Coal Holds Near 1-Month High

Thermal coal futures were at around $131 per tonne in late July, remaining near its highest level in a month after touching a four-month low in late June, as supply concerns in Indonesia supported prices. Dry weather disrupted coal barging operations along the Barito River in Kalimantan, a key transport route for the country’s coal exports, with some miners reportedly declaring force majeure on affected volumes. The disruptions raised concerns over potential shipment delays from Indonesia, the world’s largest thermal coal exporter, supporting expectations of tighter near-term availability. At the same time, rising oil prices amid escalating Middle East tensions lifted broader energy markets, with concerns over possible supply disruptions adding to upward pressure on fuel costs. Meanwhile, gains remained limited by subdued demand in China, where high inventories and cautious utility buying continued to weigh on import demand.

Thermal coal futures from Australia were at around $130 per tonne in July, not far from their lowest level since early March, as muted purchases from India offset a broader-based rebound for energy commodities. A weak rupee and an upgrade to the quantity of domestic production drove Indian utilities to extend its effort of reducing import dependency. This was combined with elevated levels of domestic inventories for the second-largest consumer to take in lower imports and soften bidding competition from other consumers. Still, energy commodities remained higher since March as fresh escalation between the US and Iran triggered another increase in power prices. LNG tankers held off from crossing the Strait of Hormuz after a vessel was struck by Iran. This supported the outlook that Japan and Korea, the main consumers of higher coal grades from Australia, are likely to maintain coal imports amid higher LNG prices.

Thermal coal futures fell below $130 per ton, returning to levels last seen before the Middle East conflict erupted as continued peace talks between the US and Iran raised hopes for a lasting resolution and the full reopening of the Strait of Hormuz. Investors are closely watching the latest developments in negotiations between Washington and Tehran in Qatar following a recent flare-up in hostilities around the key shipping route. Oil and natural gas prices have also retreated to pre-war levels, with analysts forecasting a global supply surplus as Middle Eastern production rebounds, reducing the need for fuel switching. Meanwhile, China’s latest five-year plan reaffirmed its "all-of-the-above" energy strategy by expanding both coal-fired power generation and renewable energy. China remains the world’s largest investor in clean energy while continuing to lead global coal expansion, accounting for 78% of new coal power capacity added worldwide in 2025.