Coal Surges to 2-Month High

Coal prices climbed toward $140 per ton in late August, reaching a two-month high as robust global energy demand coincided with persistent concerns over supply. Coal remains the world’s largest source of power generation, producing nearly 11,000 TWh in 2026, while surging electricity demand is slowing efforts to displace the fuel with renewable energy. The IEA also expects coal to remain the largest single source of power generation through 2030, with no individual alternative coming close to replacing it. The prolonged Middle East conflict, which tightened global LNG supplies and drove energy prices higher, further strengthened the outlook for coal demand. Meanwhile, as many as 45 coal-fired power plants in India are operating with critically low coal stocks as electricity demand rises amid a strong El Niño, while supply has been disrupted by monsoon rains.

Coal prices rose above $131 per ton in late August, reaching their highest levels in three weeks, amid firm Asian energy demand and ongoing supply risks. China’s latest stimulus signals could offer some additional support, as measures aimed at boosting domestic demand and accelerating infrastructure investment may help strengthen industrial activity and electricity consumption. A more sustained recovery in economic activity could, in turn, support power generation and coal demand. Meanwhile, Japan’s power prices have climbed to their highest level since 2023 as a heatwave drives higher cooling demand, potentially lifting thermal generation and providing some support to coal demand. The outlook will ultimately depend on power demand, generation levels, coal inventories, and broader supply conditions.

Thermal coal futures steadied near $130 per ton in mid-August, moving in a sideways trading range as oil prices remained elevated amid persistent uncertainty over a US-Iran deal to end the conflict and reopen the Strait of Hormuz. Higher oil prices increase the incentive for fuel switching, particularly among energy-importing countries across Europe and Asia. Meanwhile, China’s National Development and Reform Commission and National Energy Administration released the “15th Five-Year Plan for Coal Industry Development,” which aims to lift the proportion of capacity from large, modernized coal mines to 87% and that from intelligent mines to 75% by 2030. The plan also calls for an annual reserve of more than 100 million metric tons of production capacity and seeks to accelerate the closure of outdated mines through market-based and legal measures, while enforcing strict replacement requirements for new capacity.