Australian Thermal Coal Rises 40% to $150 a Ton as Supply Tightens
Key Facts
Australian thermal coal at Newcastle has risen 40% since the start of the year to about $150 per metric ton as of Oct. 31, its highest level in two years, according to a Bank of America estimate cited by Investing.com. Prices are climbing as global demand expectations increase and supplies available for trade come under pressure. But the International Energy Agency does not expect a confirmed global deficit; it forecasts production will exceed expected demand in 2026. That leaves the market facing a paradox between abundant overall production and tight supplies reaching some buyers. High gas costs have also helped make coal an alternative for some Asian power systems.
The International Energy Agency expects global coal demand to rise 1.2% in 2026 to 8.94 billion tons, after previously forecasting a slight decline. It attributed the revised estimate to the Middle East crisis and El Niño weather, which changed calculations for energy supply and demand. The agency said shortages of natural gas supply drove gas prices higher, encouraging some power systems to switch to coal. The shift reflects the impact of disruption in the liquefied natural gas market on coal, particularly in Asia. Asian demand, however, is not moving uniformly, as consumption and trade forecasts vary across economies.
In ASEAN countries, the agency expects coal demand to reach about 574 million tons in 2026, led mainly by the power sectors in Indonesia and Vietnam. It also forecasts Southeast Asian imports to rise to 164 million tons from 156 million in 2025, with Vietnam leading the growth. Vietnam’s imports are estimated at about 62 million tons, compared with 55 million the previous year. The figures highlight the region’s growing need for imported supplies, alongside an expected decline in Indonesian exports. The comparison indicates that regional demand growth does not mean all Asian markets depend on a single trend.
On the production side, the agency expects global output to fall about 1% in 2026, but remain above 9 billion tons for a third consecutive year. The decline follows pressure on Chinese production, after more than 100 mines in Shanxi were temporarily closed following an accident in May. The closed mines had annual production capacity of more than 100 million tons. Coal output fell about 10% year over year in June and July, its steepest decline since 2016. These developments show how local disruptions and safety measures can reduce available supply, even as global production remains high.
Indonesian trade adds further pressure to the seaborne market. Indonesia’s thermal coal exports fell to 517 million tons in 2025 from 557 million in 2024, with a decline in Chinese imports a key factor. The agency expects exports to fall again to about 495 million tons in 2026, alongside a slight decline in global exports. Lower Indonesian shipments mean a reduced supply source for Asian buyers at a time when the agency expects ASEAN demand to grow. Pressure on coal availability is therefore concentrated in trade flows and shipment distribution, rather than evidence that global consumption will exceed production.
The rise in Asian prices coincided with power plants preparing for winter and building fuel stocks, amid high demand and supply disruptions from China to Indonesia, Bloomberg reported via Energy Connects on Oct. 13. Bank of America said October gas prices exceeded $30 per million British thermal units in the Asian liquefied natural gas market and 90 euros per megawatt-hour in the European market. The bank expects coal prices to remain supported through winter, as higher gas costs encourage power producers to switch to coal, particularly in Asia. These levels provide context for coal’s increased appeal to some power plants, without proving that prices of all energy commodities will continue to rise. The bank’s outlook remains tied to the winter period, not an open-ended price trajectory.
For 2027, the agency links the demand outlook to the recovery of liquefied natural gas shipments through the Strait of Hormuz and the direction of gas prices. In its base case, if Middle East tensions ease, it expects global coal demand to fall 0.4% to 8.91 billion tons. If restrictions on LNG shipments persist, demand could rise instead. On the supply side, the agency expects global production to increase by about 26 million tons in 2027, keeping it above 9 billion tons for a fourth consecutive year. The return of gas supplies will determine how long the shift to coal continues, while production forecasts point to global supply remaining high.