Thermal coal prices surged through March and early April as Middle East energy disruptions constrained global LNG supplies, prompting countries to secure power through alternative fuels.
The growing strain on gas markets has reaffirmed coal’s role as a fallback for energy security despite ongoing decarbonisation goals.
Benchmark FOB Newcastle 6,000 kcal/kg coal averaged US$126 per tonne in March 2026, before rising to US$132 per tonne in recent trades, up sharply from US$114 per tonne in February.
Prices at other key export hubs also gained, with FOB Richards Bay 6,000 kcal/kg averaging around US$110 per tonne, while CFR ARA reached US$123 per tonne amid continued gas market volatility.
According to Wood Mackenzie, the price rebound has been triggered by the prolonged disruption to Middle East energy supplies, which is reshaping global energy flows.
“In supply shocks of this scale, coal becomes a critical fallback for energy security,” said Sushmita Vazirani, Principal Analyst, Bulk Commodities at Wood Mackenzie.
“Despite decarbonisation commitments across Asia, tightening LNG supply and elevated prices are accelerating fuel switching back to coal.”
While the Strait of Hormuz remains the world’s most critical chokepoint for oil and gas, relatively little thermal coal passes through the route.
Major exporters such as Australia, Indonesia, Russia, South Africa, and Colombia are not directly exposed. However, the ripple effects of constrained LNG flows are significant.
Higher gas prices are pushing fuel-sensitive markets, especially in Asia and Europe, back toward coal-based generation.
Wood Mackenzie’s analysis shows that for every US$10 per barrel increase in crude oil prices, coal mine site costs rise by US$1–3 per tonne, intensifying pressure on already tight supply.
Rising diesel costs further threaten supply-side responsiveness.
“Rising diesel prices are creating a cost squeeze for coal producers, just as markets call for more supply,” Vazirani said.
“In Australia, heavy reliance on imported diesel adds an additional layer of risk, potentially constraining output and tightening global markets.”
Across Northeast Asia, coal-fired generation remains firm despite mild seasonal demand.
Taiwan is preparing to restart the 2.1 GW Hsinta coal-fired power plant, expected to consume approximately 5.5 Mt of coal annually.
South Korea has increased guidance for Russian coal imports, while Japan is relying more on nuclear restarts such as Kashiwazaki-Kariwa Unit 6.
China, where gas contributes less than 3 per cent of power generation, remains largely insulated but continues to secure a domestic coal supply to bolster energy security.
In India, elevated LNG and petcoke costs are driving industrial users back to coal.
In Europe, several nations (including Italy) are weighing coal-fired restarts, particularly in the Amsterdam-Rotterdam-Antwerp (ARA) region, where gas dependence leaves markets exposed.
With pre-conflict marginal costs near US$112 per tonne, Wood Mackenzie predicts further cost escalation as fuel and logistics pressures mount.
As global energy markets grapple with prolonged volatility, coal’s resilience underscores how energy security concerns are reshaping the pace of decarbonisation across major economies.
