Asian coal demand surges as winter approaches and supply constraints tighten
Thermal coal prices in Asia have jumped to two-year highs as power generators stockpile fuel for the coming winter amid supply disruptions and higher oil and gas costs.
Asian thermal-coal markets are tightening as power producers build reserves for winter, sending Newcastle futures to their highest level since August 2024 and up more than 40% so far. The Iran war has lifted oil and gas prices, prompting a shift toward cheaper coal and boosting demand for heating fuel. Supply is constrained by a safety-driven production slowdown in China and Indonesia's export quotas compounded by drought-affected barge traffic.
In India, a weak monsoon and high summer temperatures have depleted hydropower and forced coal-fired stations to use up stockpiles, while many plants hold less than a quarter of required reserves. Analysts at Morgan Stanley and Wood Mackenzie expect the price rally to continue, though a milder winter could ease pressure.
Why it matters
Higher coal prices and tighter supply could raise electricity costs across Asia during winter.
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