LONDON (Realist English). The global coal market, which surged to historic highs on the back of the Middle East crisis, spent the final days of May in tense anticipation. Prices have retreated from the peaks of $142–145 per tonne recorded in mid-April, but remain persistently high amid ongoing threats to LNG supplies and structural supply deficits.
The main trigger for volatility remains uncertainty surrounding US-Iran talks and the fate of the Strait of Hormuz.
Price dynamics (9–17 May 2026)
The coal market once again demonstrated its high sensitivity to geopolitics. On 7 May, amid reports of a possible reopening of the Strait of Hormuz, coal futures fell sharply: Newcastle 6,000 kcal contracts lost up to $8 per tonne, hitting an intraday low of $133/t. However, by the close, losses had narrowed, and the third-quarter contract settled at $137/t — just 4.5% below the levels seen on 5 May.
Key coal prices as of mid-May 2026:
| Grade / Brand (delivery terms) | Price ($/t) | Change |
| Newcastle, 6,000 kcal (FOB) | 133 $ | -$2 from 5 May |
| Newcastle, 5,500 kcal (FOB) | 98 $ | -$2 from 5 May |
| Richards Bay, 6,000 kcal (FOB) | 112 $ | -$1 over the week |
| API2 (European, CIF ARA) | ~$121 | +13% since the war began |
| Indonesia, 4,200 kcal | 57 $ | +12% since the war began |
Key market trends
1. The gas pause is dragging on — coal remains in play
Initial fears that reopening the strait would instantly crush gas and coal prices have not materialised. The market has realised that LNG infrastructure in the Gulf — particularly in Qatar — has been damaged and could take months to restore. This means coal continues to serve as a “marginal fuel” in the energy mix of Asian and European countries, keeping prices above pre-crisis levels.
2. Asian giants increase their appetite: China and India ramp up demand
The region’s largest economies continue to show strong demand. China, despite a decline in domestic production, is actively increasing imports to strengthen energy security. Seasonal summer demand and limited supply from Indonesia provide a solid foundation for elevated prices.
India is at the centre of the energy storm. The government has ordered all thermal power plants to operate at full capacity in preparation for tapping coal reserves. At the same time, Coal India faces sharply higher costs for explosives and ammonium nitrate due to rising logistics expenses, creating domestic inflationary pressure and further driving prices upward.
3. Japan and South Korea turn away from gas
Asian economies are shifting into emergency energy-saving mode. Japan has lifted restrictions on coal-fired power plant utilisation, while South Korea has raised nuclear power plant utilisation rates to 80% and abolished seasonal limits on coal generation. This points to a systemic “energy switch” that could support coal demand over the long term.
Forecasts and expert opinions
Analysts at leading global banks and rating agencies agree that coal prices will remain high and volatile in the short term.
UBS has issued one of the most bullish forecasts. The bank raised its 2026 forecast for Newcastle (6,000 NAR) coal by 10% — from $115/t to $126/t — citing high natural gas prices and persistent Middle East risks. UBS analysts also maintained their forecast for premium low-volatility coking coal at $235/t due to supply disruptions in Australia and strong demand from India.
BMI (Fitch Solutions) has raised its forecast for Newcastle coal this year to $115/t, arguing that Asian countries are directly substituting LNG with coal in their energy mix.
Morgan Stanley has warned bullish traders that if the conflict drags on and negotiations remain deadlocked, benchmark coal prices could stabilise above $130/t. Rising diesel prices in Australia could provide an additional upward push.
Fitch Ratings has also revised its 2026 forecast for coking coal upward — from $180/t to $190/t — due to strong prices at the beginning of the year and supply disruptions in Australia following a cyclone.
Morgans expects prices to remain around $115/t in the second half of the 2026 financial year and to hold near $120/t over the long term.
The coal market stands at a crossroads. On the one hand, it longs for the return of cheap gas that could ease pressure on global energy markets. On the other hand, the war around Iran has demonstrated just how fragile the global energy system built around LNG supplies really is.
While diplomats in New Delhi and Washington discuss a possible nuclear deal with Iran, coal traders continue to follow the old rule: any news of peace sends prices down by $5 a tonne, while any real escalation pushes them up by $20.