SHANGHAI (Realist English). The global coal market is experiencing large‑scale price turbulence amid escalating conflict in the Persian Gulf and abnormally high temperatures in Asia.
Quotes at key global hubs have updated their yearly highs, while in Europe a paradoxical situation has emerged: coal prices have soared more than 300% since the start of the year, surpassing the peaks seen during the 2008 financial crisis.
Asia: Record Prices and Supply Shortages
China, as the largest consumer, has become the epicentre of the price shock. Spot thermal coal prices have reached their highest levels in three years. The main drivers are the abnormal heat and a major accident in Shanxi Province (the country’s largest coal‑mining region), which led to comprehensive safety inspections and production stoppages.
The price of coal with a calorific value of 5,500 kcal/kg on a CFR South China basis reached $127 per tonne. Port prices in northern provinces stalled at 865 yuan per tonne (about $120), showing stagnation for the seventh consecutive day, indicating a temporary pause in negotiations between sellers and buyers.
The coking coal market is also extremely tight. Due to supply shortages in Shanxi, the CCI index for low‑grade coal rose by 23 yuan in a single day, reaching 1,944 yuan/tonne. The deficit is pushing Chinese steel mills to seek alternatives: Australian coal is becoming more competitive compared to Mongolian coal.
Japan, South Korea and Taiwan are actively building up reserves, fearing supply disruptions because of the Persian Gulf conflict and seeking to replace expensive oil and gas. Demand in India has also risen sharply: coal‑fired power generation in the country showed its largest monthly increase in May since June 2024. Experts warn that the expected El Niño phenomenon could trigger extreme heat and further boost energy demand in the region.
Indonesia, the world’s largest exporter, has abruptly changed course: authorities have abandoned plans to cut output and announced they would dynamically increase production to take advantage of rising prices and capture the market share left by production shortfalls in other countries.
Europe: Coal Renaissance Amid Energy Crisis
The European market is experiencing a dramatic renaissance of coal. European deliveries (API2 index) have soared to $280 per tonne — more than 300% above the beginning of the year and higher than the 2008 peak.
This dynamic is being driven by rising gas prices (TTF) and concerns about gas storage levels against the backdrop of the Iran conflict. At the same time, the market is showing an anomalous structure: futures for June and the third quarter are trading at a premium of $8–13 over spot prices, indicating expectations of even greater shortages at the height of the summer season due to lower supply from Russia and disruptions in Colombia.
Russia and India: A New Strategic Alliance
Russian coal is trading at a discount against the record‑breaking Chinese market. Sales to China are going at $108–115 per tonne (a discount to market prices), while quotes on a FOB Vostochny basis have risen only 0.3%. In parallel, Russian exporters are testing new logistics routes: in June, the port of Murmansk sent a trial shipment of coal to East Africa.
The main story is unfolding with India. New Delhi, seeking to reduce its dependence on Australia and protect itself from volatility, is holding talks with Moscow. Indian state‑owned giants SAIL and NMDC are discussing not only increasing purchases (two to three times) but also the possibility of directly acquiring coal assets in Russia.
Coking coal has officially been recognised as a strategic raw material in India.
