June 18, 2026 - A deadly mining accident in China's largest coal-producing region and uncertainty over Indonesia's coal export policy could pressure global supplies and push prices higher in the coming months.

Quoted from Reuters, analysts and industry participants said the situation comes as liquefied natural gas (LNG) supplies remain constrained due to the conflict between the United States, Israel, and Iran.

Shipping disruptions through the Strait of Hormuz caused by the conflict have prompted Japan and South Korea to increase purchases of high-quality coal. The situation has also pushed the Newcastle benchmark coal price close to its highest level in nearly two years, above USD 150 per tonne.

Meanwhile, demand for lower-quality Indonesian coal remains weak as China and India rely on sufficient inventories and increased renewable energy production to meet electricity demand.

However, the situation began to change following an explosion at a coal mine in Shanxi Province last month. The incident triggered widespread safety inspections and could potentially reduce China's domestic coal supply.

DBX Commodities CEO Alexandre Claude estimated that China's thermal coal imports in June will increase 27.6% compared with the same period last year to 27.8 million tonnes, driven by rising seasonal demand and reduced domestic supply.

On the other hand, the Indonesian government's plan to place all coal exports under the management of a new state-owned company, Danantara, has added further uncertainty to the market.

"Production restrictions in Shanxi and the transition towards Danantara have tightened coal supplies in the international market," Claude said.

According to him, coal inventories that previously acted as a supply buffer are beginning to decline. With demand remaining strong and supply limited, the risk of short-term price increases remains significant.

McCloskey Executive Director Scott Dendy said Indonesia's thermal coal production during the first four months of this year fell 7% compared with the same period last year.

He estimated that Indonesian coal exports could decline by around 11% to 446 million tonnes this year if the current production pace continues.

The supply pressures are emerging as several Southeast Asian countries are increasing coal-fired power generation capacity.

I-Energy Resources Executive Director Vasudev Pamnani said hotter weather has increased coal consumption in Vietnam and the Philippines. Meanwhile, tighter gas supplies in Thailand are expected to drive higher coal imports this year.

Rystad Energy estimates that the impact of the Iran conflict alone could add up to 70 million tonnes of coal consumption in the Asia-Pacific region in 2026.

Although the US and Iran have reached a framework agreement to reopen the Strait of Hormuz, industry participants expect the restoration of energy supplies to normal levels will still take several weeks.

In addition, Argus estimates global coal supply will fall 5.7% to 985 million tonnes in 2026. The expected El Nino weather conditions could also increase energy demand across Asia.

Nanjing University Atmospheric Science lecturer Peng Qihua said dry conditions in northern China could pressure hydropower generation, while higher temperatures would increase air conditioning usage.

A decline in hydropower generation typically drives higher coal consumption in China.

On the other hand, major producing countries are also facing production challenges. Dendy said around two-thirds of coal producers in Russia are currently operating at a loss due to a stronger rouble and higher transport costs.

Meanwhile, Australian coal exports are expected to increase this year, although higher mining costs and diesel supply constraints could limit production growth.

According to Pamnani, buyers from India have also begun looking at coal supplies from South Africa as an alternative amid uncertainty over supplies from Indonesia. (ARF/ZH)