October 20, 2026 - Thermal coal prices in Asia are expected to stay elevated in the coming months as demand is strengthening in the ongoing gas-to-coal switch, while supply from China and Indonesia is falling, Fitch Ratings said in a report.

Coal prices in China, for example, have hit a three-year high in recent weeks as supply from key exporter Indonesia remains restricted due to government policies and strong El Niño disrupting river barge movements.

Indonesia’s thermal coal exports have been crimped by government production quotas and heightened uncertainties about Indonesia’s policy in the coal mining and exporting sectors. The Indonesian government slashed quotas for coal miners, while the strong El Niño has reduced rainfall and lowered river water levels, disrupting coal barge movements to export ports. 

China’s domestic coal supply has also declined this year, following the deadliest mining disaster in 16 years in May, which prompted authorities to step up safety checks and order suspension of activities in a number of mines in the key coal-producing region of Shanxi.

Year to date, Chinese output has been trending lower this year than a year earlier.

China’s raw coal production rose by 6.4% in September from August, for the highest level since May, per government data from earlier this week. But the output was still 6.8% below last year’s September levels.

As a result of lower Chinese output, highly uncertain Indonesian export volumes amid policy changes, and strong demand for coal in Japan and South Korea, thermal coal prices are set to remain elevated in the near term, Fitch Ratings said.

“Demand from gas-to-coal switching in Japan and Korea is likely to stay firm, driven by the Middle East conflict, pushing regional prices higher - particularly for high- Calorific Value (CV) coal,” the rating agency said.

The global benchmark for coal prices, the Newcastle futures, have jumped by 30% compared to pre-war levels.