October 31, 2026 - Global coal supply is currently struggling to keep pace with rising demand across Asia, a situation driven by production constraints and elevated natural gas prices that could push thermal coal prices higher this winter, according to analysts at Bank of America (BofA).

Benchmark Australian Newcastle thermal coal prices have already surged 40% this year, reaching approximately $150 per metric ton, marking their highest level in two years. This price strength is being supported by robust consumption and limited seaborne supplies. Analysts suggest that coal prices have significant room to rise, estimating that Newcastle coal could exceed $350 per ton before it loses its cost advantage over natural gas.

The market is being tightened by high energy costs, as liquefied natural gas (LNG) supplies face pressure from conflicts in the Middle East. This has pushed Asian JKM prices above $30 per million British thermal units and European TTF prices beyond €90 per megawatt-hour this month. These elevated natural gas costs are expected to encourage power producers, particularly in Asia, to switch to coal for fuel.

Demand is being driven by South Korea and emerging Asian economies such as Vietnam and Pakistan, where high energy costs have increased the appeal of coal. Additionally, supply pressures are mounting in the world's largest coal-consuming nations, China and India. In China, stricter oversight regarding mine safety and excessive production has limited domestic output growth as utilities prepare for winter. In India, weaker-than-expected production combined with sustained power generation has caused power plant coal stocks to fall more than 60% from their March peak.

Global supply remains vulnerable due to several regional disruptions. Indonesian coal exports have declined following government-mandated production cuts and drought-related transportation issues, while Russian shipments face financial and logistical challenges, including vessel attacks that have effectively halted exports from Black Sea and Azov ports. While increased shipments from the U.S., Australia, Colombia, and South Africa have partially offset these shortfalls, limited spare export capacity leaves the global market susceptible to further supply disruptions. BofA expects restocking in both China and India to support import demand in the coming months.