Coal Prices Dip After Five-Day Rally Amid India's Supply Crisis

Jakarta, CNBC Indonesia - Coal prices weakened despite being supported by numerous positive sentiments. According to Refinitiv, coal prices closed at US$134.5 per ton on Thursday (23/7/2026), down 0.77%. This decline snapped a positive trend in which prices had strengthened by 3.9% over the previous five days. The price fell even as oil prices soared past US$100 per barrel and despite supportive news, including a supply crisis in India.

India is facing coal supply pressures amid surging electricity demand. As of mid-July 2026, coal stocks at steam power plants (PLTU) were only sufficient for about 13 days of operation, far below the ideal norm of around 26 days. Several factors have caused the depletion of coal reserves, including a spike in electricity demand due to hotter weather from the El Niño phenomenon, which has increased the use of air conditioning. Additionally, electricity production from hydropower and wind plants has been disrupted by lower-than-normal rainfall. Consequently, coal-fired power plants must operate more intensively to meet national electricity needs. Coal inventories at PLTUs reached approximately 41 million tonnes, enough for about 13 days of operation, a level below normal. To maintain current generation rates, Indian power plants require around 3.1 million tonnes of coal per day. On the other hand, mines owned by Coal India Ltd. still have around 152 million tonnes of coal inventory that can be distributed to power plants. India’s electricity demand surged to around 270 gigawatts (GW) in mid-July, approaching the all-time record of 270.2 GW recorded in May. The government estimates that peak electricity load could reach 280 GW this year if the rainy season remains weak. The Indian government has asserted that coal supply remains under control despite declining stocks at power plants. The Ministry of Coal, Ministry of Energy, and Ministry of Railways are enhancing coordination to ensure smooth coal distribution to PLTUs and prevent electricity supply disruptions. Although India continues to develop renewable energy, coal remains the primary source of national electricity. During the April-June 2026 period, coal and lignite-fired power plants contributed about 69.5% of electricity supply, with their contribution reaching around 75% during evening peak loads. To maintain system reliability, India also added 9.47 GW of PLTU capacity in 2025-2026 and a further 2.26 GW between April and July 2026.

In the United States, President Donald Trump has allocated US$700 million to revive the coal industry amid soaring energy prices following the Iran war. The funding uses the Defense Production Act, a Cold War-era law granting the president authority to support strategic industries. “Today we are taking a historic step to lower energy prices and the cost of living for the American people through the power of coal,” Trump said, as quoted by the BBC. Of the total investment, US$500 million is allocated to maintain the operations of 14 coal-fired power plants, 42 coal mines, and to build a new export terminal in California. The remaining US$200 million will be used to construct two new coal-fired power plants in Alaska and West Virginia, marking the first such projects in the US since 2013. Trump claimed the investment would create around 14,000 jobs and save consumers US$50 billion in electricity generation costs. The move follows the Iran war and the closure of the Strait of Hormuz, which caused energy prices to spike. Petrol prices in the US have reached US$4.24 per gallon, up from US$2.98 at the start of the conflict, while consumer energy prices surged 17.9% year-on-year as of April.

Sentiment in China’s northern port thermal coal market weakened again as demand remained sluggish and port inventories stayed high. However, market participants remain optimistic that prices will not fall sharply because mine-side supply is relatively tight and shipping costs remain high. Demand in China is weak as buyers, especially power plants, are still reluctant to make large spot purchases. Many utilities are choosing to wait because their existing stockpiles are still sufficient. High coal inventories at northern Chinese ports continue to put pressure on prices, weakening market sentiment compared to previous days. Despite the weaker sentiment, traders are not aggressively cutting prices. Analysts assess that supply from mining areas remains limited, providing support for prices. Market participants expect electricity demand to increase due to hot weather and summer air conditioning use. The rise in electricity consumption is expected to drive coal purchases in the coming weeks, potentially strengthening prices again.