Coal Prices Rebound Amid Global Agency's Danger Warning

Coal prices have rebounded after two consecutive days of decline. According to Refinitiv, coal prices closed at US$125.75 per tonne on Thursday (16/4/2026) trading, strengthening by 0.64%. This uptick ends the coal’s suffering from a 5.7% plunge over the previous two days. Coal prices are rising again in line with the increase in oil prices, which also surged 4% on Thursday. The latest Wood Mackenzie analysis states that prolonged disruptions to energy supplies in the Middle East are triggering a new surge in demand and global thermal coal prices. This is because many countries are switching back to coal to maintain electricity supplies amid limited LNG flows through the Strait of Hormuz. Wood Mackenzie is a leading global energy research and consulting firm based in Edinburgh, Scotland (UK). “In a supply shock of this magnitude, coal becomes an important reserve for energy security,” said Sushmita Vazirani, Principal Bulk Commodities Analyst at Wood Mackenzie, quoted from Reuters. Although only a small portion of global coal trade passes through the Strait of Hormuz, disruptions in this route have a significant indirect impact on the energy market. Reduced LNG supplies are causing global gas prices to rise, prompting utilities and industries to return to coal for power generation. This shift is most evident in Asia and Europe, where energy security is beginning to override short-term decarbonisation targets. Taiwan is preparing to restart the 2.1 GW Hsinta coal-fired power plant, which could consume 5.5 million tonnes of coal per year. South Korea is raising its guidance for Russian coal imports. Japan is expected to rely more on nuclear power, including the restart of the Kashiwazaki-Kariwa Unit 6 reactor, to reduce dependence on expensive LNG. In Europe, Italy is considering reactivating coal-fired power plant capacity. The ARA market is most vulnerable due to its reliance on gas imports, making the switch to coal even stronger. On the supply side, pressures are also mounting. Wood Mackenzie notes that marginal production costs before the disruption were around US$112/tonne and are expected to rise due to higher crude oil prices. Every US$10 increase per barrel in oil prices can raise coal mining costs by US$1-3/tonne, particularly due to more expensive diesel for heavy equipment and transportation. The return of coal demonstrates the conflict between energy security and climate commitments. Although many countries have pledged to reduce reliance on coal, current market conditions are forcing a temporary reversal. With the LNG market under pressure and ongoing geopolitical risks, coal is once again becoming the world’s primary backup fuel.