Coal Prices Soar! India to China Scramble for Supplies

Coal prices have soared amid a surge in demand. According to Refinitiv, the May contract price closed at US$123.75 per tonne on Tuesday (22/4/2026), up 2.78%. This rise breaks a negative trend where coal prices had plummeted 4.3% over the previous two consecutive days. The increase in coal prices is driven by persistently high oil prices and rising demand. The European Union’s thermal coal imports are projected to reach their highest level in five months in April 2026. This uptick is occurring as European utilities stockpile to anticipate further gas price spikes due to the war in the Middle East. The rise in imports indicates that Europe is once again turning to coal as an energy security buffer amid a turbulent gas market. As gas supply risks intensify, power plants tend to switch to coal to maintain electrical system stability and production costs. In the market, this trend could support global coal prices, particularly supplies from Colombia, the United States, South Africa, and Australia, which are the main suppliers to Europe during tight energy periods. For Asia, Europe’s buying surge could also tighten the seaborne coal market, increasing competition for export cargoes and risking further price hikes. In China, the metallurgical coke market remains supported by tight fundamentals following recent price increases. Bullish sentiment persists due to relatively tight supply and demand conditions. Demand from steel mills remains solid as hot metal production is still high and steel margins are improving. Coke inventories at mills and ports are also tending to be low, keeping the market tight. If steel demand remains stable, China’s met coke prices could rise further in the short term. In the United States, President Donald Trump on Monday used wartime powers under the Defense Production Act (DPA) to push for increased production of oil, gas, and coal. The DPA gives the president authority to ramp up production of certain goods to support national security. This week, Trump issued five memoranda applying the act to the oil, coal, natural gas infrastructure and exports, power grid equipment, and “large-scale energy infrastructure and related energy infrastructure” sectors. This step was taken as the war in Iran triggers an oil supply crisis. Around one-fifth of the world’s oil supply typically passes through the Strait of Hormuz off Iran’s coast. Tehran is exploiting this narrow waterway and effectively halting oil flows. Oil is a globally traded commodity, so this disruption is driving sharp price surges worldwide. In coal-related policy, Trump specifically mentioned artificial intelligence or AI. He stated that without adequate baseload power supply from coal-fired plants, the United States would lack the stable electricity needed to support defence installations, industrial expansion, and the massive energy demands of new technologies like artificial intelligence. The coal price rise is also bolstered by news from India. The country’s coal production is feared to decline amid high demand. Total domestic coal production fell 0.64% to 1.040 million tonnes in March 2026, from 1.047 million tonnes in March 2025. Of this, Coal India Limited, which accounts for nearly 80% of national production, recorded a sharper drop of 1.65%, to 768 million tonnes from 781 million tonnes. Among CIL’s eight subsidiaries, four saw production declines compared to March 2025. The three largest drops were at BCCL by 12.30%, WCL by 8.81%, and CCL by 6.09%. India’s largest coal imports are coking coal, mainly used by the Steel Authority of India and private steel companies. According to the Ministry of Coal, imports fell 2.10% year-on-year in fiscal year 2024-25. However, since nearly 85% of coking coal for the steel industry still comes from imports, India remains the world’s largest importer of coking coal. Coal demand is projected to exceed 1.5 billion tonnes by 2030. If the gap between demand and production persists, reliance on imports will increase. According to the ministry, 77% of India’s electricity still depends on coal. With rising demand, alternative energy sources are beginning to be considered.