Asian Coal Prices Hit Two-Year High as Supply Tightens Ahead of Winter
nashnova research
Newcastle coal futures are up over 40% year-to-date, closing at their highest since August 2024; geopolitical disruptions to oil and gas, falling Chinese mine output, and winter stockpiling are pushing coal back to centre stage in global energy.
Why has coal surged so sharply?
Newcastle thermal coal futures have risen over 40% this year, with Tuesday's close marking the highest since August 2024.
Two geopolitical crises are driving the move: Ukrainian drone strikes on Russian refineries and disrupted energy flows through the Strait of Hormuz — both pushing natural gas and heating oil prices higher.
This means → utilities are switching to cheaper coal. Demand is rising not because coal improved, but because the alternatives got more expensive.
What do the banks say about the longer-term outlook?
A Morgan Stanley team led by analyst Amy Gower raised the long-term Newcastle export coal price forecast by 4% to $125 per tonne last week.
The key call: the global refining crisis makes thermal coal's long-term demand outlook "more resilient."
In plain terms = the bank no longer views coal as purely a transition fuel — as long as oil-and-gas supply chains stay disrupted, coal's demand floor is structurally higher.
What is wrong on the supply side?
China's coal output fell over 3% year-on-year in the first eight months — a major mine disaster early in the year triggered industry-wide safety inspections, shutting multiple mines for months.
Wood Mackenzie analyst Hangyu Li said more mines are expected to resume after roughly four months of closure, but a quick rebound in output is unlikely.
This means → the supply gap probably won't close until early next year, yet winter stockpiling season is already here — the supply-demand mismatch will persist for months.
Can coal keep climbing from here?
The key level the market is watching is $150 per tonne — if Newcastle futures hold there, analysts see scope for a larger breakout.
A potential brake exists, though: a record El Niño event is pushing winter temperature forecasts above normal across much of Asia.
In plain terms = if a warm winter materialises, heating demand gets suppressed and coal may top out near $150 rather than break through — weather is the single biggest wildcard right now.
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