The price of coal for power generation has increased by approximately 40% since the beginning of 2026, driven by record demand as high natural gas prices prompt power generators—particularly in Asia—to switch from liquefied natural gas (LNG) to coal [1]. This surge in demand is occurring alongside significant supply-side uncertainty, as coal exports from Indonesia have stagnated due to tighter government controls on miners and domestic supply obligations. Exporters in Indonesia face curbs and other restrictions, which have contributed to the market's supply constraints [1].
Miners in both Indonesia and Australia are grappling with regulatory changes and logistical challenges, further limiting global coal supply and pushing prices higher as buyers seek alternatives to expensive LNG [1]. The combination of increased demand and supply disruptions has led to sharp price gains in the coal market this year [1].
Market participants are closely monitoring export policies in Indonesia and Australia, as any additional restrictions or logistical issues could drive coal prices even higher. The prevailing market sentiment is cautious, with traders watching for policy signals or supply chain disruptions that could impact coal availability or pricing [1].
Looking ahead, as global energy markets remain volatile, coal's role as a replacement for LNG is expected to continue in the short term, supporting elevated price levels [1].
CONCLUSION
Coal prices have surged 40% in 2026 due to increased demand from power generators switching from LNG and ongoing supply uncertainties in major exporting countries. Market sentiment remains cautious, with participants closely watching for further policy changes or disruptions that could impact prices. In the near term, coal is expected to maintain its elevated role as an alternative to LNG.