Global Coal Demand is Outstripping Supply, Bank of America Says

A recent report from Bank of America (BofA) has revealed that global demand for coal is outstripping supply, with Asian countries accounting for most of the rise in coal demand. Analysts from the bank project a rise in thermal coal prices during the winter as high natural gas prices push countries to seek alternative sources of energy.

Benchmark prices for Australian Newcastle thermal coal have already jumped 40% in 2026 thanks to limited supply and stronger demand, reaching a two-year high at $150 per metric ton. With the ongoing Iran-U.S. war and the Hormuz strait closure choking off over 20% of the world’s fossil fuel supply, many countries are turning to coal to cover energy shortfalls.

For environmentalists who were counting on coal production and use to wind down, the recent increase in coal demand isn’t welcome news. However, the ongoing energy crisis has left dozens of countries paying notably higher oil prices and forced them to seek cheaper alternatives. According to BofA, coal prices will remain elevated through the winter as high natural gas prices compel countries to opt for more affordable alternatives.

With the Middle East conflict constraining global liquefied natural gas supplies, BofA estimates that the cost of Newcastle coal could rise to over $350 per ton before it costs the same as natural gas, giving coal prices significant room to rise before purchasing coal becomes as costly as using natural gas. Increased energy demand due to winter-related heating will likely eat up most of this room for price growth as countries tap into coal to meet their heating needs.

Asia, which consumes a massive portion of the world’s coal supply, has played a major role in the recent growth in coal demand. South Korea, Pakistan, Vietnam, and other emerging economies in Asia are turning to coal in droves to avoid high natural gas and oil prices. India and China, the most prolific coal consumers on the globe, are facing major internal supply pressures, with China’s coal output growth lagging due to the country’s strict mining and production rules.

Meanwhile, India’s coal inventories have been all but depleted amidst weaker production and sustained coal demand, resulting in an over 60% drop in coal power plant stocks from their peak in March.

Restrictions on Russian exports coupled with limited seaside supplies due to vessel attacks are contributing to increased coal prices, and although exports from Colombia, South Africa, the U.S., and Australia are offsetting these supply shortfalls in the short term, BofA says constrained coal exports could ultimately lead to supply disruptions in the future.

These prevailing market conditions position firms like Frontieras North America Inc. to benefit from the anticipated increases in the global price of thermal coal.

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