The IEA predicts that global coal demand will reach 8.94 billion tons in 2026, breaking historical records, with the peak demand further delayed.

The International Energy Agency (IEA) predicts that global coal demand will reach 8.94 billion tons in 2026, breaking historical records. This means that previous expectations surrounding peak coal demand have once again failed to materialize, and fossil fuels will continue to play a vital role in power supply and industrial demand.

The International Energy Agency (IEA) released its latest coal market report on Thursday, predicting that global coal demand will grow by about 1.2% in 2026 compared to 2025, reaching a record high of 8.94 billion tons.

The IEA attributes this shift to the situation in the Strait of Hormuz triggered by the Middle East conflict. Since the outbreak of the Iraq War, the transport of crude oil and liquefied natural gas (LNG) through this waterway has been continuously disrupted, leading to a sharp rise in natural gas prices and thus enhancing the competitiveness of coal.

Several institutions had previously predicted that coal demand would peak around 2024, but the latest forecast not only failed to confirm the inflection point, but also pushed the peak date further back.

Major economies with gas-fired power units and surplus coal production capacity, such as Europe, Japan, and South Korea, have significantly increased their coal-fired power generation, with coal consumption exceeding previous expectations.

The Hormuz effect: LNG supply disruptions lead to a rebound in coal competitiveness.

The continued blockade of the Strait of Hormuz is the direct trigger for this round of upward revisions in coal demand.

The IEA points out that although coal transport itself does not pass through this waterway, the obstruction of LNG routes has significantly tightened the global supply of gaseous fuels and pushed up natural gas prices, highlighting the relative advantage of coal in power generation costs.

According to Reuters, thermal coal prices rose to $150 per ton in the first half of this year. Against this backdrop, countries with idle coal-fired power capacity accelerated their switch to coal-fired power generation, with the increased demand mainly coming from Europe, Japan, and South Korea.

Weather factors are another major driver of demand. The IEA points out that the unusually strong El Niño phenomenon expected this year will increase cooling demand while reducing hydropower generation, which will further put pressure on national power systems, prompting grids to rely more on coal to fill the gap.

Regional demand differentiation and tightening supply

Despite the overall forecast being revised upwards, market trends are diverging across different regions.

The IEA forecasts that coal demand in India and South Korea will grow by 4.2% and 6% respectively this year. In contrast, coal demand in Japan and the United States is expected to contract, declining by 1% and 7% respectively.

The IEA projects that global coal production will remain above 9 billion tons for the third consecutive year. After a slight decline in production due to ample inventories in 2026, production is expected to rebound slightly in 2027.

Affected by the aforementioned supply and demand factors, thermal coal prices rose in the first half of this year, reaching $150 per ton at times. The IEA predicts that the Middle East crisis will boost global coal trade and help stabilize the market.

Long-term prospects depend on geopolitical evolution

The future trajectory of the global coal market is currently highly dependent on the duration of the shipping disruptions in the Middle East. The IEA emphasizes that the market outlook is highly uncertain, with the key variable being whether shipping traffic in the Strait of Hormuz can resume.

If geopolitical tensions ease, liquefied natural gas (LNG) transportation resumes, and natural gas prices fall, the IEA projects that global coal demand will decline by 0.4% to 8.91 billion tons in 2027.

However, if the Strait of Hormuz remains largely closed to liquefied natural gas transport, global coal demand could face further increases.

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