Japan and South Korea Coal Use Hits Multi-Year Highs After Qatar LNG Disruption
Iranian strikes disrupted 17% of Qatari LNG export capacity, pushing both countries to burn more coal in April and May than at any point in years.
A regional energy market regulator approved 900 megawatts of electricity imports from Malaysia on August 24 (2026-08-24), Japan NRG reported, with Sembcorp Utilities clearing 300 MW and Southern Solar Alliance (a unit of Ditrolic Energy Holdings) securing the remaining 600 MW.4
The approval came as Northeast Asia's power sectors shifted sharply toward coal following disruptions to Qatari LNG supplies. Japan's coal-fired generation jumped 11.1% in April, its fastest pace in at least a year, while gas-fired output fell 12.9% to 16,447 gigawatt-hours, according to the Japanese Electricity Market Data Hub. South Korea's swing was larger: coal generation rose 39.7% year-on-year to 10,733 gigawatt-hours in April, the steepest gain since August 2019, while gas-fired output dropped 6.4%, Korea Power Exchange data show.2
Iranian retaliation to U.S.-Israeli strikes disrupted roughly 17% of LNG export capacity in Qatar, the world's second-largest LNG supplier, according to market data reported by Kyodo. JKM Asian LNG stood at $23.17 per MMBtu on August 31 (2026-08-31), unchanged on the day, with bearish supply-side signals in the forward data suggesting limited near-term upside.2
Nuclear output added to the pressure. Japan's nuclear generation fell 2.7% in April, South Korea's fell 14.6%, with further declines in both countries during the first ten days of May. Coal substitution then deepened: generation from coal rose 18.3% in Japan and 14.7% in South Korea through May (2026-05), while gas-fired output fell 23.4% and 12.2% respectively, Kyodo reported.2
The cargo-level impact was material. Fei Xu, senior gas analyst at ICIS, estimated Japan's increased coal burn displaced roughly four LNG cargoes in April — about half the annual reduction in LNG imports the Japanese government had projected from expanded coal use. If that rate of displacement continues, Japan's LNG reduction for 2026 would run well ahead of government targets.2
Vietnam amplified the regional coal call. A spring heatwave pushed coal-fired electricity generation up 12.3% in April to a record 17,864 gigawatt-hours, according to government figures, and electricity-grade coal imports reached a record 5.4 million tonnes in the same period. London-based DBX Commodities forecasts imports by other Asian countries rising 9.4% year-on-year to 31 million metric tonnes this year. Newcastle physical coal held at $125.60 per tonne on August 31 (2026-08-31).2
South Korea's energy pivot comes against a stressed economic backdrop. The IMF cut the country's 2026 growth forecast on April 22 (2026-04-22) to 1%, down from 2% projected in January, after Washington imposed 25% sectoral tariffs on steel, aluminium and automobiles from March and April. A broader reciprocal tariff of 25% on Korean goods has been announced but suspended for 90 days. Japan's growth forecast was cut by 0.5 percentage points in the same IMF round.1
In May (2026-05-19), Japan's Prime Minister Takaichi and South Korea's President Lee Jae-myung discussed joint crude oil procurement at a summit in Seoul, Japan NRG reported. The conversation indicated both governments are moving toward coordinated purchasing as a hedge against supply shocks, alongside unilateral fuel-switching.3
The 900 MW of Malaysian electricity approved on August 24 (2026-08-24) fits that pattern of supply diversification. But it is modest against the scale of coal capacity being run harder across Northeast and Southeast Asia. Xu's view at ICIS was that the longer the conflict continues, the more switching will occur, suggesting the coal dependency is contingent rather than structural. Newcastle coal's price trajectory and any concrete sign of Qatari export capacity restoration are the figures to track as the fourth quarter approaches.2,4