IEA Forecasts Record Coal Demand as Ras Laffan Damage Prolongs Asia's LNG Shortfall
Damaged Ras Laffan plants leave 17 billion cubic metres of annual LNG capacity offline even after the Hormuz ceasefire, sustaining Asia's record coal demand push.
Global coal demand is on course for a record high this year, the International Energy Agency said in a report published Thursday (2026-09-10), as Asian economies absorb the loss of Gulf LNG supply cut off by the Strait of Hormuz blockade and seek alternatives wherever they can find them.6,7
Asia's exposure was concentrated in ways that make the shift durable. The region was purchasing 80% to 90% of Gulf oil and gas exports before the conflict began, and the strait's closure removed roughly a fifth of global LNG supply in weeks. A US-Iran ceasefire agreement reopened the waterway in June (2026-06-08), but two damaged Ras Laffan liquefaction plants have left about 17 billion cubic metres of annual LNG capacity offline, the IEA says, and that deficit persists regardless of shipping conditions.3,4
Newcastle 6,000-kilocalorie thermal coal physical sat at $139.05 a tonne on Monday (2026-09-14). That is down from peaks near $150 a tonne during the first half of 2026, but Australian benchmark coal exports are still up 25% from late February 2026 levels, according to The Economist. Asian LNG benchmark JKM held at $24.88 per MMBtu on Monday (2026-09-14), a spread wide enough to keep coal competitive against gas for most Asian power generators.7,1
A coal mining equity ETF fell 1.73% on Monday (2026-09-14), and ICE Brent crude front-month eased to $107.53 a barrel that morning, off 0.45% on the session. Coal equity funds track mining companies rather than physical tonnes, and crude carries multiple drivers beyond Hormuz flows — both moves suggest financial markets are not extrapolating the disruption indefinitely. Newcastle coal, sitting about $11 below its first-half peak, reflects the same moderation in physical trade.1
Supply is not easing fast enough to justify a sharp price retreat. The IEA projects global coal production will dip 0.7% this year, its first annual fall after several years of growth, while holding above 9 billion tonnes.7 A fatal mining accident in China's Shanxi province, its largest coal-producing region, tightened domestic supply through the first half, the IEA's data show.7,5 Indonesia then compounded the pressure: its government announced new commodity export controls in early June (2026-06-08), delaying outbound shipments when Asian buyers were most actively sourcing coal alternatives to Gulf LNG, Investing.com reported.4
Japan illustrates the substitution ceiling. Despite policy changes designed to lift coal plant utilisation, Japanese utilities could not import enough coal to replace Hormuz-disrupted LNG, leaving them exposed, Asian Power reported in May (2026-05-12). The market structure partially explains why: only 17% of global coal output is traded across borders, against 20% of all natural gas and virtually all LNG, according to The Economist. That thin seaborne market amplifies price moves without expanding available volumes.2,1
Demand from the two largest consumers is still growing. The IEA forecasts Chinese coal use will rise 1% to 5 billion tonnes this year, while India's climbs 4.2% to 1.353 billion tonnes, reversing a temporary slip in 2025.6 Together those increments sustain pressure on seaborne supply at a time when Indonesian export availability remains uncertain.
Capital is following the demand signal. Global coal investment will reach $180 billion this year, up 4% from 2025 and the highest since 2012, the IEA said, with steam coal spending rising 5% and coking coal up 3%.3 Expenditure had been climbing for six years before the Hormuz shock. The conflict has damaged confidence in Strait of Hormuz transit in ways reshaping Asian energy-security planning beyond any single political resolution, the IEA noted.3
The pace of Ras Laffan restoration is what coal traders are watching most closely. If even partial LNG capacity returns faster than the IEA's 17 bcm offline estimate implies, or Indonesia eases its export restrictions, the coal-gas price relationship shifts and Newcastle coal at $139.05 a tonne loses its current floor. With India forecast to add 4.2% to coal consumption and China a further 1%, a sustained LNG shortfall leaves the record $180 billion investment cycle looking well-timed.3,4,6