IEA Sees Record Coal Demand as China Accelerates Domestic Gas Shift
The Hormuz crisis is pushing global coal demand to new highs just as China builds out a coal-to-gas programme that could reshape seaborne thermal markets by 2030.
The International Energy Agency expects global coal demand to hit a record this year, driven by oil and gas trade disruptions from the Strait of Hormuz closure that have pushed several countries back toward coal-fired generation as oil inventories thin, OilPrice.com reported on Sunday (2026-09-20).7
China's share of global consumption makes that baseline difficult to read in isolation. The country burned roughly 55.6% of the world's coal, according to data highlighted by Visual Capitalist and reported by BusinessToday.in in August 2026, with China and India combined accounting for nearly 70% of total demand. Any change in Chinese coal appetite moves markets from Australian export terminals to South African ports.5
But China's import volumes have already reversed. Coal imports reached a record 47.6 million metric tons in September 2024 before falling 26% year-on-year by June 2025, according to analysis published by ainvest.com in May 2026. The gap was filled domestically: Chinese coal output rose 5% year-on-year in 2025 to record levels, displacing seaborne supply.1
The structural shift goes beyond production. Wind and solar capacity surpassed thermal coal for the first time in Q1 2025, reaching 1,482 GW against 1,450 GW for coal plant, while coal-fired generation fell 4.7% year-on-year in that quarter. Renewables supplied 36% of China's electricity in that period. By 2030, they are projected to account for 25% of primary energy, and coal's share of power generation is expected to fall to 37-40%.1
China's 15th Five-Year Plan for 2026-2030, released in August 2026, confirmed the direction away from coal. Yet it declined to set a government-endorsed year for coal use to peak and established no binding production target, though it revised down an earlier coal reserve-production capacity figure, Carbon Brief reported on Thursday (2026-08-20). That absence leaves room for coal producers to argue longer-term demand resilience.6
Running alongside the renewables expansion is a coal-to-gas conversion programme that Rystad Energy describes as the world's only large-scale effort of its kind. China's 15th Five-Year Plan covers expansion of synthetic natural gas made from domestic coal — designed to reduce exposure to LNG import disruptions. The Fuxin project, one element of the programme, was revived in 2026 after earlier delays.4,3
Rystad estimates China's coal-to-gas capacity will reach 9.4 billion cubic meters per year by the end of 2026 and expand to 28 billion cubic meters annually by 2030. That upper-end volume could displace a material portion of China's spot LNG purchases over the same horizon.4
China's role in LNG markets has already shifted. Wood Mackenzie analysts told asian-power.com in June 2026 that the country has moved from a predictable demand anchor to a price-sensitive balancer, adjusting import volumes against spot conditions. "When prices are low, it will buy more LNG," the analysts said. JKM Asian LNG fetched $25.72/MMBtu on Thursday (2026-09-24).2
Newcastle thermal coal physical stood at $137.25 per tonne on Thursday (2026-09-24), with the COAL ETF down 0.41% the same day. The Hormuz-related demand story flagged by the IEA has not produced a pronounced rally in spot coal benchmarks, which may reflect the market already pricing in softer Chinese seaborne demand running in the opposite direction.7
How quickly China's coal-to-gas buildout scales toward Rystad's 28 Bcm target — against a policy backdrop with no fixed domestic coal peak — is the variable the IEA's record-demand projection cannot fully absorb. If CTG capacity delivers on schedule, Chinese LNG spot demand could shrink even as domestic coal output grows, leaving Newcastle prices increasingly dependent on buyers outside Beijing's procurement decisions.4,2,7