China Thermal Power Output Rises 2.1% in May as Coal Fills Asian LNG Gap
Official data show China is burning more coal through mid-2026 as Hormuz disruptions squeeze LNG imports across the region.
China's thermal power generation rose 2.1% in May compared with a year earlier, official data showed, taking the cumulative gain for the first five months of 2026 to 3.4% — a faster pace than last year and one driven by geopolitical disruption as much as underlying demand growth.
The acceleration has a clear proximate cause. In April (2026-04-30), shipping disruptions through the Strait of Hormuz weighed heavily on China's energy imports, with crude oil falling around 20% year-on-year and natural gas imports dropping roughly 13%, according to data from the Centre for Research on Energy and Clean Air.1 Iranian retaliation to U.S.-Israeli strikes disrupted an estimated 17% of Qatar's LNG export capacity, cutting supply into a market that had been relying on flexible imports to balance its grid.5
Total power generation rose an estimated 6.6% year-on-year in April, but with wind output weakening and nuclear plants undergoing extended refuelling outages, coal power climbed for the fourth consecutive month.1 The May data indicates that pattern persisted.
The same forces are reshaping generation across Northeast Asia. Japan and South Korea sharply increased coal-fired electricity output in April and early May (2026-05-01 to 2026-05-15) as the Hormuz disruption pushed delivered LNG prices higher. Fei Xu, senior gas analyst at ICIS, estimated Japan's increased coal consumption displaced roughly four LNG cargoes in April — about half the annual reduction in LNG imports the government had projected from shifting to greater coal use.5 JKM Asian LNG front-month was at $15.52 per MMBtu as of Friday's (2026-06-27) close.
The supply side offers little near-term cushion. Domestic coal output in China fell 1% in April to 385.63 million tons, Reuters reported, citing official statistics — a retreat from an all-time high set in March.2 Over the first four months of 2026, cumulative production dipped 0.1% to 1.58 billion tons. Generation companies are therefore more exposed to seaborne coal markets at precisely the moment when import logistics remain strained.
That constraint is compounding a divergence in China's power sector investment picture. Thermal power commissioning in the first quarter of 2026 surged by more than 160% year-on-year to a record high, even as solar capacity additions fell 31% from the same period a year earlier — though they remained above first-quarter 2023 levels. Wind additions rose 8%.1 New coal plant approvals are running ahead of what the clean power buildout can offset in the short run, and disruption to gas imports has reinforced that gap rather than narrowed it.
For context, China's thermal generation rose 1.5% for the full year 2024, official data showed on Friday (2026-05-15), defying expectations that coal-fired output was near a cyclical peak — though growth that year was the lowest in nine years, excluding pandemic years.4 The 3.4% year-to-date pace in 2026 represents a clear step-up, driven by the combination of weather and supply shocks rather than a new structural trajectory, though the two are now hard to separate.
The IEA's Electricity 2026 report forecast that coal's share of the global generation mix would erode over the rest of the decade as nuclear, renewables and natural gas grow, with solar PV alone adding around 600 TWh annually through 2030.3 The data from China through May suggest those projections will face near-term pressure from geopolitical variables that no energy transition planning fully anticipated.
Newcastle thermal coal physical settled at $125.80 per tonne as of Friday's (2026-06-27) close. The direction from here depends primarily on whether Hormuz shipping returns to normal volumes and whether China's nuclear fleet clears the maintenance backlog that pushed coal demand higher through the spring.