China's Coal Power Rises for Fourth Month as Hormuz Cuts Bite
China's coal-fired power generation rose for a fourth consecutive month in April 2026, driven by a sharp drop in energy imports caused by Strait of Hormuz shipping disruptions, data from the Centre for Research on Energy and Clean Air showed.1
Crude oil imports fell around 20% year-on-year in April while natural gas imports dropped roughly 13%, as the disruptions curtailed supplies through the critical waterway. With less gas and oil available, utilities leaned harder on domestic coal reserves to meet an overall power generation increase estimated at 6.6% year-on-year.1
The shift carries wider market implications. China is the world's largest coal consumer, and a sustained turn back to thermal generation risks cementing higher demand at a moment when policymakers were counting on renewable capacity to absorb growth. Thermal power commissioning in the first quarter surged more than 160% year-on-year, hitting a record high — a pipeline that suggests the coal-to-power trend will not reverse quickly even if import routes normalise.1
The Hormuz effect is not confined to China. India imports roughly 60% of its liquefied natural gas through the same strait, and elevated gas prices driven by the supply squeeze have pushed Indian utilities toward cheaper domestic coal as well.2 The simultaneous pivot by both Asian giants illustrates how a single chokepoint disruption can override years of stated clean-energy policy ambitions in a matter of weeks.
Renewable additions continued in China, though at a slower pace than the prior year's record. Solar capacity additions fell 31% year-on-year in April, reflecting a high comparison base from 2025. Wind additions rose 8%. Neither was sufficient to offset the coal rebound in power generation terms, given weak wind conditions, subdued solar output, and extended nuclear refuelling outages that ran concurrently.1
Battery manufacturing showed a different trajectory. Output rose 55.6% year-on-year in April, supported by energy storage demand and export flows. Solar cell production fell 25.6% year-on-year, partly reflecting weaker domestic installations and some pullback in exports after March's tariff-related surge.1
The construction site of the Ningxia Electric Investment Yongli 2×660 megawatt coal-fired power project in Yinchuan, active as of March 2026, is one visible data point in a broader commissioning wave. Projects approved during the post-pandemic electricity crunch years are now entering service at the same time as Hormuz-linked supply disruptions are making imported gas more expensive and less reliable.1
The chemical industry faces its own version of this pressure. The fossil fuel crunch linked to the Strait of Hormuz added cost pressure on manufacturers dependent on gas feedstocks, compounding the demand-side slowdown from slower industrial value-added growth in April.1
For coal markets, the question is how long Hormuz disruptions persist and whether China's LNG import diversification — through Australian supply routes and pipeline gas from Central Asia — can offset the shortfall fast enough to slow coal burn. Newcastle thermal coal, the Asian benchmark, was trading around $113 per tonne as of late June 2026, a level that remains attractive for coal-to-power economics relative to LNG spot prices.
The structural read is harder. China's stated energy policy centres on expanding renewables while controlling coal's absolute output. April's data suggests that when import shocks hit, coal remains the swing fuel of first resort — a role that new capacity additions are reinforcing rather than eroding.