Coal Generation Rebounds 13% in U.S. as MISO Dark Spreads Stay Positive
U.S. coal-fired electricity generation increased 13% in the first months of 2026, extending a rebound driven by favorable economics in the Midcontinent Independent System Operator. EIA data published in May showed that dark spreads — the margin between wholesale electricity prices and coal fuel costs — remained positive in MISO through the first four months of the year, a condition that makes coal dispatch rational for operators who still hold the capacity.4
Physical Newcastle coal traded at $122.40 per tonne on Monday (2026-07-06), above levels that make seaborne thermal coal economically viable for power generation across multiple markets. NYMEX Henry Hub front-month settled at $3.25 per million BTU the same day — low enough to keep gas competitive in many U.S. regions, but insufficient to erode coal's cost advantage in MISO, where delivered coal prices have remained below switching thresholds.4
The domestic economics are reinforced by a global backdrop. Iranian retaliation against U.S.-Israeli strikes disrupted approximately 17% of Qatar's LNG export capacity, tightening the seaborne market and pushing JKM spot LNG to $16.06 per MMBtu on Monday (2026-07-06). That price has made coal a financially necessary alternative for Asian buyers unable to absorb LNG import costs at current levels.5
Japan and South Korea sharply increased coal-fired generation in April (2026-04) as war disrupted supply and pushed prices higher, Kyodo reported. Fei Xu, senior gas analyst at ICIS, said Japan's increased coal use displaced roughly four LNG cargoes in April — about half the annual reduction in imports the government had expected from greater coal reliance over a full year.5
Vietnam's coal-fired electricity generation rose 12.3% in April (2026-04) to a record 17,864 gigawatt-hours, government figures showed. India, which routes about 60% of its LNG imports through the Hormuz corridor, has prioritized domestic coal as high gas prices made imports unaffordable, OilPrice.com reported.5,2
In China, total power generation rose an estimated 6.6% year-on-year in April (2026-04), but weak wind performance, subdued solar output, and extended nuclear refuelling outages pushed coal generation higher for the fourth consecutive month, analysis by the Centre for Research on Energy and Clean Air found. Crude oil and natural gas imports each fell around 20% and 13% year-on-year respectively as Hormuz shipping disruptions compressed supply. Thermal power capacity additions in China surged more than 160% year-on-year in the first quarter of 2026 (2026-Q1) to a record level.1
Coal remains the world's largest single source of electricity, accounting for approximately 35% of global supply despite the expansion of renewables, GlobalElectricity.org data show.3
The near-term market signals complicate the picture. Real-time MISO power prices carry a bearish directional signal on the supply side, as do API2 coal front-month prices — the European benchmark. If those signals reflect physical rebalancing rather than positioning, MISO dark spreads could compress through the second half of 2026 as gas-fired generators respond to moderating wholesale prices.
Summer demand will be the first test. Sustained heat across the U.S. South and Midwest would extend coal's dispatch window by keeping power prices elevated relative to fuel costs. A mild summer, by contrast, would reduce the hours in which coal clears MISO's merit order, narrowing the annualized generation gain.
The broader question is whether LNG supply through Hormuz recovers quickly enough to relieve pressure on Asian buyers. Every month the disruption persists, Asian coal demand remains above pre-crisis levels — sustaining Newcastle prices and providing indirect support for U.S. coal operators through tighter global markets. The five-year phase-down pledges from COP26 were already being deferred; the Hormuz disruption has accelerated that deferral without any formal policy revision.2,6