Middle East energy disruption spurs Asia coal demand surge, Rystad says

The tight gas supply drove higher utilisation of existing coal plants across key markets.

Disruption to Middle East energy infrastructure has tightened global liquefied natural gas (LNG) supply and led to higher near-term coal use across Asia-Pacific power systems, according to Rystad Energy.

The research firm estimates Asia-Pacific thermal coal demand will rise by about 70 million tonnes in 2026 under a tight gas scenario, driven by an LNG shortfall of around 35 million tonnes.

It said roughly half of the projected cumulative increase through 2030, estimated at about 150 million tonnes, is expected in 2026.

Rystad Energy said the increase is being driven mainly by higher utilisation of existing coal-fired power plants rather than new capacity additions

It estimated around 90 terawatt-hours of generation has shifted from gas to coal in affected markets.

The report linked tighter LNG supply to disruptions at Qatar’s Ras Laffan facility, which removed about 10.2 million tonnes per annum of LNG capacity and triggered force majeure declarations.

This has tightened regional gas balances and pushed spot LNG prices to close to three-year highs.

Japan, South Korea, and Taiwan are expected to account for a large share of incremental coal demand, alongside Vietnam, Thailand, and the Philippines.

Japan’s coal-fired generation rose 11%, whilst gas output fell 13%. South Korean and Japanese coal imports were more than 50% and 20% higher year on year respectively in May.

Rystad Energy said the shift reflects higher utilisation of existing coal fleets in gas-exposed markets rather than structural capacity expansion.

In a downside scenario where disruptions persist, the firm estimates coal demand could rise by about 90 million tonnes in 2026, with cumulative near-term demand reaching around 190 million tonnes.

The Newcastle 6000 kcal coal benchmark is expected to average about $125 per tonne in 2026 before easing to around $115 per tonne in 2027, as nuclear restarts and improved LNG supply ease tightness.

Rystad Energy said no major coal producers have sanctioned large-scale new mining projects or major mine life extensions in response to the demand increase.