Asia Turns to Coal as Iran Conflict Disrupts LNG Supplies

The ongoing conflict in Iran has led to a significant disruption in liquefied natural gas (LNG) supplies, causing Asian markets to turn to coal for power generation. In April and early May, Japan and South Korea ramped up their use of coal-fired power plants, with Japan's gas-fired power supply hitting two-year lows.

According to data from the Japanese Electricity Market Data Hub and Korea Power Exchange (KPX), Japan's coal-fired power supply surged 11.1% in April, while gas-fired power plunged 12.9%. In South Korea, coal-fired power output rose 39.7% annually to 10,733 GWh.

The shift is attributed to the war-induced LNG supply crisis, which has boosted prices by 62%. 'The longer this war continues, the more switching we will see,' said Andre Lambine, a power analyst at S&P Global Energy.

As a result, coal imports are on the rise in both countries. Japan's coal imports are expected to increase by over 20% annually in May, while South Korea's could rise by over 50%. Asian thermal coal shipments outside China and India also surged 9.4% annually to 31 million metric tons in May.