Asia's LNG Crisis Drives Record Coal Imports Amid Iran War
The ongoing conflict in Iran has disrupted liquefied natural gas (LNG) supplies to Asia, leading major importers Japan and South Korea to boost coal-fired power generation. According to market data, Japan's gas-fired power supply hit two-year lows in April, while South Korea's dropped to six-month lows.
Coal imports by these countries are on track for annual rises of more than 50% and 20%, respectively, with Vietnam also seeing a surge in coal-fired output due to a heatwave. Asian spot LNG prices have surged 62% since the start of the war, dwarfing a 13% rise in the Newcastle coal benchmark.
S&P Global Energy analyst Andre Lambine predicted that 'the longer this war continues, the more switching we will see' from gas to coal-fired power generation.
Japan's ability to switch from gas to coal may be larger and faster than expected, according to Fei Xu, senior gas analyst at ICIS. South Korea could also use more coal as its coal-fired power plants remained underutilised.