Global Coal Demand Set to Rise Despite Decline in Production

The International Energy Agency's Mid-Year Update 2026 forecasts a 1.2% increase in global coal demand, reaching 8.94 billion tonnes. This rise is attributed to higher natural gas prices resulting from the closure of the Strait of Hormuz, leading countries with gas-fired power fleets and spare coal capacity to increase coal use.

Europe, Japan, South Korea, and China are among those expected to see greater coal usage. China has also increased its coal consumption for producing chemical products due to high oil prices. The forecasted demand surge is despite a decline in global coal production, with China's output expected to drop after a major mine accident in May triggered safety inspections.

Weather patterns are another factor contributing to the increase in coal demand. A strong El Niño weather pattern this year is expected to boost cooling needs and lower hydropower output in Asia, particularly in India and Vietnam.