Asia-Pacific thermal coal demand is set to jump sharply in the wake of Middle East energy disruptions that have tightened global LNG supply and forced power utilities back into coal, Rystad Energy strategists said in a note on Monday.
The consultancy estimates an additional 150 million metric tons of cumulative coal consumption through 2030, with about half of that increase occurring in 2026 alone, driven by a widening liquefied natural gas shortfall and elevated gas prices across key importing economies.
A force majeure at Qatar's Ras Laffan facility, following conflict-related damage, has removed about 10.2 mmt per annum of LNG supply to Asia, tightening regional balances and helping push spot LNG prices to near three-year highs.
Rystad estimates a resulting supply gap of around 35 million mt in 2026, leaving utilities with limited alternatives beyond increased coal burn.
"Coal is stepping in when gas prices spike, supply tightens or mothballed plants are briefly restarted," said Tonmit Talukdar, coal research analyst at Rystad Energy.
Under its base case, the firm expects incremental coal consumption in Asia to rise by close to 70 mmt in 2026, largely through higher utilization of existing coal-fired capacity rather than new build-outs.
Rystad said that translates into about 90 terawatt-hours of generation shifting from gas to coal across Northeast and Southeast Asia.
The adjustment is already visible in regional power mixes. Japan's coal-fired generation rose 11% even as gas output fell 13%, while coal imports in South Korea and Japan are tracking over 50% and over 20% higher over the year, respectively, for May.
The firm said the response reflects "necessity over choice," with coal supply chains largely unaffected by the geopolitical disruption, even as LNG markets tighten.
However, despite the near-term spike, Rystad said the shift is a cyclical stress response rather than a structural reversal of the energy transition, pointing to strong coal inventories in India and China and growing renewable capacity that have prevented a more severe imbalance similar to the 2022 energy crisis triggered by Russia's invasion of Ukraine.
Rystad strategists said until storage, grid flexibility, and firm low-carbon capacity scale sufficiently to cover peak demand and periods of low wind or hydro output, coal will continue to serve as the system's fallback.
The consultancy, in a downside scenario in which hostilities escalate again, projected that incremental coal demand could rise by about 90 mmt in 2026, with cumulative near-term growth reaching about 190 mmt.
Price signals are also expected to reflect the tightening. Newcastle 6,000 kcal coal, the benchmark for seaborne thermal coal, is projected to average about $125 per metric ton in 2026 before easing to $115/mt in 2027 as nuclear restarts in Northeast Asia and improving LNG supply conditions gradually rebalance markets.
Demand gains are expected to be concentrated in gas-exposed power systems, with Japan leading due to nuclear restarts and policy adjustments, while South Korea, Taiwan and parts of Southeast Asia, including Vietnam, Thailand and the Philippines, increase coal burn to offset LNG shortages.