Coal prices gained support from stronger natural gas markets, tighter Indonesian supply and rising summer power demand across Asia, Kpler said in a Friday note.
Rising tensions between the US and Iran pushed natural gas prices higher after strikes, a renewed blockade and transit fees in the Strait of Hormuz, strengthening the outlook for thermal coal, Kpler said.
Favorable winter generation margins prompted European utilities to build Q4 forward coal positions over gas, according to Kpler.
Still, elevated coal inventories and the Rhine's Kaub water level dropping to 45 centimeters, a four-year low, continued to curb inland demand.
Following power outages in Java, Indonesia raised coal allocations for state utility PLN to 212 million metric tons from an estimated requirement of 154 million mt, reducing the export availability of mid-calorific value coal, Kpler said.
Extreme heat and heavy rainfall prompted China's National Meteorological Center to issue yellow alerts. Temperatures climbed above 40 degrees Celsius across parts of Sichuan, Chongqing, Henan, Anhui, Jiangsu, Shanghai, Zhejiang, Jiangxi, Hubei, Hunan, Xinjiang and Inner Mongolia on July 16, Kpler said.
Higher electricity demand reduced coal inventories around northern China's Bohai Rim, although stockpiles remained above 2025 levels.
Kpler expects coal burn to accelerate later this month once drier weather replaces the cooling effect of heavy rainfall.
An unusually mild start to summer gave way to intense heat across Japan, where authorities issued heatwave alerts for 25 prefectures. Tokyo is also set to record its first temperature above 35 degrees Celsius, or 95 degrees Fahrenheit, this year, Kpler said.
Growing air-conditioning demand will lift electricity consumption across Japan, encouraging utilities to increase thermal coal generation through the remainder of the summer, Kpler said.
Record coal consumption driven by heatwaves pushed India's domestic coal inventories below 40 million mt for the first time since the second quarter of 2025.
Kpler said the country may turn to more imports if stockpiles fall another 10 million mt, even as domestic production remains strong.