Global coal consumption is expected to hit a record 8.94 billion tonnes in 2026, as disruptions linked to the Middle East conflict and an intense El Niño weather pattern drive greater demand for coal-fired power generation, according to the International Energy Agency (IEA).
The IEA’s latest Coal Mid-Year Update revised its previous outlook, which had projected a decline in global coal consumption. The agency now expects demand to rise by 1.2 per cent in 2026, reflecting a sharp shift in energy markets following disruptions to liquefied natural gas (LNG) shipments through the Strait of Hormuz.
The conflict has contributed to higher natural gas prices, prompting power producers in parts of Asia and Europe to increase their reliance on coal-fired generation. At the same time, the strong El Niño conditions have increased electricity demand for cooling while reducing hydropower availability in several markets.
Although coal consumption in the United States and European Union continues to decline over the longer term, growing demand in India and Southeast Asia is expected to more than offset those reductions and push global consumption to a new record.
Global Coal Production Set to Decline
While demand is rising, global coal production is expected to fall in 2026. The IEA estimates production could decline by around 0.7 per cent to 2 per cent, marking the end of a prolonged period of growth in global coal supply.
China has recorded a significant mid-year decline in production following temporary mine closures for safety inspections after a deadly accident in Shanxi province.
Coal output in Indonesia is also expected to decrease, with lower government production targets, increased domestic supply requirements and regulatory changes contributing to the decline.
India, however, is moving in the opposite direction. The country is expected to set another record for coal production as it continues efforts to reduce its reliance on imported coal.
Coal Prices Remain Elevated
The combination of stronger demand and tighter supply has pushed benchmark thermal coal prices above $140 per tonne.
The IEA expects coal prices to remain elevated through the remainder of 2026, as constrained production struggles to keep pace with the unexpected increase in consumption.
The latest outlook highlights the continued sensitivity of global energy markets to geopolitical disruptions and extreme weather, while also underscoring the differing trajectories of coal use across major economies.
