Coal Prices Surge Close to USD 140, China and India Scramble for Supply
27 May 2026, 06:39 PM
462
Coal prices surged amid market concerns over supply conditions in China and strong demand from India.According to Refinitiv data, coal prices closed at USD 139.4 per ton on Tuesday (May 26, 2026), rising 2.16%. The latest closing price marked the highest level since May 5, 2026, or in more than three weeks.Coke prices in China officially increased for the fourth time this year after major steel mills accepted price hikes proposed by coke producers. The latest increase took effect on May 26, amounting to around CNY 50–55 per ton.The increase came amid tightening coking coal supply following a mining accident in Shanxi, China’s key coal-producing region.Large-scale safety inspections forced several mines to temporarily halt production, raising market concerns that supply could shrink further.After the fourth round of price hikes took effect, the market immediately began discussing the possibility of a fifth increase.Coal Price Performance (USD/tonSource: RefinitivIndustry players believe coke producers now hold stronger bargaining power as market inventories remain relatively low while demand from the steel industry stays fairly stable.However, not all parties agree. Several steel mills have begun resisting further price increases as profit margins in the steel sector remain under pressure due to weakening steel prices. Tensions between coke producers and steelmakers have started to emerge.Meanwhile, the global coking coal market has also strengthened. Australian and Chinese coking coal prices climbed throughout May due to tight supply conditions and production disruptions in several mining regions.Following a mining accident that killed 82 people last week, authorities in Shanxi suspended operations at 109 mines with a combined annual production capacity of 122 million tons.The fatal explosion occurred at the privately owned Liushenyu mine on Friday night.Most mines are typically required to suspend operations for three to seven days after a serious incident.The market is now watching closely to see whether the scope of the shutdowns will be expanded, especially as China prepares to launch its annual mining safety campaign on June 1.If Beijing does not impose broader restrictions, coal production could recover quickly once the initial inspections are completed, potentially putting downward pressure on prices again.“Considering the need to maintain coal supply ahead of summer, the central government has so far not tightened safety supervision further,” said Yu Dian, lead researcher at Shanghai-based Citic Futures, as quoted by The Star.The explosion killed at least 82 people and suddenly tightened China’s coking coal market, directly impacting around 4% of total national production. Mysteel reported that several mining companies had already started receiving higher price offers following the disaster.Coking coal futures rose 0.5% to 1,273 yuan per ton at 11:01 a.m. Singapore time. Meanwhile, iron ore prices on the Singapore Exchange fell 1.4% to USD 105.20 per ton. Iron ore prices in Dalian and steel prices in Shanghai also weakened.Summer Demand Drives ConsumptionIn addition to the inspections, summer is approaching and electricity demand is entering its peak period. Institutions such as CITIC Securities noted that this year’s summer demand — including coal consumption by coal-fired power plants and the chemical sector — has exceeded expectations.Downstream users are currently reducing inventories during the low-demand season, but restocking demand for the peak season could emerge at any time.On one side, coal supply is shrinking, while on the other, demand remains stable or is even increasing. Naturally, the remaining coal supply has become increasingly contested.As a result, coal prices were immediately repriced in the futures market.Front-month coking coal futures surged nearly 8% in a single day, while contracts for the following month also hit their daily price limit.From India, state-owned miner Coal India instructed its subsidiaries to increase coal supply to power plants.The move aims to avoid shortages as the country’s electricity demand reaches record highs due to an extreme heatwave, according to two sources familiar with the matter.Several regions in India have experienced power outages, especially at night when renewable energy supply is unavailable. The situation comes after extreme temperatures triggered by El Niño weather patterns placed heavy pressure on the national power grid.A total of 21 power plants were reported to have critically low coal inventories — enough to meet demand for less than one week — based on the latest data from the Central Electricity Authority, an advisory body under India’s Ministry of Power.The world’s largest coal producer has instructed its subsidiaries to maximize coal shipments through all transportation modes, including railways transporting coal directly from mines to power plants, the sources said.Coal India on Tuesday stated that it had asked power utilities to increase coal inventories earlier ahead of peak demand, especially for plants located in areas with logistical challenges.India’s peak power demand, which measures maximum electricity requirements, reached a record high of 270.8 gigawatts (GW) last week.Although India already has 228 GW of non-fossil fuel energy capacity, coal still accounts for more than 70% of the country’s electricity generation.Coal India and its eight subsidiaries, which contribute around 80% of India’s coal production, recorded a 9.7% decline in output to 56.1 million metric tons in April, according to company data.The mining company stated that it currently holds coal inventories totaling 168 million tons, including 47.6 million tons at power plants, enough to meet consumption for 19 days.Meanwhile, coal stockpiles at mining sites reached 113.5 million tons as of May 23, up around 10% compared to the previous year.
