The global coking coal market is experiencing significant tightness due to a combination of three major shocks, which are expected to keep prices elevated into 2027. China's severe mine safety crackdown, triggered by fatal accidents in Shanxi in late May and Hunan in August, has sharply reduced domestic coking coal output. This has led to Australian premium low-vol coking coal prices surging by more than $60/ton since late July, reaching nearly $280/ton, and has limited the overall coal supply in China despite healthy thermal coal inventories. While China's regulatory body, NDRC, has called for higher output, coking coal production is not expected to recover to pre-accident levels quickly, contributing to a tight supply-demand balance.
Simultaneously, high natural gas prices in both Europe and Asia are pushing coal back into the energy generation mix. European and Asian gas, particularly LNG for Japanese and South Korean utilities, is now trading above coal on a delivered basis, making coal a more economically viable option for power generation. This increased demand for thermal coal, even as coking coal supply remains constrained, further tightens the overall coal market.
Adding to the supply pressures, naval attacks in the Black Sea have disrupted a key shipping route for Russian coal exports, which accounted for 13% of its seaborne volume in 2025. This forces a more expensive rerouting through the Baltic Sea. These three factors combined are creating a significant upward price movement in the global coal market. Northeast and South Asian buyers are driving the sharpest growth in seaborne demand, with India expected to return to the market from October after depleting its stockpiles, further exacerbating the supply squeeze.
Despite an expected increase in China's overall coal output, the specific issue of coking coal supply, particularly premium low-vol material, is expected to remain tight. The reduced Mongolian coal imports, with daily truck clearances at Ganqimaodu port falling from 1,300 to between 500 and 600, have led to a rapid decline in port inventories. Seaborne coal imports have stepped in to fill this gap, but the lingering effects of China's mine safety inspections suggest that the tight supply-demand balance will persist, especially for high-quality coking coal, well into next year.
