Coal prices hit three-year high amid Middle East conflict and LNG volatility

Global coal prices have reached their highest levels in three years, with Newcastle benchmark futures trading around US$ 150 to US$ 154.6 per ton. This surge is driven by a massive shift from liquefied natural gas (LNG) to coal as power plants seek cheaper alternatives ahead of the winter season. While LNG prices have spiked due to supply disruptions in the Middle East, coal remains approximately 80% cheaper than LNG.

The International Energy Agency (IEA) projects that global coal demand will reach record highs this year, despite ongoing clean energy transition efforts. In Indonesia, the surge has increased the Indonesian Coal Price Reference (HBA) across all calorie levels.

Supply constraints are also playing a role, as Indonesia—the world's largest thermal coal exporter—has seen a decline in shipments. Indonesian coal export volumes fell 9.33% between January and August 2026, with August 2026 seeing a 25.3% year-on-year drop. The IEA expects Indonesian production to decrease by more than 12 million tons this year due to production quota reductions and policy uncertainty.