Global coal demand to reach record level this year
The International Energy Agency has updated its coal consumption forecasts due to rising natural gas prices and uncertainties in LNG flows.
The International Energy Agency (IEA) has announced that global coal demand will increase by 1.2 percent this year to reach 8.94 billion tons, breaking a record, as a result of uncertainties in liquefied natural gas flows in the Strait of Hormuz and rising natural gas prices.
Demand Increase and Forecast Revision
In a published report, the International Energy Agency was forced to revise its previously forecasted decline in consumption because demand for coal remained resilient.
At the end of last year, the agency had predicted that coal demand would decline slightly in 2026 and that this decline would continue until 2030.
Strait of Hormuz and LNG Impact
Although the Middle East region is not a major coal producer or consumer and no coal shipments pass through the strait, sharp drops in LNG flows through the Strait of Hormuz drove natural gas prices upward.
This situation directly impacted coal markets, leading to an increase in coal-fired electricity generation in gas-fired power plants and countries with backup coal capacity.
Fuel Switching by Region
The phenomenon of shifting from natural gas to coal in the energy mix was clearly observed in various geographies, notably China, South Korea, Japan, and Europe.
El Nino and Hydropower Generation
The severe El Nino event experienced this year both significantly increased cooling demand and reduced the generation capacity of hydroelectric power plants in countries such as India and Vietnam.
Future Expectations
The IEA stated that if the Strait of Hormuz reopens and LNG flows return to levels seen before the US and Israeli attacks on Iran, global coal demand could decline next year.
It was emphasized that if the opposite scenario occurs, 2027 could be another record year for coal demand.