Thermal coal, a fuel many governments had pencilled in for retirement, is trading near a three-year high. Australia's Newcastle benchmark stood at US$150.40 a tonne on 16 October. That is up 39.91 per cent since January and 45.38 per cent on a year earlier.

The cause lies in gas. The closure of the Strait of Hormuz cut about a fifth of global liquefied natural gas (LNG) supply, and utilities turned back to coal. For Australia, the world's second-largest coal exporter, the rally has revived earnings just as a court ruling clouds future supply.

What the benchmark measures

Newcastle thermal coal is high-energy coal shipped from the New South Wales port, quoted in US dollars per tonne. It is the main seaborne reference for coal burned in Asian power stations.

The 2026 rise started from a low base. The International Energy Agency (IEA) says late-2025 prices had fallen close to producers' costs.

A gas shock drives the 2026 rally

The decisive event came on 28 February, when the Strait of Hormuz closed. QatarEnergy declared force majeure on 4 March, according to the US Energy Information Administration (EIA). More than 10 billion cubic feet a day of LNG supply was affected.

By late April Asia's JKM gas benchmark was 51 per cent above its pre-closure level, the EIA said. Coal became the cheaper fuel for power in Japan, Korea, China and parts of Europe.

The IEA's Coal Mid-Year Update, published in September, expects global demand to rise 1.2 per cent to a record 8.94 billion tonnes. In December it had forecast a small decline.

Supply has tightened at the same time. Indonesia, the largest thermal coal exporter, cut its production target. It shipped 23 per cent less coal in August than a year earlier, according to Jakarta Post data cited by OilPrice.com.

This month's move

The path has been uneven. Newcastle averaged US$139 a tonne in June and slipped to US$131 in August, according to the IEA. Prices have since rebounded, rising 3.98 per cent over the past month and 1.04 per cent in the past week.

On 6 October coal touched US$152.20, its highest since October 2024, according to Trading Economics. A day later, Australia's High Court dismissed MACH Energy's appeal over the Mount Pleasant mine expansion in the Hunter Valley. The court ruled that planners must weigh emissions from coal burned overseas, a decision miners warned could deter investment.

The Australian angle

Australia has shipped more coal into the shortage. Thermal coal exports rose 8 million tonnes to 213 million tonnes in 2025-26, AFP reported. New South Wales coal exports earned A$23.4 billion last year, mostly from buyers in South Korea, Japan, China and Taiwan.

Producers: Yancoal reported record first-half output of 19.8 million tonnes, with its realised thermal price up 4 per cent to A$143 a tonne. Analysts covering New Hope credited demand from Japan and Korea, and supply limits in Indonesia and China. Whitehaven noted the benchmark began its financial year near US$130, against about US$110 a year earlier.

Approvals remain mixed. On 30 September the NSW Independent Planning Commission let Glencore run its Hunter Valley Operations until 2045.

State budgets benefit too. Queensland's tiered royalty scheme has a top rate of 40 per cent on prices above A$300 a tonne. Climate Energy Finance, a think tank, estimated in April that elevated prices could add more than A$1 billion to the state's 2025-26 coal royalties.

Outlook: forecasters diverge

Canberra expects the windfall to fade. The September Resources and Energy Quarterly forecasts thermal coal export earnings falling from A$31 billion in 2025-26 to A$26 billion in 2027-28. Westpac, writing in August, expected Newcastle to ease towards US$120 in 2027.

Metric

Value

Price (USD/T)

150.40

Daily change

+0.75 (+0.50%)

Weekly change

+1.04%

Monthly change

+3.98%

Year to date

+39.91%

Year on year

+45.38%

Price date

16 October 2026