Asia's seaborne thermal coal imports are on track to rise for a third consecutive month in July, driven by increased buying from major consumers China, Japan and South Korea ahead of peak summer power demand.

Seaborne thermal coal trade in Asia accounts for roughly 90% of the global total. July imports are estimated at 75.37 million tonnes, up 2.14% year on year and 3.41% month on month, according to Kpler vessel-tracking data.

Thermal coal, primarily used for power generation, has seen sustained demand in Asia this year due to its price advantage over liquefied natural gas (LNG). Disruptions to Qatari LNG shipments, which account for about 20% of global supply, amid Middle East geopolitical tensions have sent spot LNG prices surging, further boosting coal's competitiveness.

China imports supported by output constraints

China's July thermal coal imports are estimated at 25.06 million tonnes, up 2.56% year on year but down 5.41% from June, Kpler data showed. The increase is driven by constrained domestic production and higher power generation, as thermal coal and LNG do not directly compete in China's power sector.

The country's raw coal output fell 9.7% year on year to 380 million tonnes in June, following safety inspections triggered by a deadly accident at a Shanxi mine on May 22. While domestic output is expected to recover in the coming months, import levels are likely to remain strong.

China's coal-fired power generation rose 0.5% year on year in June, while January-June output was up 2.9%. The China Electricity Council forecasts full-year 2026 power consumption growth of 5-6%, a pace that renewable energy expansion, despite accelerating, is not yet sufficient to meet.

Japan, South Korea boost summer imports

Japan's July thermal coal imports are estimated at 9.27 million tonnes, up 31% month on month and the highest since February, data showed. South Korea's imports are estimated at 8.13 million tonnes, up from 6.38 million tonnes in June and the highest since September last year.

Stronger Asian demand has pushed up thermal coal prices. The Newcastle 6,000 Kcal/kg NAR price rose above $133/t in the week to July 24, a four-week high. Australian high-CV coal mainly supplies Japan and South Korea, while Chinese buyers favor lower-CV coal from Indonesia, Russia and Australia.

India imports slide to low

India's July seaborne thermal coal imports are estimated at 11.51 million tonnes, down from 12.05 million tonnes in June and marking a third consecutive monthly decline to a year-to-date low.

Weaker-than-normal monsoon rains have pushed power demand to record highs, which could spur Indian buyers to increase imports if seaborne coal prices fall. Domestic coal supply has also come under pressure, with days of coal inventory at power plants falling to 14 by mid-July, well below the typical 3-4 weeks.

A slight softening in Indonesian coal prices in recent days could boost Indian power plant import demand in the coming weeks, though a more sustained price decline may be needed for a significant rebound in import volumes.