Asia's seaborne thermal coal market in August was shaped by divergent regional demand, frequent supply disruptions and a higher price floor, with weather factors partially offsetting traditional peak-season support.

Asian seaborne thermal coal imports totaled 73.08 million tonnes in August, down 9.14% year on year and 2.36% from the previous month, Kpler vessel-tracking data showed. Cumulative imports over January-August reached 562 million tonnes, down 2.2% year on year.

China's seaborne thermal coal imports fell notably in August, with a pronounced year-on-year decline. Imports stood at 24.00 million tonnes, down 19.65% year on year and 5.84% month on month. January-August cumulative imports totaled 182 million tonnes, down 7.49% year on year.

The month-on-month decline in China's August imports was mainly attributed to above-average rainfall that significantly boosted hydropower output while suppressing cooling demand, prompting power plants to temporarily slow procurement of imported coal. However, China's coal market fundamentals remained tight, with coal consumption not declining from a year earlier and demand growth widely expected to be deferred until winter.

Kpler noted that China's power sector coal consumption in July was nearly flat year on year, and daily coal consumption at six major coastal power plants stayed above 900,000 tonnes for most of August, indicating resilient underlying demand despite lower imports.

More importantly, strict mine safety inspections have led to notable output declines in key producing regions. The domestic supply shortfall was not fully offset by imports but balanced through inventory drawdowns, pointing to potentially higher winter restocking demand and price elasticity.

India's seaborne thermal coal imports reached 10.27 million tonnes in August, down 4.85% year on year and 10.94% month on month. Cumulative imports over January-August totaled 96.88 million tonnes, down 12.23% year on year.

India's power demand is running well above seasonal levels. August coal-fired generation is estimated to have risen nearly 14% year on year to approximately 114 TWh, with coal consumption climbing about 10% to 77 million tonnes. However, domestic coal output fell over 8% year on year to around 64 million tonnes due to monsoon rains, sharply widening the supply-demand gap.

This has driven Indian power plant coal inventories down roughly 50% year on year to about 27 million tonnes in August from approximately 53 million tonnes a year earlier, with meaningful recovery unlikely before the fiscal year ends in April 2027.

Kpler expects Indian buyers may have to return to the seaborne market for large-scale procurement from October to replenish rapidly depleting inventories. This timing, coinciding with the winter peak season, could become a core driver supporting Asian coal prices in the fourth quarter.

Japan's seaborne thermal coal imports totaled 10.27 million tonnes in August, down 9.54% year on year but up 9.47% month on month. South Korea's imports reached 8.43 million tonnes, down 5.32% year on year but up 11.33% from the previous month.

Japan and South Korea, traditional demand centers for high-grade thermal coal, showed lackluster import performance in August. Japan's power demand was weak due to milder-than-usual summer temperatures, with coal consumption falling for a second consecutive month. However, with Japanese LNG import prices persistently above coal and winter approaching, the economics of gas-to-coal switching are strengthening, providing price support for high-CV Australian coal.

South Korea saw increased coal-fired output amid nuclear plant maintenance and delayed commissioning of new units. Nuclear capacity is set to temporarily rise by about 2,300 MW in December, which may briefly squeeze coal-fired generation, though high LNG procurement costs will continue to support coal's marginal competitiveness.

Southeast Asian thermal coal import demand diverged in August. Vietnam's seaborne imports totaled 3.51 million tonnes, up 6.2% year on year but down 24.7% month on month. Malaysia's imports reached 3.38 million tonnes, up 0.24% year on year and 9.38% month on month. The Philippines imported 3.29 million tonnes, up 2.38% year on year and 1.11% from the previous month.

Vietnam's hydropower output fell about 10% year on year over January-July, increasing reliance on coal-fired power. The first 700 MW unit at the Quang Trach plant has entered trial operation, further boosting coal consumption and import demand. Philippine demand remained steady, though the country's continued moratorium on new coal projects means limited future demand growth.

On prices, supply-demand tensions in the seaborne market have been fully reflected in market pricing. From late August to early September, CFR prices for 6,000 Kcal/kg NAR coal at ARA ports for October-November loading exceeded $135/t, though most of the gas-to-coal switching premium has been absorbed by the market, limiting further upside.

In contrast, FOB Newcastle prices have shown greater resilience on tighter spot demand in the Asia-Pacific region. The Newcastle premium over ARA remains below historical averages and is expected to widen again in the coming months.

While short-term price momentum has moderated, Asian thermal coal prices are expected to remain elevated through the remainder of 2026 as winter stockpiling approaches and India returns to the market, with supply risk premiums set to be the dominant pricing factor through the fourth quarter.