International coal prices showed a strengthening trend since the second quarter of 2026, driven by multiple factors including the Middle East conflict and supply disruptions in China. But how long can this situation last?

Global thermal coal prices are near their peak and are expected to decline gradually from 2027, while the most in-demand coking coal grades could rise 20-30% by 2029, according to analysts interviewed by Russian state news agency TASS.

Alexander Kotov, consulting partner at NEFT Research, told TASS that global thermal coal consumption will decline over the next two years.

In the second quarter of 2026, global energy prices rose amid the ongoing Middle East conflict. Although the crisis did not cause a coal shortage, it pushed up seaborne freight costs, exerting indirect pressure on the market.

Other factors driving prices higher included output constraints from Chinese coal mine accidents and subsequent safety inspections, as well as supply disruptions from Colombia and South Africa. In addition, Kotov said the Indonesian government began controlling coal export volumes from June 1, adding further pressure on the industry.

"This brought volatility back to the Asian market. As a result of the resulting imbalance, thermal coal prices in Asia surged sharply, exceeding levels seen two years ago." the expert said. He expects the global thermal coal market to enter a cyclical downturn in 2027-2028. "The factors that supported prices in 2026 are gradually fading."

It is claimed that once China's domestic output stabilizes and Indonesian export flows adapt to the new allocation regulatory mechanism, a structural surplus will emerge in the market. In Europe, thermal coal demand will continue to decline as new renewable energy capacity comes online.

Other analysts interviewed by TASS gave similar assessments, saying coal prices in the Asia-Pacific region are near their peak and will remain at that level for several months before gradually declining from 2027.

Sergey Kazachkov, partner in the Investment and Capital Markets Department at Russian consultancy Kept, noted that according to Russian Railways data, Russia's coal exports rose about 7% in January-July 2026, indicating rising market demand.

However, he said the current growth is not a long-term trend but the result of a series of force majeure events, including the Middle East conflict, safety inspections in China following a May mine accident that halted production at some mines, and production restrictions imposed by the Indonesian government.

He also noted that despite new price drivers in Asia, coal exports remain constrained by a shortage of capacity on eastbound routes and the high cost of alternative routes.

Kazachkov said that according to consensus forecasts from Economist Intelligence Unit (EIU) analysts, global coal prices are expected to remain close to current levels in 2026 and decline gradually from 2027. Therefore, absent new drivers, Asian coal prices can be considered near their peak.

Another analyst, Nikolai Maslikov, argued that the current price rally is not driven by a fundamental recovery in demand. "As for Russian coal, we continue to believe that thermal coal is under pressure from expensive logistics, while coking coal is stagnating amid the lack of a significant recovery in the metallurgical sector." he emphasized.

On coking coal, Kotov holds a different view. He believes prices for the most sought-after coking coal grades could rise 20-30% from current levels by 2029. The market will undergo a structural transformation over the next three years.

According to him, the global metallurgical coal market began growing in the second quarter of 2026 due to supply shortages. Constrained Chinese supply is one of the main causes of the shortage, while Middle East geopolitical tensions and increased Indian purchases also played a role.

Kotov noted that all these factors will support prices at least through the end of this year. In addition, after the early autumn monsoon season ends, Indian metallurgical giants will return to the seaborne market for active purchasing.

In his view, between 2027 and 2029, the geographic pattern of coking coal demand will shift. India is expected to become the main importer, with purchases rising from 76 million tonnes last year to 89 million tonnes in 2027 and reaching 104 million tonnes by 2030.

Kotov also noted that coking coal purchases by other Southeast Asian countries, mainly Vietnam, are expected to increase. Meanwhile, China's consumption will gradually decline due to a slowdown in construction. And in the longer term, Europe's demand for metallurgical coal will remain weak given the downward trend in pig iron output.

Kotov emphasized that taking into account these trends and the inevitable rise in production and logistics costs, NEFT Research forecasts that prices for the most popular coking coal grades could rise 20-30% from current levels by 2029.