Only 17% of coal dug up around the world is traded across borders, compared with 20% of all natural gas and virtually every load of LNG. Indonesia is the biggest exporter and imposes production quotas to prop up prices. Australia is the main global benchmark for export prices. Most Australian coal typically ends up in Asia.
Many large energy importers in Asia, in particular China and India, still dig up and burn lots of coal domestically. Their mines' output can be increased to offset an LNG shortfall in a matter of months, and they have plenty of idle coal-fired generation that can be quickly brought back online owing to a gradual transition to less filthy gas and cleaner renewables. Japan, South Korea and Taiwan, all big importers of both LNG and coal, have less domestic production to fall back on.
During the gas crisis following Russia's full-scale invasion of Ukraine in early 2022, European countries—many of which had all but stopped mining coal—had no choice but to turn to the international market. Russian coal could not be easily diverted east for lack of adequate railways. The resulting fall in global supply from the world's third-biggest exporter pushed the Australian benchmark up two and a half times.
After the closure of the Strait of Hormuz in March 2026, Japan and South Korea lifted restrictions on older coal-fired power plants that were being phased out. The Philippines said it intended to rely more heavily on coal-fired output. Prices for Australian coal rose by 25%, with Asian prices rising three times as fast as European prices and five times as fast as American ones. Indonesia said it might ease its production quotas to profit from the uptick in demand.
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