CRU Group has outlined a scenario in which benchmark thermal coal prices could substantially exceed $200 per tonne by the end of 2026, contingent upon multiple upside risks manifesting together, according to an analysis by author Glen Kurokawa published on crugroup.com. The analysis identifies two primary risk factors that could drive thermal coal prices sharply higher. The first involves a prolonged Middle East conflict scenario in which the Strait of Hormuz remains closed until at least the end of 2026, which would push liquefied natural gas (LNG) prices significantly higher.
CRU estimates that under this scenario, LNG prices could reach approximately $40 per million BTU, or roughly €120 per megawatt-hour, in December when demand peaks. Historically, between January 2021 and December 2023, each $1 per mmBtu increase in the average East Asian and European LNG benchmark was associated with a $6 to $20 per tonne rise in the FOB Newcastle 6,000 kcal/kg spot assessment. CRU assumes a sensitivity ratio of 5:1 as a slightly conservative estimate, accounting for ongoing and potentially escalating Middle East conflict.
Under this assumption, thermal coal prices would exceed $200 per tonne by year-end 2026. The second critical risk factor concerns Indonesian coal production. Indonesia remains the world's largest thermal coal exporter, yet the Indonesian government's 2026 coal production target of 600 million tonnes is substantially below its 2025 target of 740 million tonnes.
If this lower target is strictly enforced, exports in the fourth quarter of 2026 would be severely constrained to minimal levels. CRU notes that Indonesian domestic consumption and exports have already been higher year-over-year during the first three quarters of 2026. A dramatic reduction in Indonesian export availability would create acute supply tightness relative to projected global demand.
Although CRU states it is not possible to quantify the exact price impact directly from the Business Costs curve as supply shrinks far below demand, historical analysis of price behavior under prior supply-constrained conditions indicates this risk alone could push the FOB Newcastle 6,000 kcal/kg spot assessment well above $200 per tonne. When both upside risks materialize simultaneously—elevated LNG prices driven by Middle East disruption and restricted Indonesian coal exports—FOB Newcastle 6,000 kcal/kg thermal coal spot prices would far exceed $200 per tonne. CRU emphasizes that thermal coal prices would rise to their highest level since 2022 under this scenario, even if only some of the identified upside risks materialize.
CRU acknowledges there are downside price risks to thermal coal as well, including potential impacts from a Super El Niño weather event. However, the consulting firm's assessment suggests upside risks currently carry greater weight. CRU's base case price forecast, to be discussed in the upcoming edition of the CRU Thermal Coal Market Outlook, is characterised as more moderate than the upside scenario described in this analysis.
Source: crugroup.com