Global coal demand is set to hit a record in 2026 as higher gas prices and Middle East disruptions drive a shift towards coal in some power markets, according to the International Energy Agency (IEA).
India’s coal demand is expected to rise 4.2% to 1.353 billion tonnes in 2026, with stronger electricity and industrial demand supporting consumption even as the country reduces its reliance on imported thermal coal, according to the International Energy Agency (IEA).
The increase will also make India the primary source of growth in global metallurgical coal demand this year, as rising pig iron production to meet stronger steel demand drives coking coal consumption, the IEA said in its Coal Mid-Year Update 2026 released on Thursday.
Steel demand lifts coking coal use
Global demand for coking coal is expected to remain broadly stable in 2026 as regional trends offset one another. India, however, is expected to account for the main increase, the report said.
“Rising pig iron production to meet stronger steel demand is expected to drive metallurgical coal demand in India. Most of the additional steel output is expected to come from the blast furnace-basic oxygen furnace (BF-BOF) route, which relies on coking coal,” the IEA said.
The trend is important because India has limited supplies of high-quality coking coal. The IEA expects stronger Indian imports in 2027 as steel production expands and domestic availability remains constrained. That increase is expected to offset weaker metallurgical coal demand in China and other mature economies.
Thermal coal imports fall
India’s coking coal requirements are rising even as thermal coal imports move in the opposite direction.
The IEA projects India’s seaborne thermal coal imports to fall to around 160 million tonnes in 2026, from 167 million tonnes in 2025. “High inventories and efforts to substitute imported coal with domestic supplies are weighing on purchases by utilities and industrial consumers,” it said.
India is also increasing domestic coal output. Production is expected to reach a record 1.095 billion tonnes in 2026, with captive and private mines driving growth while Coal India Ltd’s output growth moderates. India is projected to set another production record in 2027.
Power and industry support demand
The 4.2% increase in overall coal demand comes despite rapid growth in renewable power.
Higher electricity demand is expected to support coal use in 2026. The IEA also expects a strong El Niño to increase cooling requirements and reduce hydropower availability, providing additional support to coal-fired generation.
Industrial demand is another important driver. Pig iron, direct reduced iron and cement are identified by the IEA as India’s three largest coal-consuming industrial sectors.
Global coal demand hits record
Globally, coal demand is forecast to rise 1.2% in 2026 to a record 8.94 billion tonnes, reversing the IEA’s previous forecast for a decline.
The revision reflects, among other factors, higher natural gas prices linked to disruptions from the Middle East conflict, which are encouraging gas-to-coal switching in some power markets. The IEA also expects El Niño-related weather conditions to support coal demand in some countries.
The outlook for 2027 remains uncertain. The IEA said if LNG flows through the Strait of Hormuz recover and gas prices ease, global coal demand could decline 0.4% to 8.91 billion tonnes. A prolonged disruption to LNG flows could instead support higher coal use.
For India, the IEA’s outlook points to a two-speed coal market: domestic production is increasingly replacing imported thermal coal, while stronger steel demand keeps high-quality coking coal an important import requirement.
