UBS metals and mining analyst Myles Allsop wrote in a note this week that thermal coal prices face a number of factors colliding at once that could push prices higher over the next few months: 

We see a number of risks that could drive up thermal coal prices over next few months, with 1) demand supported by a hot summer (increasing demand for cooling), the high gas price (due to the ME conflict) and potentially a cold winter in the Northern Hemisphere due to the 'super El Niño' (conditions to peak in Dec), and 2) supply at risk from Chinese safety checks, Indonesian government policy, Russian diesel shortages, and potentially weather-related disruption, e.g. droughts and water shortages. 

We note that most of these factors would be short-term and think the market should return to balance from March.

Geographically:

China: Imports of seaborne coal rose to 24Mt in Jul-26, ~3Mt higher than the 1H average. The Shanxi accident in May triggered a round of safety inspections across the coal industry, with raw coal production falling to its lowest level in 58 months in Jul-26, with imports (of low-CV Indonesian and AU coal) rising and domestic coal prices recovering; we see potential for the market to remain disrupted for the next 3-6 months (LINK).

India: Imports have been subdued due to monsoon-weakened power demand and pro-domestic coal policy; however, low plant stocks and post-monsoon industrial restocking should support renewed demand for SA and US coal from Sept.

Indonesia: Thermal coal exports are estimated at 38Mt in Jul-26, down from ~40Mt in June due to supply constraints (tightening production quotas under the RKAB framework and stricter enforcement of 25% DMO, LINK) and logistical bottlenecks (low water levels along the Barito River in Central Kalimantan disrupting barging). We note the bottlenecks should ease with the onset of the rainy season in Sept.

JKT: In Japan, thermal generation has stepped up due to the heatwave and a nuclear outage (Tonati #3 due to restart in Aug-26), while Taiwan has maintained adequate LNG supply (despite the restart of two retired 600MW units); in South Korea the five state-owned utilities are being merged into one entity, with coal purchasing set to shift towards more long-term contracts (from spot).