Top Asian LNG markets boost coal use as Iran war limits supply

• Japan's coal-fired power surged 11.1% in April (fastest pace in a year) while gas-fired power plunged 12.9%; South Korea's coal power jumped 39.7%, the sharpest rise since August 2019
• Asian spot LNG prices have surged 62% since the Iran war began, compared to only a 13% rise in Newcastle coal benchmark prices
• May coal imports by Asian countries excluding China and India are set to rise 9.4% year-over-year to 31 million metric tons, with South Korea and Japan imports up over 50% and 20% respectively

Summary: Asian LNG Markets Shift to Coal Amid Iran War Supply Disruptions

Major Asian LNG importers Japan and South Korea significantly increased coal-fired power generation in April and early May following supply disruptions from the Iran conflict, which impacted facilities in Qatar, the world's second-largest LNG supplier.

Key Data Points:

Japan (April):

• Coal-fired power surged 11.1%, fastest pace in a year
• Gas-fired power plunged 12.9% to 16,447 GWh
• Nuclear supply fell 2.7%
• May coal-fired output rose 18.3% annually

South Korea (April):

• Coal-fired power jumped 39.7% to 10,733 GWh—sharpest increase since August 2019
• Gas-fired power declined 6.4%
• Nuclear supply dropped 14.6%
• May coal-fired output increased 14.7%

Pricing Impact:

• Asian spot LNG prices surged 62% since the war began
• Coal prices rose only 13% (Newcastle benchmark)

Import Trends:

• May coal imports across Asia (excluding China/India) expected to rise 9.4% annually to 31 million metric tons
• Vietnam's electricity-grade coal imports hit record 5.4 million tons in April
• South Korea and Japan May coal imports on track for 50%+ and 20%+ annual increases, respectively

Market Implications:

The fuel-switching demonstrates coal's growing role as a security asset rather than purely economic choice. Japan's increased coal usage displaced approximately 4 LNG cargoes in April alone—half its expected annual coal-driven LNG displacement. The trend is expected to continue as long as the conflict persists, reshaping Asian power generation patterns and supporting coal demand despite climate concerns.