Japan's coal-fired power generation jumped 11.1% in April while gas-fired output fell 12.9%, after the war in Iran disrupted LNG shipments and pushed northeast Asian spot gas prices sharply higher. South Korea saw an even larger shift, with coal-fired output up about 40% year on year and gas generation at multi-month lows. Analysts say coal switching and industrial curtailment are the immediate responses as buyers hunt alternative LNG cargos and draw down inventories; market watchers expect demand to rise in June when summer cooling and the end of scheduled nuclear maintenance will further test regional balances.

Japan and South Korea turned back to coal in April and into early May after supplies of liquefied natural gas were pinched by the Iran war, according to market and grid data. In Japan, coal-fired generation rose 11.1% in April while gas-fired output fell 12.9% to about 16,447 GWh, and nuclear output edged lower, down 2.7% for the month, the data show.

Coal up, gas down: the dispatch picture

The dispatch changes were stark. South Korea saw coal-fired generation climb about 39.7% in April to roughly 10,733 GWh versus the prior year, the largest monthly jump since August 2019, while its gas-fired production slipped to multi-month lows and nuclear fell 14.6% in April, according to the same exchange and grid-level figures. Market monitors and shipping data also point to an increase in coal shipments and imports to key buyers as utilities secure fuel for baseload and flexible plants.

Analysts say coal switching is the dominant short-term lever available. Anthony Knutson, global head of coal at Wood Mackenzie, put it bluntly, saying Asian countries are "opening the tap on coal generation" to offset gas price and supply risk. Andre Lambine, a power analyst at S&P Global Energy, warned that the longer the war continues, the more fuel switching will occur. Fei Xu, a senior gas analyst at ICIS, estimated that Japan’s extra coal output in April displaced roughly four LNG cargoes.

That calculation helps explain why utilities have raced to secure coal. Spot LNG prices in northeast Asia have risen dramatically since the conflict began, rising by roughly 60-70% on some measures, while international seaborne thermal coal prices have climbed more modestly in the low double digits. The price gap makes coal a more attractive immediate stopgap for generators that can switch fuels.

Mastheads

How the supply shock spread and what can't change

The supply shock stems from constrained flows through the Strait of Hormuz and the removal of material export capacity from the market, according to multiple accounts. Some reports say about 17% of Qatar’s LNG export capacity was knocked out in the early weeks of the conflict, and tightened regional flows have drained available cargoes. One Columbia University analysis, cited only in that piece, further claimed that almost 90% of LNG that transited the Strait of Hormuz in 2025 was destined for Asian countries.

That same Columbia analysis also said Japan plans to lift a 50% capacity-factor restriction on some coal-fired units, a measure noted only in that single analysis.

Traders and grid operators have responded in three ways. First, coal switching at power plants has been the fastest tool to replace lost gas volumes where plants are dual-fuel capable. Second, buyers have scrambled for alternative LNG cargos and drawn on inventories to cover near-term needs. Third, some demand-side measures have begun, including industrial curtailment in price-sensitive markets, according to the coverage.

Even so, analysts note coal can't entirely replace the lost gas volumes. Coal provides a buffer for baseload and flexible generation, but it doesn't replicate the operational profile or emissions footprint of gas. The region’s options are therefore constrained to restarting idled thermal units, accelerating nuclear restarts where doable, and trimming industrial gas demand while longer-term supply routes are negotiated.

Estimates differ on how much seaborne coal trade has risen. A DBX Commodities projection cited an annual 9.4% rise in thermal coal imports outside China and India to about 31 million metric tonnes, while shipping association data reported elsewhere put a 27% year-on-year surge in coal shipments to South Korea, Japan and the EU for March-April. The divergence highlights that available trade and shipment tallies are still being reconciled as markets react.

Market participants say the immediate pressure is on spot LNG markets and on inventories that will need replenishing before the summer. Analysts quoted across the coverage expect seasonal demand to rise in June as summer cooling picks up and as utilities finish scheduled nuclear maintenance, a convergence that will further test the balancing of LNG and coal supplies in northeast Asia.

Related Articles

June is the next hard test. As cooling demand rises and planned nuclear maintenance completes, utilities will need more fuel for peak demand. How much additional LNG can be found, and whether coal imports rise further, will determine if the region can meet summer needs without broader industrial curtailment.

This article was created with AI assistance.