In 2024, global coal demand climbed to 8.79 billion tonnes, reaching a record high. The “Coal Midyear Update” report released by the International Energy Agency in July 2025 predicts that coal consumption will stabilize at a similar level in 2025, marking a critical turning point for the market.
In the first half of 2025, China’s coal demand slightly decreased by 0.5%, affected by slower growth in electricity demand and increased renewable energy generation.
The contraction in coal demand, coupled with a 3% drop in coal-fired power generation, indicates that China is entering a new phase where renewable energy and improved energy efficiency are curbing coal growth. Despite this, coal remains the cornerstone for ensuring system stability. In India, coal demand in the power sector also declined in the first half of the year (down 2.1% year-on-year), but the IEA expects its full-year growth to reach 1.3%.
Among developed economies, the United States stands out. Benefiting from strong electricity demand and rising natural gas prices, U.S. coal demand surged by 12% in the first half of 2025, with full-year growth expected to be 7%, bringing the total volume to approximately 400 million tonnes.
In the European Union, due to reduced hydro and wind power output coupled with rising natural gas prices, coal use in the EU power sector increased in the first half of 2025 instead of declining.
Looking ahead, the IEA expects global coal demand in 2026 to be slightly below the 2024 level, suggesting a potential downward cycle may begin. However, supply remains ample, with global coal production expected to exceed 8.2 billion tonnes in 2025, led by production increases in China and India, while growth in U.S. production offset reductions in Indonesia.
Against the backdrop of stabilizing demand, supply expansion could exert downward pressure on prices and trade flows. Global coal trade is expected to contract in 2025, the first such occurrence since the COVID-19 outbreak in 2020, and will continue into 2026. If this trend materializes, it would be the first time in the 21st century that seaborne coal volumes have declined for two consecutive years, potentially reshaping the freight market and altering vessel operating patterns.
Indonesia: Export Giant Under Pressure
As the world’s largest thermal coal exporter, Indonesia’s production has surged over the past 20 years, jumping from about 557 million tonnes in 2018 to approximately 775 million tonnes in 2023. According to data from the Ministry of Energy and Mineral Resources, production further increased to about 836 million tonnes in 2024.
China and India remain the two core export markets for Indonesian coal. Chinese buyers have publicly resisted the Indonesian government’s HBA benchmark pricing mechanism, while India, despite fluctuations in its procurement patterns, still maintains substantial import volumes.
In March 2025, the Indonesian government required all coal transactions to use the HBA benchmark price, which is updated twice monthly, as a floor price. This move was widely resisted by exporters and buyers, especially those from China. By the end of August 2025, the regulation was formally revoked. Producers are no longer forced to sell at the benchmark price, but taxes, royalties, and additional fees are still calculated based on the HBA, keeping miners exposed to the risk of the gap between the official valuation and the actual market price.
India: Expanding Production and Improving Efficiency
India’s coal market is entering a phase of significant growth. In FY2025, the country’s domestic coal production was about 1.05 billion tonnes, and it is projected to grow by 42% to nearly 1.53 billion tonnes by FY2030. This expansion is driven by the New Delhi government’s strategy to meet growing electricity demand and reduce dependence on thermal coal imports. Meanwhile, the steel industry is becoming a core engine for coking coal demand. India’s coking coal consumption is expected to increase from about 87 million tonnes to 135 million tonnes by 2030, an increase of approximately 55%. Although India is focusing on enhancing beneficiation capacity and diversifying supply, its coking coal demand will still primarily rely on imports for the next decade.
Besides continuous domestic production expansion and steel demand, shifts in coal trade flows are also reshaping India’s coal supply landscape, with Russia and Australia regaining a dominant share in India’s import market. Since the beginning of this year, Russia’s coal exports to India have increased significantly compared to the first eight months of last year. After peaking at nearly 4 million tonnes in April, export volumes have stabilized, remaining above 2.5 million tonnes per month on average between June and August.
