After years of post-COVID growth, coal demand hits a plateau in 2025, with regional shifts and falling prices reshaping global energy dynamics.
Updated figures on global coal consumption
According to the Coal Market Update – Mid-Year 2025 released by the International Energy Agency (IEA), global coal demand is expected to remain flat over the next two years, after reaching a new record high of 8.79 billion tons in 2024, up 1.5% from 2023.
The post-COVID expansion phase brought cumulative growth of over 16% since 2020, but that trend appears to be leveling off starting in 2025. The IEA projects a modest 0.2% increase this year, followed by a slight decline in 2026, bringing consumption just below 2024 levels.
The energy sector remains the dominant driver of global coal demand, with coal-fired electricity generation reaching 10,766 TWh in 2024. Metallurgical coal, used in steelmaking, also accounts for a significant share, despite a global decline of 1.6%.
Asia-Pacific continues to lead the market, with China, India, and ASEAN countries representing 77% of global coal demand in 2024, more than double their share at the turn of the century.
Regional dynamics in global coal consumption
During the first half of 2025, regional coal demand showed divergent trends. In China, the world’s largest coal consumer (nearly 5 billion tons annually), demand fell by 0.5%, driven by slower industrial output and a surge in renewable energy.
India also saw a drop in the first half (-2.1% in power generation), due to an early monsoon season and an unfavorable comparison with 2024’s heatwave-driven peak. However, a rebound expected in the second half should bring annual demand to a modest 1.3% increase.
In contrast, the United States experienced a 12% rise in coal demand during the first half, with a projected 7% increase for the full year. This is fueled by higher electricity consumption and elevated natural gas prices.
In the European Union, coal demand rose in early 2025 to offset weak wind and hydropower generation, with Germany posting an 11% increase in coal-fired electricity. Yet the long-term trend remains downward: annual EU coal demand is expected to drop by 1.6%, a smaller decline compared to the sharp drops of 11% in 2024 and 25% in 2023.
Production rises, global coal trade declines
While coal demand holds steady, production is set to hit a new record in 2025, exceeding 9.2 billion tons. China and India remain top producers, with estimated outputs of 4.8 and 1.11 billion tons, respectively.
Indonesia, the world’s third-largest producer, will reduce output by 10% due to lower prices and weaker international demand.
Marginal increases are expected in the United States (+2%) and South Africa (+3%), while production in Europe continues to shrink. A 13% decline is forecast for 2026, driven by steep cuts in Germany and Poland.
After a record-setting 2024 with 1.55 billion tons of coal traded globally, the trend is reversing. For the first time since 2020, the IEA projects a contraction in coal trade in 2025, with thermal coal exports expected to fall by 7%. This is mainly due to reduced imports from China (-76 Mt) and India, as well as cuts in Japan, South Korea, and the EU.
Another decline is expected in 2026, marking the first back-to-back annual drop in coal trade this century. Exceptions include Vietnam, forecasted to grow coal imports by 4% in 2025 and 5% in 2026, and some South African exports heading to the European market.
Prices fall as coal supply outpaces demand
Despite stable demand, global coal supply remains abundant and inventories are full, pushing prices down. In the first half of 2025, coal prices dropped to levels not seen in four years.
In China, thermal coal prices have dropped significantly. On the international market, benchmark prices, such as Newcastle coal, hover around $100 per ton. In southern China, prices have dipped as low as $76 per ton.
This market environment is placing heavy pressure on producers. Glencore has announced production cuts in Colombia, while in Russia, more than half of coal companies are operating at a loss, despite government support.
Coking coal, used in steel production, is also under pressure. Premium Australian metallurgical coal remains below $200 per ton. Logistical bottlenecks and weaker demand from Asian countries are keeping prices low.
While prices have declined, volatility remains. Forecasts for the coming years suggest modest increases, but prices are expected to stay far below the peaks seen during the 2022 energy crisis.
A roadblock to energy transition
Coal remains the largest contributor to energy-related global CO₂ emissions. Despite the rapid expansion of renewable energy, coal continues to play a central role in energy security, especially in Asian markets, slowing the pace of transition.
The IEA notes that, while short-term trends vary by region, the overall trajectory is still shaped by structural forces that are not easily reversed in the short term.
