Coal Market Insights – September 2025: Shifting Flows Reshape Global Trade
- zarra6
- Sep 25
- 2 min read
25 September 2025 Signal
Global Perspective
Global coal demand reached 8.79 billion tons in 2024, marking a new record. According to the IEA’s Coal Mid-Year Update 2025 (July, 2025), consumption is expected to plateau at similar levels in 2025, reflecting a critical shift. .
In China, coal demand fell by around 0.5% in the first half of 2025, as electricity demand growth slowed and renewable generation expanded. This contraction, alongside a 3% decline in coal-fired power generation, suggests that China is entering a phase where renewables and efficiency gains can begin to curb coal growth. Coal, however, still underpins system stability. In India, first-half demand also dipped (–2.1% y/y in the power sector), yet the IEA projects a 1.3% annual increase for 2025.
By contrast, the United States is an outlier among advanced economies. Coal demand rose 12% in H1 2025, and full-year growth is projected at 7% (to ~400 Mt), driven by robust electricity demand and elevated natural gas prices. In the European Union, coal use increased in the power sector during the first half of 2025, reflecting weaker hydro and wind output as well as higher gas prices.
Looking ahead, the IEA expects global demand in 2026 to fall marginally below 2024 levels, signaling the beginning of a potential downward phase. However, supply remains abundant: coal production is projected to exceed 9.2 billion tons in 2025, led by China and India, with incremental U.S. growth offsetting Indonesia’s decline. This supply expansion, in the context of flat demand, could exert downward pressure on prices and trade flows. Global coal trade is forecast to contract in 2025, the first decline since the COVID-19 shock of 2020, with another drop expected in 2026. If confirmed, this would mark the first consecutive two-year decline in seaborne coal trade in the 21st century, a development that could reshape freight markets and alter vessel employment patterns.
Indonesia: Export Giant Under Pressure
Indonesia, the world’s largest exporter of thermal coal, has sharply expanded output over the past two decades, from about 557 million tons in 2018 to about 775 million tons in 2023, according to the Ministry of Energy & Mineral Resources. In 2024, production rose further to around 836 million tons. China and India remain Indonesia’s two biggest markets. Chinese buyers have openly resisted the government’s HBA benchmark pricing, while India has continued importing large volumes, albeit with periodic shifts in buying patterns.
In March 2025, the government required that all coal transactions use its benchmark price (Harga Batubara Acuan, HBA) as a minimum, updated twice a month. The rule faced resistance from exporters and buyers, particularly in China, and in late August 2025, the government rescinded the requirement. Producers are no longer obliged to sell at benchmark levels, but taxes, royalties, and levies continue to be calculated on the HBA, leaving miners exposed to the spread between official valuations and actual market prices.
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