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Global coal demand is likely to remain
broadly unchanged this year and next, despite short-term fluctuations across
several major markets in the first half of this year, the International Energy
Agency’s (IEA’s) latest update
on the sector, released on July 24, shows.
The ‘Coal Mid-Year
Update’ shows that global coal demand increased to a
new all-time high of about 8.8-billion tonnes in 2024, up 1.5% from 2023, as
rising consumption in China, India, Indonesia and other emerging economies more
than offset declines in advanced economies in Europe, North America and
north-east Asia.
However, several of those trends reversed
in the first half of this year as demand declined in China and India owing to
weaker growth in electricity consumption and strong increases in power
generation from renewable sources.
By contrast, the IEA notes, coal use grew
by about 10% in the US as robust growth in electricity demand combined with
higher natural gas prices drove up coal consumption for power generation.
In the EU, coal demand was broadly flat,
with lower consumption by industry offsetting higher demand from electricity
generation.
Despite these short-term variations, the
report notes that the underlying structural drivers of the world’s coal use remain broadly unchanged.
As a result, it forecasts a slight increase
in global coal demand this year, followed by a marginal decline in 2026,
bringing demand to just below 2024 levels.
The IEA says this remains consistent with
the forecast published in December in ‘Coal 2024’, the IEA’s yearly coal market report, with
the main changes of note since then including downward revisions for global
economic growth and the important energy policy shift in favour of coal in the
US.
Over the whole of this year, the report
indicates, coal demand in China is expected to decline slightly, by less than
1%. In the US, demand is forecast to grow by about 7%, and in the EU, it is set
to decrease by nearly 2%.
“While we have seen contrasting trends in
different regions in the first half of 2025, these do not alter the underlying
trajectory of global coal demand,” says IEA energy
markets and security director Keisuke Sadamori.
“We expect the world’s coal consumption to remain broadly flat this year and next, in
line with our previous forecast, although short-term fluctuations remain
possible in different regions due to weather conditions and the high degree of
economic and geopolitical uncertainty.
“As in past years, global coal trends
continue to be shaped overwhelmingly by China, which consumes almost 30% more
coal than the rest of the world combined.”
The report notes that the power sector
remains the dominant source of coal demand in China and globally. But
industrial use of coal in China, particularly in steel and chemicals, is also
large enough to influence global trends.
Global coal production is expected to rise
to a new record this year, driven by continued output growth in China and
India, which rely on coal for ensuring their energy security priorities.
However, the report anticipates a decline
in global coal production in 2026, as high stock levels and lower prices begin
to weigh on supply.
Coal trade volumes, which rose steadily in
recent years, are projected to contract this year for the first time since the
2020 Covid-19-related downturn.
This decline is expected to continue into
2026, which would mark the first consecutive two-year drop in global coal trade
volumes this century, according to IEA data.
Amid persistent oversupply, coal prices
have fallen back to levels last seen in early 2021, putting economic pressure
on producers.
While Indonesia is expected to register the
largest drop in output by volume this year, Russian coal exporters are facing
the most acute economic strain due to current market conditions, the IEA says.