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Thermal coal prices will likely decline in 2025 and 2026 on lower global consumption, while coking coal prices are expected to drop on weak steel production, analysts say. “Global (thermal) coal consumption is projected to decline in 2025 and contract further in 2026, following a modest 1 per cent increase in the first six months of 2024..
. Additional electricity demand in China, the world’s largest coal consumer, was mostly met by renewables and hydropower, while India drove the rise in global coal consumption in the first half of 2024,” said World Bank’s Paolo Agnolucci, Matias Guerra Urzua and Nikita Makarenko. (Agnolucci is senior economist, Prospects Group of the World Bank, while Urzua is research analyst with the group and Makarenka is research analyst with World Bank.
) “Looking closer at demand, we expect Europe to drive global coal-demand weakness in the coming months...
Rising coal stockpiles and lower demand in Europe has compelled some market participants to resell excess inventory to Asia and Africa, putting additional pressure on global prices,” said research agency BMI, a unit of Fitch Solutions. The Australian Office of the Chief Economist said China achieved its 2030 clean energy target 6 years ahead, consistently breaking records in the rollout of wind and solar capacity. “The continued pace and scale of the rollout of renewables and resulting reduction in thermal coal demand is expected to place downward pressure on prices over the coming years,” it said.
The World Bank research team said global coal consumption is expected to marginally decrease in 2025, and continue falling in 2026, as the transition to renewables and natural gas for power generation accelerates, displacing coal. “Demand in China is poised to decline in both years, while India’s demand growth is expected to slow down. If these forecasts prove accurate, global coal consumption will have peaked in 2024—marking an important milestone in the global energy transition,” they said.
The AOCE said a large-scale rollout of renewables in China and the increased deployment of nuclear power in Japan and South Korea are expected to reduce demand. The World Bank research team sees a 12 per cent fall in thermal coal prices in 2025 and 2026. Currently, Newcastle thermal coal is ruling at $114.
55 a tonne. BMI forecast the Newcastle thermal coal price to be higher than the prices levels before the Covid pandemic and significantly lower than $358/tonne reached in 2022. The AOCE said from around $136 a tonne at the end of 2024, thermal coal price is forecast to ease to around $114 a tonne by 2026.
Coking coal, used in the manufacturing of steel, prices are expected to face a situation of oversupply, with annual production expected to climb to about 560 million tonnes (mt), while consumption is unlikely to break through the 550-mt-mark, commodity data group SunSirs said. BMI said, “As China’s construction industry holds the reigns on coking coal demand through the steel industry (which in turn remains in doldrums), we see little revival in coking coal prices in the coming months.” AOCE said the receding likelihood of a La Niña weather episode has reduced the risks to Australian metallurgical coal supply.
“As a consequence, price forecasts for 2025 have been revised down since September 2024,” it said. SunSirs said coking coal prices will likely continue to decline, and the market operating pressure will increase. The Australian Chief Economist Office said coking coal prices are expected to average around $205 a tonne, but will be subject to high volatility given market illiquidity and the potential for steel trade flows to vary with geopolitical and trade policy changes BMI forecast coking coal price at $220/tonne as global steel production remains grim.
Currently, coking coal prices on Singapore Exchange for April delivery are ruling at $197. BMI said in the longer term, coking coal prices will remain on a downward trend, as global blast furnace steel production slows on the back of the transition to a greener economy. AOCE said increased Indian activity on the spot market presents an upside risk for prices.
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