The volume of thermal coal traded in seaborne markets is forecast to fall over the rest years prior to 2030, as demand is anticipated to be under pressure from accelerated green energy transition, accordingly to a quarterly report recently published by Australia's Department of Industry, Science and Resources.

The quarterly report estimated global trading volume of thermal coal will gradually decrease from 1.17 billion tonnes in 2024 to 1.008 billion tonnes by 2030, with an average decrease of 2.4%.

It noted two key factors are expected to drive this change. One is the decarbonization, which includes the promotion of alternative energy sources including renewables (especially wind and solar), nuclear and gas.

The second is increased domestic production. Energy security has become an increasing focus across the world. Countries with domestic reserves (such as China and India) are increasing production and mine capacity to reduce import reliance.

However, there are uncertainties. Frequent extreme weather events (e.g. El Nino/La Nina) may push up coal demand in the short term, while geopolitical conflicts (e.g. uncertain supply from Russia) or changes in the cost of renewable energy technologies will further exacerbate volatility.

Main importers

Global imports are expected to remain dominated by China and India, with the two economies representing over half of global import demand. The impact of falling Chinese imports is unlikely to be fully met from increased demand from India and Southeast Asian markets — contributing to shrinking global thermal coal trade.

China's thermal coal import demand has already presented downward trend, due to increased domestic production and its targets for carbon peaking and neutralization. Although the peak of Chinese coal consumption has been forecast for some time, it has been delayed time and again.

Unpredictable output from alternative energy sources (e.g. solar, wind, and hydro), combined with overall growing energy demand, and decreased domestic production, have all sustained China's thermal coal imports.

It is worth noting that although China accounts for 63% of the global planned coal-fired power projects, it doesn't necessarily mean additional coal consumption.

China is building a large-scale power reserve system to ensure the dispatches of traditional energy when renewable energy is unavailable. Meanwhile, China's coal-fired power plants are undergoing technical improvements to increase flexibility and assist in providing peaking power capacity.

By 2030, China's thermal coal imports are forecast to drop from 421 million tonnes in 2024 to 257 million tonnes.

Over the outlook period, India will require more energy to support GDP growth, a rising population, urbanization, and increased electrification. In 2024, India generated an estimated 1,800 TWh of electricity, and this will rise 34% to 2,400 TWh by 2030.  

However, despite the large increase in forecast energy requirements, this will likely only partially translate to increased thermal coal import demand. India has ambitious targets for the deployment of renewable energy capacity.

By 2030, India's thermal coal imports are likely to increase only by 10 million tonnes.

Japan, South Korea, and China's Taiwan, as traditionally high-quality coal consumers, are subjected to revival of nuclear power generation and energy efficiency improvement. In 2024, imported thermal coal from the three regions accounted for nearly 25% of the global trade volume.

However, with the continuous increase in nuclear capacity in Japan and South Korea, it is expected that the demand for imported thermal coal will slightly decrease by 10 million tonnes during the outlook period.

In addition, the industrialization of emerging economies in Southeast Asia such as Vietnam and Indonesia will drive demand up. But global pressure for carbon emission reduction and financing restrictions have led to the cancellation or postponement of many coal-fired power projects, resulting in a significant reduction in the expected growth of in these countries. It is expected that they will ramp up their imports during the outlook period, but scale of remains uncertain.

Main exporters

Seaborne exports are expected to fall over the outlook period, as demand declines. The decline is expected to be more acute for coals with lower calorific value. Burning low-quality coals emits toxic substances which cause smog and respiratory illnesses. Most coal plant units in operation today use higher grades of coal that have a cleaner burn. While demand for higher grade coals is also expected to decline over the outlook, the pace is expected to be slower than for lower quality coals.

As the world's largest exporter of thermal coal, Indonesia tends to drive some supplies to domestic market. In 2024, the Indonesian government increased the coal production quota by nearly 30% compared to the target set in 2020, which contributed to the growth of production and exports, with exports up by 5% year on year.

The Indonesian government is considering adjusting royalty rates for mineral and coal mining commodities, which may affect its competitiveness. It is expected that Indonesian coal exports may decrease as global demand declines, but domestic demand increases.

With declined demand in China, Indonesia's coal production would also fall slightly, mainly in low-quality coal production. 

However, Indonesia is likely to absorb most of its lost export share itself, driven by economic growth and the expansion of energy-intensive metal-processing industries. By 2030, Indonesia's power demand is expected to increase by nearly 40%, while thermal coal exports will decrease by 4.6%.

Although seaborne supply and demand are expected to remain relatively balanced during the outlook period, changes in Russian supply remain a key uncertain factor. In addition to logistics issues, Russian supply has also faced transportation restrictions in the past three years, as rail capacity has been diverted to high value exports (including metallurgical coal) and the movement of military assets. 

Although Russian coal exports are still subject to sanctions, the expansion of railway capacity and new channels to China will help alleviate this restriction. If the restricted Russian supply returns to the global market, it will put downward pressure on prices and may force some high cost producers to reduce production.

In 2024, Australia's thermal coal exports performed strongly, reaching a historic high of 209 million tonnes, thanks to favorable supplying conditions, and high demand from Japan and China.

But by 2030, this figure is expected to drop, but overall condition will remain desirable as its high-CV coal grades and stable export market will remain preferred.

The report predicts that Australia's thermal coal exports will decrease from 209 million tonnes in 2024 to 200 million tonnes in 2030, but market share will remain stable or slightly increase.

Prices

The report shows the Newcastle 6,000 Kcal/kg NAR coal price averaged $110/t in the first two months of 2025, but dropped below $100/t at the start of March. The primary reason behind recent low prices is high inventory levels in Asia during a relatively mild winter. The Newcastle 6,000 Kcal/kg NAR coal price has hit a new low.

Energy security concerns have prompted some Asian economies to build inventories ahead of seasonal peaks. In addition, possible La Nina has increased the likelihood of supply disruptions in the southern hemisphere occurring simultaneously with winter peaks in the northern hemisphere.

Looking ahead, as production costs rise, thermal coal prices will remain stable. During the outlook period, the spot price of thermal coal is expected to show a moderate downward trend, which is consistent with global supply surplus.

While price volatility is expected to be high over the outlook period — as economies grapple with unpredictable supply and demand — prices are still likely to converge downwards towards the cost of production.

Risks are mostly weighted to the downside, with the potential for additional supply from Russia flowing into China, and cheaper gas prices from additional global LNG supply.

Overall, by 2030, the global thermal coal market will gradually weaken. The energy transition, as the dominant factor, will continue to suppress coal demand through policy guidance and technological progress.

However, due to considerations of energy security, this downward trend may be temporarily delayed in certain regions.