Driven mainly by strong growth in the People’s Republic of China and Hong Kong (hereafter, “China”) of 6%, or 276 million tonnes (Mt), and in India (9.2% or 105 Mt), global coal demand grew by 2.6% in 2023, to reach a new record of 8.7 billion tonnes. The increases in China and India more than offset significant declines in the European Union (-22.5% or -103 Mt) and the United States (-17.3% or -81 Mt)

Coal consumption grew in both electricity generation and industrial sectors, where the iron and steel industry is the largest consumer. Power generation from coal increased by 1.9% in 2023 to 10 690 terawatt-hours (TWh), setting a new record. As a result, coal continues to be the largest source of global electricity generation globally. 

A recovery in hydropower in China combined with significant expansion of wind and solar is expected to slow the growth of coal power generation globally in 2024, albeit with contrasting trends across different regions. Since April, hydropower production in China has rebounded, but electricity consumption in China has grown strongly due to robust increases in demand both in the services sector and industry. At the same time, coal-intensive heavy industries in China (i.e. cement and steel) continue to struggle due to the sluggish real estate sector.

Coal demand increased in both India and Viet Nam in the first half of 2024 due to strong electricity demand and low hydropower output. Meanwhile, India’s economy is growing rapidly, pushing up industrial coal consumption. However, India’s coal demand growth is expected to slow in the second half of 2024, as the unusually strong increase in demand in the first half of the year was driven by exceptional weather conditions.

In the United States, where coal use has been in decline since 2008, coal demand remained almost unchanged year-on-year in the first half of 2024 due to lower switching from coal to natural gas in the electricity sector. In the European Union, after a 22% decline in coal demand in 2023, we expect a decrease of 19% in 2024, mostly driven by the electricity sector, where the expansion of renewables continues while demand remains relatively weak.

Based on our current assumptions, we expect global coal demand to remain broadly flat for the full year. However, weather, economic activity, natural gas prices and other factors could still result in slight fluctuations. This is particularly true for China’s electricity, sector which accounts for one-third of global coal demand. 

The electricity sector accounts for two-thirds of global coal demand. In most countries, coal demand in the power sector fluctuates more significantly than in industrial sectors, largely because there are fewer substitution options for industrial coal use. As such, changes in global coal demand trends are mainly driven by the electricity sector. At the same time, the increasing impacts of unforeseen extreme weather events is making electricity demand harder to predict in the short term.

At a regional level, coal demand in advanced economies is clearly on a downward trend – while in some emerging economies, further growth in demand is very likely. This leaves China as the key variable. Given the most recent data, global coal demand is expected to remain broadly unchanged in 2025 compared with 2024, at around 8.7 billion tonnes. 

In 2023, production by the three largest coal producers, accounting for 70% of global output, grew considerably: China (3.4%), India (12%) and Indonesia (13%). As a result, global coal production reached an all-time high of 8.9 billion tonnes.

China expanded coal production to guarantee energy security and reduce price volatility. In India, energy security is also a high priority, as frequent shortages in the past have turned attention toward reducing imports. Indonesia’s production, despite the increasing domestic need, is export oriented. As such, its production grew in 2023 to meet demand in international markets. In the United States, the fourth largest producer, coal output declined by 2.8%, much less than demand, due to higher exports and stock building. In the Russian Federation (hereafter, ‘Russia’) data show only a slight decline in production, despite exports being subject to sanctions. 

Our analysis for the first half of 2024 shows a slight decline in global coal production of 0.7% year-on-year, driven mostly by China, which recorded a decline of 1.7%. Responsible for half of global coal output, China has intensified safety checks in Shanxi province, the country’s largest producing region, which accounted for 1.3 billion tonnes of coal output in 2023. Pressure to increase domestic production has declined due to slowing demand growth, healthy stocks across the supply chain, and higher imports. India continues to encourage production to avoid coal shortages and reduce imports. Meanwhile, Indonesia aims to produce 720 Mt in 2024, but has mining approvals for more than 900 Mt. Indonesia’s coal production will ultimately depend on international demand, in particular, that of China.

Assuming no new safety inspection programmes, Chinese production is set to recover partially in the second half of 2024 to result in a slight decrease of 0.8%. In India, the strong push to increase production continues and even intensifies. Coal India, the cornerstone of domestic production, is increasing production at growth rates close to 10%. However, production by captive blocks and commercial mines is growing much faster. In Indonesia, we expect little growth after last year’s surge.

In the United States, coal production is estimated to have declined 17% in the first half of 2024, partially due to a higher comparison base in 2023 and high stocks in power plants. Despite coal demand in the United States remaining flat in the first half of 2024 rather than decreasing, US coal production is set to continue to decline because of high stocks. In Russia, production is forecast to remain stable in 2024, with domestic demand still robust and exports expected to decline slightly. In Europe, coal production is set to decline. Against this backdrop, our analysis indicates a marginal decrease in global coal production in 2024.

The decrease of around 50 Mt in two key importing areas, Europe and Northeast Asia (Japan, Korea and Chinese Taipei) was more than offset by growth in India, Southeast Asia and China in 2023. Chinese imports reached unprecedented levels of 480 Mt, surpassing the former record by 140 Mt or 40%. This was due to strong demand, stock building, and lower prices than in 2021-2022, which made imports more attractive despite China’s boost in domestic coal production since October 2021. This pushed the global international coal trade volume above 2019 highs, surpassing 1.5 billion tonnes for the first time. Seaborne coal trade also reached an all-time high of 1.38 billion tonnes.

All major exporters increased volumes in 2023, except for Russia, due to sanctions. Indonesia became the first exporting country to exceed 500 Mt in a year, demonstrating its unmatched flexibility to ramp up production and exports. Mongolia increased exports to 70 Mt, more than doubling the 2022 figure and more than quadrupling 2021 exports, propelled by improvements in infrastructure and the demand in China for cheap coal.

The weak coal demand in Europe and Northeast Asia will result in lower coal imports. Japan, Korea, Chinese Taipei, Germany and other countries in the European Union (EU) are among those in which coal imports, in particular thermal coal, are expected to decline. By contrast, in China, India and Viet Nam, we expect coal imports to increase. The analysis shows trade volumes in 2024 will surpass 2023 volumes marginally and hit a new record. However, this comes with an important caveat, notably the potential for volatile swings in China’s import volumes if there are policy changes. 

On the supply side, Indonesia, and to a lesser extent, Australia, Colombia and the United States, are expected to supply the additional volumes required to meet others’ import demand and offset reduced Russian exports. Mongolian exports to China, mostly coking coal, are expected to grow.

The unusual market conditions of recent years, due to the Covid-19 pandemic, the economic rebound, Russia’s invasion of Ukraine, and the subsequent energy crisis, have led to unprecedented energy price fluctuations. The impact on coal was significant, resulting in very high prices and volatility as well as exceptional differences between qualities and geographical regions. Since 2023, coal prices have remained higher than before the Covid-19 pandemic but remain in a normal range. During the last year, thermal coal prices have been less stable than in the 2017-2019 period. Generally, they have been slightly higher, pushed up by cost inflation and some disruption due to sanctions affecting Russia, which remains the world’s third largest coal exporter.