Exporters around the world have benefited from continuous growth in world seaborne coal trade over the past four years, but the upwards trend seems poised to start reversing soon. Signs of a downturn in 2025 have been multiplying, amid indications of lower import demand in several countries and only limited positive changes elsewhere.
But this outlook is not altogether surprising. The strength of expansion in the past few years has been a greater surprise, given the magnitude of environmental pressures and related policy influences encouraging the movement towards cleaner energy sources. Despite this restraining background, however, coal is still a vital and sometimes the largest energy source in many countries and is expected to remain a valuable fuel for many years.
Although sustained dependence on imported coal supplies in a wide range of countries is likely to be a feature of the global market in the years ahead, downwards pressures are set to persist over the longer term. Within this trend, fluctuations, upwards or downwards from year to year, also are foreseeable for a variety of reasons, affecting coal consumption directly or indirectly through variations in supplies of other energy types. Energy security has also become a greater focus during the past few years, implying additional potential for annual changes in coal usage and imports, with implications for exporters’ activity.
Among recent forecasts of world coal trade, optimism about further growth in 2025 as a whole is not prominent. A flat or more likely decreased volume is seen as being a more realistic outcome. Available global export supplies enabling volumes envisaged seem adequate. As usual, however, considerable uncertainty surrounds how activity by the main buyers and sellers will evolve.
THE ENERGY CONTEXT
Underlying trends in energy consumption and coal usage during the past several years have been disrupted by events which disguised the effects of fundamental influences. The global economic recovery from the coronavirus pandemic was immediately followed by an energy crisis and an inflationary episode, amid rising geopolitical tensions with some impacts on the energy markets. Advantages for coal trade were evident.
The nature and pattern of world economic activity, and more relevantly in coal importing countries, has been of limited benefit. Economic growth rates, with implications for output in industries using coal directly or (via electricity consumption) indirectly, provided some support. World growth in gross domestic product (GDP) was stable at 3.3% last year but, according to the OECD organization’s latest (early June) estimates, a lower 2.9% growth rate is envisaged during 2025. Possible changes in international trade policies are a large unpredictable element, possibly with further negative consequences.
Potential for a more unfavourable outcome is clear. OECD economists suggested a few weeks ago that “global economic prospects are weakening, with substantial barriers to trade, tighter financial conditions, diminishing confidence and heightened policy uncertainty projected to have adverse impacts”. The deterioration in prospects unfolding over recent months has been quite a dramatic change, not widely anticipated..
Looking at specific forecasts for countries which are major coal importers, one of the most positive contributions is India’s GDP growth, expected to remain vigorous in 2025 at 6.3%, similar to last year’s rate. By contrast China’s growth is seen as experiencing a continued slowdown from 5.0% last year to 4.7%. In Japan the economy saw almost no increase in the past year and is likely to grow only minimally at 0.7% in 2025. Within the euro area, enlargement was slow at under 0.8% last year and may reach only 1.0% in the current year.
One interpretation of these expectations is that positive effects on energy consumption from economic activity trends this year are likely to prove limited. Nevertheless, consequences are not always obvious, because other influences will modify the impact of any change in the broad pattern of economic activity.
In some, probably most, countries coal import demand reflects other develop - ments which are more visible influences on changes in the pace. Varying trends in domestic production of coal (where this aspect is relevant) can be influential, especially in China and India, where changes in these supplies are often a prominent element determining foreign coal purchases. Another aspect already mentioned is the focus — both longer term and in the short term — on alternative energy sources. Environmental regulations designed to limit or reduce coal burning are a notable feature. A heightened emphasis on energy security in many countries is also evident.
EXPORT MARKETS OVERVIEW
Prospects for coal exporters in 2025 as a whole suggest that for many it will be hard to maintain last year’s volumes. During a period of predominantly downwards pressure on import demand, export decreases are likely. Changing trade patterns may provide advantages for a number of suppliers, especially when competitiveness is improved by other countries’ exports falling.
Seaborne trade developments in the past few years underlined how political decisions in importing countries — often reflecting pressure designed to cut carbon emissions and reduce air pollution — are shaping coal trade. Decisions of this type are foreseeable in principle, but the precise timing and extent of impact is not always predicted correctly, adding impetus to speculation surrounding trade volumes and patterns. Currently the ongoing war involving one of the biggest coal exporters, and sanctions imposed in reaction, are compounding uncertainty about political influences on the coal market.
An example of a cautious outlook for 2025 was published recently. Calculations by commodity analysts at the Australian Government Department of Industry, Science and Resources suggest that world coal trade — mostly seaborne but including land movements — could decline by 38mt (million tonnes) or 3%, from 1,515mt last year to 1,477mt this year.
This forecast envisages differing performances in the two parts. Steam or thermal coal trade, the largest part comprising over three-quarters of the total, is forecast to decline by 37mt (3%) to 1,129mt in 2025. In the metallurgical or coking coal sub-sector comprising the remainder, the current year’s volume is estimated at 348mt, a small decline of one million tonnes.
Among forecasters, opinions do not always align, reflecting differing views about uncertainties surrounding the main influences and the magnitude of foreseeable changes. Since the above calculations were published a few weeks ago, further evidence has pointed towards a larger world coal trade annual reduction, although opinions vary, and conclusions are tentative. There is much uncertainty in particular about foreign purchases by China and India, together comprising almost half of world imports.
Broadly, potential for supplying countries either individually or together to raise exports during 2025 seems very limited. Greater competition among exporters probably will be a feature. Direct commercial competition reflecting availability, quality and price will influence varying success in achieving results. The trade policy of governments, especially affecting imports from Russia that are under sanctions prohibiting purchases in a number of countries, also are likely to be instrumental in shaping trade movements.
Domestic influences in exporting countries are reflected in coal production, availability and quality of export supplies. These factors include the scale, efficiency and profitability of mining activity and output, the type of coal produced, and the proportion absorbed by domestic demand. Production costs and internal transport capacity for moving coal from mines to loading ports and the costs involved have an impact on competitiveness and pricing in the international market.
OUTLOOK FOR INDIVIDUAL EXPORTERS
The accompanying table includes major suppliers to the world coal market, showing export totals for 2024 and trends in preceding years. These seven large exporters’ volumes represent over 95% of all world sea trade in coal. A feature is the large and often contrasting annual changes among individual countries. Another notable characteristic is how the market is dominated by two countries. Indonesia and Australia contribute over two-thirds of world export supplies.
Coal exports by number one supplier Indonesia (predominantly steam coal) increased in 2024 by 38mt (7%) from the previous year to reach 557mt, according to these calculations. The total included large quantities of low-grade lignite mainly carried to China for power station use. Recently signs have suggested that during 2025 the upwards trend may be hard to sustain, and a lower volume could be seen. A possibility that China’s overall coal import demand will be much reduced implies unfavourable consequences for Indonesia.
Australia’s exports in both main segments — steam coal and coking coal — are very large. In 2024, the 362mt total was 8mt (2%) higher, comprised of 210mt steam coal (58% of overall volume) and 152mt coking coal (42% of the total). In 2025 an overall increase of 4mt or 2% to 366mt is forecast by AGDISR, mainly due to an envisaged rise in coking coal quantities, but other forecasts suggest a smaller rise may occur.
The third-largest supplier to the world market for seaborne coal is Russia, mainly selling steam coal grades which comprised three-quarters of exports in the past twelve months. Last year’s export total was156mt, a 13mt or 8% decline. During 2025 some further weakening may be seen but forecasts are largely speculative. In particular, uncertainty surrounds the impact of international sanctions that have reduced buying by several importers, while other importers not imposing sanctions have raised purchases. Despite the competitive advantages of having low-cost, high-quality coal available, the ability of Russian exporters to continue directing extra sales towards these non-sanctioned markets seems unclear.
Exports of coal from the United States (excluding shipments to Canada) were again higher last year when the total increased by 7mt (8%), to reach 93mt. Within this quantity steam coal and coking coal comprised similar proportions at 44mt and 49mt respectively. Indications suggest that in 2025 the total may be down, and AGDISR calculations point to a possible 10% reduction. The USA is generally viewed as a price-sensitive swing supplier in world markets, because most production is high-cost and therefore more vulnerable to competition.
Seaborne coal sales by South Africa, mainly consisting of steam coal, decreased last year. The total was about 3% below the previous year’s level at 71mt and for 2025 estimates vary between a flat outcome and another limited decrease. Restrained throughput at the Richards Bay terminal, handling most of the country’s shipment, has reflected various logistical problems encountered in transporting coal from mines to the port.
Exports from Colombia mainly comprise steam coal grades. In 2024 the total increased by 5mt (10%) to 53mt, but some forecasters envisage that this year’s volume will not maintain the improved performance and could fall back. Several influences may restrict production and supplies, implying difficulty in supporting current export levels.
Canada is a significant supplier, mainly exporting coking coal. Seaborne exports (excluding shipments within North America to USA) were flat last year at 30mt. In 2025 the total may diminish slightly, according to some estimates. Another, relatively minor, supplier is Mozambique, which exported 4mt of coking coal last year, similar to volumes seen in previous years. Signs suggest that potential for increases in the years ahead is limited.
EXPORTERS FACING HARDER TIMES
A more difficult global market for many coal exporting countries seems likely to unfold over the years ahead. Clear signs of diminishing import demand in numerous countries are visible, although a few positive elements also are features. The downwards trend may begin in 2025, based on tentative estimates and indications emerging in the past few months. Potential for a large reduction in the current year is apparent, especially if there is a sharp decline in purchases by one of the biggest importers.
Year-to-year changes in the volume of global seaborne coal trade may not always be negative because of changing circum s - tances in the energy markets of individual importing countries. But the general evolution expected to emerge is a fading pattern which is likely to affect most exporters, albeit unevenly. Environmental pressures and accompanying regulations have profoundly unfavourable implications for coal usage and trade.
Decarbonization strategies are being applied vigorously in many countries. Competition from alternative energy sources is growing, especially renewables, with some of these benefiting from falling costs. Government measures in numerous countries are designed to deter or prevent coal usage in the longer term.
Assessments of prospects for global coal import demand and the participation of exporters during 2025 and into next year reflect background assumptions. The outlook for economic activity around the world suggests that restraints have become more influential, with adverse implications for some energy- and coal-consuming industries. Geographical coal trading patterns remain disrupted by the war in Ukraine and its wider consequences for both importers and exporters in the world energy market.
Expectations of shrinking elements of the coal trade import demand forecast for 2025 focus especially on China and Europe, although India also is a potentially weaker buyer. In Europe the trend of reducing or eliminating coal use, especially in power stations, is ongoing but the rapid phase apparently has ended and further declines could be slower to emerge. The impact on imports in the next couple of years may be relatively small.
In China, the number one importing country with about 30% of the world seaborne coal imports total, potential for a downturn in 2025 is evident. Although massive, these imports form a small part, around 8%, of the Chinese coal market which is mainly supplied by domestic mines. Limited changes upwards or downwards in domestic coal production, consumption and stocks sometimes have a dispropor - tionate impact on imports. Foreign purchases also partly reflect government policy changes. Domestic market changes supporting coal imports may weaken this year, with signs already visible, causing foreign purchases to fall.
Among other Asian countries, adverse pressures are evident, especially where changes weakening coal use are clear or are foreseeable. The outlook often reflects government energy and environmental policies, prioritizing increased use of alternative energy sources. However, the pattern is not uniformly negative, because in several smaller Asian importing countries consumption growth is still evolving, providing opportunities for some coal exporters.
Although a global coal trade weakening in 2025 has become more plausible, implying a tougher market for exporters, the longer term trend is still surrounded by uncertainties. The broad direction seems predictable. But year-to-year forecast changes in global trade volumes tend to be heavily based on speculation and guesses, both for the total and for individual countries involved. Assumed changes will require frequent modification amid changing circumstances. Estimates of coal sales by exporting countries will reflect the complicated patterns unfolding.