Coal at the crossroads: lower prices and smaller volumes

• Prices for seaborne thermal coal have fallen to a four-year low in Asian markets.
• The largest importers of the raw material, namely China, India and Japan, buy smaller amounts of fuel for power plants.
• Prices for thermal coal supplied by major exporters Indonesia and Australia have been on a downward trend since October 2024.

Kpler analysts point out that China, the world's largest importer of thermal hard coal, saw its imports fall to 22.72 million tonnes in April 2025, compared with 23.84 million tonnes in March.

China's thermal coal imports decline

In the first four months of 2025, China imported 91.56 million tonnes, down 13.1% from 105.4 million tonnes in the same period a year earlier.

The drop in imports occurred against the backdrop of record-high domestic coal production. It reached a record level of 440.58 million tonnes in March, up 9.6% year-on-year. In the first quarter of 2025, it amounted to 1.2 billion tonnes.

The combination of rising coal production has led to weakening domestic coal prices in the Chinese market. The falling domestic price has also weighed on import prices, which have had to fall to remain competitive. Australian coal fell to $69.98 a tonne on May 2, the first time since May 2021 that the price has fallen below $70. Coal prices from Indonesia have also fallen.

India's coal market recovery expected to continue

India, which has been boosting domestic production and recently reported passing the billion tonne mark, imported 15.31 million tonnes in April 2025, the most since May last year.

But, as Kpler points out, India's thermal coal imports fell 6.7% to 53.33 million tonnes in the first four months of 2025. However, the market recovery should continue. The government there has ordered power plants to operate at full capacity due to the upcoming heatwave.

Japan, the world's third-largest coal importer, also saw lower shipments in the first four months of 2025. The country mainly imports higher-quality coal from Australia.

Seaborne coal import prices weaken as volumes fall

In Asian markets, prices for coal imported by sea are weakening with lower volumes. China's approach will have a big impact on the market and prices. It is set to produce around 4.8 billion tonnes this year.

Reduced imports of the raw material by China will be reflected in its prices. Coal accounts for about 94 percent of China's total fossil energy resources (oil and natural gas account for only 2.5 percent and 3.5 percent, respectively). In order to increase energy security, the Middle Kingdom uses coal to produce oil and gas substitutes, as well as chemicals. The fall in the price of black gold provides an additional market incentive in China for the expansion of coal processing into chemicals.

The desire to ensure energy security is the main reason for increasing coal mining. Although wind and solar power production has increased in China, these sources are dependent on weather conditions. As a result, coal is the main source of energy, ensuring its stable supply.