Global coal demand is likely to remain broadly unchanged this year and next, despite short-term fluctuations across several major markets in the first half of 2025, according to the IEA's latest update on the sector released today.
The Coal Mid-Year Update shows that global coal demand increased to a new all-time high in 2024 of around 8.8 billion tonnes, up 1.5% from 2023, as rising consumption in China, India, Indonesia and other emerging economies more than offset declines in advanced economies in Europe, North America and northeast Asia.
However, several of those trends reversed in the first half of 2025 as demand declined in China and India due to weaker growth in electricity consumption and strong increases in power generation from renewable sources. By contrast, coal use grew by around 10% in the United States as robust growth in electricity demand combined with higher natural gas prices drove up coal consumption for power generation. In the European Union, coal demand was broadly flat, with lower consumption by industry offsetting higher demand from electricity generation.
Despite these short-term variations, the report notes that the underlying structural drivers of the world's coal use remain broadly unchanged. As a result, it forecasts a slight increase in global coal demand in 2025, followed by a marginal decline in 2026, bringing demand to just below 2024 levels. This remains consistent with the forecast published in December in Coal 2024, the IEA's annual coal market report, with the main changes of note since then including downward revisions for global economic growth and the important energy policy shift in favour of coal in the United States.
Over the whole of 2025, coal demand in China is expected to decline slightly, by less than 1%. In the United States, demand is forecast to grow by around 7%, and in the European Union, it is set to decrease by nearly 2%.
"While we have seen contrasting trends in different regions in the first half of 2025, these do not alter the underlying trajectory of global coal demand," said IEA Director of Energy Markets and Security Keisuke Sadamori. "We expect the world's coal consumption to remain broadly flat this year and next, in line with our previous forecast, although short-term fluctuations remain possible in different regions due to weather conditions and the high degree of economic and geopolitical uncertainty. As in past years, global coal trends continue to be shaped overwhelmingly by China, which consumes almost 30% more coal than the rest of the world combined."
The power sector remains the dominant source of coal demand in China and globally. But industrial use of coal in China, particularly in steel and chemicals, is also large enough to influence global trends.
Global coal production is expected to rise to a new record in 2025, driven by continued output growth in China and India, which rely on coal for ensuring their energy security priorities. However, the report anticipates a decline in global coal production in 2026, as high stock levels and lower prices begin to weigh on supply.
Coal trade volumes, which rose steadily in recent years, are projected to contract in 2025 for the first time since the 2020 Covid-related downturn. This decline is expected to continue into 2026, which would mark the first consecutive two-year drop in global coal trade volumes this century, according to IEA data.
Amid persistent oversupply, coal prices have fallen back to levels last seen in early 2021, putting economic pressure on producers. While Indonesia is expected to register the largest drop in output by volume in 2025, Russian coal exporters are facing the most acute economic strain due to current market conditions.
