JIMBARAN, Indonesia — Asia dominates the global thermal coal market but the future is looking increasingly split between robust domestic markets in the three heavyweights of China, India and Indonesia and a gradually fading seaborne market.
The three countries account for just over 70 percent of global coal production and they have been rapidly expanding output in recent years to meet rising energy demand.
Outside of these three, production is concentrated in Australia, Russia, the United States and South Africa, and all four of those nations are exporters to the seaborne market.
However, while domestic thermal coal demand in China, India and Indonesia is expected to increase in coming decades, the same cannot be said for the seaborne market.
The divide was in evidence at this week’s CT Asia conference, formerly known as Coaltrans Asia, held on the Indonesian island of Bali.
Speakers representing the governments of India and Indonesia painted bullish pictures of how coal consumption will increase in coming years, even going so far as to float new domestic uses for the fuel, such as gasification in order to produce chemicals.
Analysts at the event were also comfortable in predicting that China, which produces about 60 percent of the world’s coal, will also continue to use the more polluting fuel as part of its efforts to reduce reliance on expensive imported fossil fuels such as crude oil and liquefied natural gas (LNG).
China’s production of all grades of coal hit a record high of 4.04 billion metric tons in 2024, according to official data, having doubled from just over 2 billion in 2006.
Output may notch a fresh record this year, with production in the first eight months rising 3 percent from the same period last year to 3.17 billion tons.
India’s output exceeded 1 billion tons for the first time in 2024, and given the expansion of private mining blocs, it is expected to reach 1.2 billion to 1.4 billion in the next few years.
Indonesia’s total coal output also hit a record high in 2024 of 836 million tons, exceeding a government target of 710 million as miners took advantage of record Chinese imports.
However, production in Southeast Asia’s biggest economy is expected to slip this year, largely because China’s imports are falling amid higher domestic production and the increasing deployment of renewables such as solar and wind.
All three major US stock indexes registered record closing highs for a third straight session on Monday,
The problem for seaborne coal exporters is that the two biggest buyers, China and India, are also the two biggest miners and both have informal policies to maximise domestic output and minimize imports.
While it’s unlikely that imports will drop to zero, they look to be on the way down as more domestic coal is produced and the infrastructure to move it is improved.
Outside of China and India there are further concerns for seaborne thermal coal exporters.
A reliable market for higher energy coal has been Japan and South Korea, but these markets are also likely to see declining demand in coming years.
Japan is restarting nuclear plants and building renewables such as solar, and coal could be further constrained by LNG, which is likely to become cheaper by 2027 dragged down by a wave of new supply from Qatar and the United States.
At a presentation on Tuesday, S&P Global Commodity Insights analyst Pritish Raj showed forecasts that coal would drop from around 28 percent of Japan’s electricity generation in 2025 to just 9 percent by 2050.
South Korea is also planning on increasing nuclear generation, and similar to Japan will be able to burn more LNG in preference to coal should LNG prices decline as expected.
There are a few bright spots for seaborne thermal coal, such as increasing imports in Vietnam, Thailand and Malaysia.
Vietnam’s seaborne imports of thermal coal hit 43.33 million tons in 2024, according to data compiled by commodity analysts Kpler, which was a record high.
