Coal price

The main driver of the global coal market is Chinese power-generation demand. China accounts for about 55% of global coal consumption and, although its domestic production is around 4.5 billion tonnes a year, power plants in coastal provinces such as Guangdong, Zhejiang and Fujian typically use imported coal because of logistics. Chinese coal imports rose to a record 548 Mt, mainly from Indonesia, which exports about 550 Mt globally, and Australia. A cold winter or a dry summer that cuts hydropower output can move the Newcastle benchmark quickly.

The second major buyer is India, the world’s second-largest coal-consumption market. State miner Coal India produces about 800 Mt domestically, but that is below the needs of the country’s power sector. India therefore imports about 237 Mt of coal a year. Much of this is low-calorific-value Indonesian thermal coal at 3,800–4,200 kcal/kg, but higher-calorific-value Newcastle-type coal also has a significant share in coastal power plants. Coal-demand swings during India’s monsoon season from June to September, rail capacity for domestic coal transport and the rupee exchange rate are direct pressure points for import prices.

Over the longer term, the energy transition and carbon pricing are the market’s main sources of uncertainty. The EU ETS carbon price, currently around EUR 70–90 per tonne of CO₂, adds EUR 150–200 per tonne to the operating cost of European coal-fired power plants. European coal imports, reflected in the ARA benchmark, have therefore fallen structurally. The ban on Russian coal imports has reshaped trade flows: Europe has switched to Colombian, South African and US coal. At the same time, emerging markets such as Vietnam, Indonesia and Bangladesh are building new coal-fired capacity, while global seaborne coal trade has risen to more than 1,545 Mt.