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Global coal trade faces back-to-back declines in 2026

 

The global coal market is on the cusp of an extraordinary shift, preparing for what the International Energy Agency (IEA) in its Coal Mid-Year Update 2025 describes as "an unprecedented occurrence in this century":  a second consecutive year of decline in trade. 

For 2026, the IEA forecasts a continued reduction in China's import demand, which will be the primary driver of this sustained contraction, falling by an additional 14m tonnes. This persistent downward pressure is set to reduce overall global trade volumes to an estimated 1.42bn tonnes. The report notes that "the expected oversupply in 2025 is likely to further weigh on global coal import demand", indicating a surplus of available coal on the market that will naturally depress import requirements into the following year. 

Beyond China, India, another coal behemoth, is also projected to see its imports decrease to around 219m tonnes.

This is largely due to the continued expansion of its robust domestic coal production, which increasingly fulfils its energy needs and displaces the necessity for foreign supply.

Furthermore, established markets in Europe, Japan, Korea, and Chinese Taipei are expected to demonstrate a sustained reduction in their coal import requirements, reflecting a broader, structural decline in coal demand across these regions as they pivot towards alternative energy sources and enhance energy efficiency. Amid this widespread contraction, only Vietnam stands out as an outlier among the top six global importers, with its imports projected to rise to approximately 64m tonnes in 2026, indicating continued demand growth within its burgeoning power sector.

 

Indonesia’s loss

On the export side, Indonesia, a crucial supplier to Asian markets, is poised to face the most significant impact. Its thermal coal exports are forecast to fall by a substantial 35m tonnes compared to 2025 levels, a direct consequence of the widespread softening in demand. Russia's exports are also expected to decline by 3m tonnes year-on-year, although the IEA cautions that the outlook for Russian coal remains highly uncertain, subject to the evolving dynamics of international sanctions and the degree of government support provided to its industry. 

Australia, a key global supplier, is projected to see a further, albeit modest, decrease of 1m tonnes in its thermal coal exports in 2026.

Cumulatively, total global thermal coal exports are anticipated to decline by 4% to 1,053m tonnes, underscoring the contracting nature of the international thermal coal trade.

In a more stable segment, global metallurgical coal exports are projected to largely stabilise at 351m tonnes in 2026. This resilience in the coking coal market is noteworthy, with Australia anticipated to gain 5m tonnes in exports, and US exports expected to rise by 1m tonnes, suggesting that while the broader coal market is shrinking, the demand for steel-making coal retains a degree of robustness.

The precursor to this 2026 forecast is this year, which itself is projected to mark the beginning of the downturn, reversing the historic highs of 2024. The IEA's report indicates that global coal trade in 2025 is set to decline significantly, again largely driven by China's reduced import appetite, which is expected to fall by around 76m tonnes. 

This substantial drop is attributed to "a combination of sluggish coal demand, healthy domestic production and high stockpiles" within China. India's thermal coal imports are also projected to decline, dipping to just over 150m tonnes, primarily due to an increase in domestic production, mirroring the longer-term trend expected in 2026. 

Japan and Korea, significant Asian importers, are expected to collectively reduce their coal demand by 14m tonnes for the full year, a consequence of higher nuclear output and persistent economic uncertainty. Overall, global thermal coal trade is expected to decrease to 1.1bn tonnes in 2025, representing a 7% decline. 

 

Drop in exports

Export-wise, Indonesian thermal coal exports are projected to decline by at least 10% in 2025 due to weakened demand from its main markets. Colombian exports are also forecast to fall by 11m tonnes, a direct result of low international prices making exports less attractive. In contrast, South African exports are expected to increase slightly, buoyed by rising European demand, particularly due to periods of low wind power generation. 

The metallurgical coal market will also feel the pinch in 2025, with export growth set to reverse, declining by 7% to 345m tonnes. This reflects broader economic uncertainty that is dampening global steel demand. 

The IEA points out that "the decline is primarily driven by weakening demand from China, the world’s largest steel producer", which is expected to significantly impact Mongolian metallurgical coal shipments, exclusively destined for China. 

Australian exports are forecast to decline by 5m tonnes due to anticipated weather disruptions, while Russian and US exports are projected to decrease by 4m tonnes and 6m tonnes respectively.

This anticipated downturn follows a period of robust expansion. Last year stands as a landmark one, with global coal trade reaching an all-time high of 1.55bn tonnes, surpassing the 1.5bn tonnes mark for the very first time. Thermal coal trade alone rose by 28m tonnes to 1,180m tonnes, primarily driven by voracious import demand in Asia, particularly from China. 

China's imports in 2024 surged by a significant 14% to 548m tonnes, with the IEA noting: "This volume is more than double that of India, the second-largest importer," underscoring its unparalleled influence. 

Vietnam notably emerged as a key importer in 2024, joining the top five with a 16% increase in its purchases. 

On the supply side, Indonesia's thermal coal exports grew by 6% to 549m tonnes, largely fuelled by China's strong demand. Australia's exports also saw a healthy 3% rise to 209m tonnes, while Colombia's exports expanded by 8% to 59m tonnes. However, Russia’s thermal coal trade “faced headwinds" in 2024, grappling with sanctions, logistical disruptions, and declining profitability. 

Global metallurgical coal trade also hit an all-time high of 369m tonnes in 2024, supported by robust demand from Asian steel-producing nations. Australia maintained stable metallurgical coal exports at 153m tonnes, while Mongolia's metallurgical coal exports increased by 5% to 56m tonnes, all destined for China. Both the US and Russia increased their metallurgical coal exports by 11% each, reaching 52m tonnes and 49m tonnes respectively.