Global coal markets at a crossroads: soft demand, resilient supply, and a power sector in transition

This blog post is part of a special series based on the October 2025 Commodity Markets Outlook, a flagship report published by the World Bank. This series features concise summaries of commodity-specific sections extracted from the report. Explore the full report here.

The price of Australian coal rebounded by $6 per metric ton (mt) (6 percent) in 2025Q3 from the previous quarter. The increase in 2025Q3 was driven by strong Asian demand owing to a number of heatwaves in the region and lower exports from Australia and Indonesia. Recent data indicate a further price increase, as unusually warm temperatures have boosted demand in China. 

Global coal demand declined by approximately 1 percent in 2025H1 (y/y), with changes across major consuming regions reflecting differences in renewable electricity output and power demand. In China and India, coal power generation declined due to lower electricity consumption and increased renewable energy production. Conversely, 2025H1 U.S. coal consumption rose, driven by elevated power demand and higher natural gas prices. Global coal consumption is projected to remain broadly stable in 2026 and 2027. Higher output from renewable electricity sources will weigh on coal demand, despite rising electricity demand from increasing use of electric vehicles (EVs), air conditioning, and data centers. Among the major coal consumers, demand in 2026 and 2027 is expected to increase only in China and India, offsetting consumption reductions in the European Union and the United States.

Coal supply continued to grow in 2025H1 (y/y), primarily due to higher output from China and the United States. China’s coal production increased by 6 percent (y/y), recovering from a period of reduced output, while production in the United States expanded by 8 percent in the first six months of 2025. Contributing to upward price pressures, especially in 2025Q3, adverse weather disrupted production in Australia and Indonesia, the two largest exporters, with the latter also affected by mining incidents. Output remained stable in India while falling in Russia, reflecting international sanctions and financial strains within the sector. Global coal production is forecast to shrink in 2026, with India the only major producer expected to grow its coal supply. International coal trade is projected to edge lower in 2026, in line with falling imports in Asia. This will weaken exports from Australia and Indonesia, the two largest exporters, and contribute to lower prices.

The Australian coal price is projected to fall by 21 percent in 2025 (y/y), decrease by a further 7 percent in 2026, and recover in 2027, while risks to coal prices remain broadly balanced. The forecast assumes subdued global economic growth and adequate supply conditions, while also accounting for the prospect of stronger power demand and the continued expansion of renewable power sources. Upside risks include unexpected increases in China’s coal consumption, more frequent or severe extreme weather events in key exporting countries, and higher-than-expected power demand from data centers. Downside risks include strong coal supply in key producers, such as the U.S., where federal policies and high natural gas prices support domestic supply, and subdued demand resulting from weaker-than-expected economic activity, particularly in China and India.