This blog post is part of a special series based on the October 2024 edition of the 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.
Coal prices were down in November, following a 3 percent increase in the third quarter of 2024 and a further rise in October. These gains were driven by strong demand from the power sectors of China and India, coupled with shrinking supplies in both China and the U.S. Looking ahead, coal prices are projected to fall in 2025 and 2026 but remain above pre-pandemic levels. This anticipated decline is due to robust supply, as reductions in global consumption weigh on the market. Risks to the price outlook remain broadly balanced.
Global coal consumption is projected to decline in 2025 and contract further in 2026, following a modest 1 percent increase in the first six months of 2024, compared to the previous year. Additional electricity demand in China, the world’s largest coal consumer, was mostly met by renewables and hydropower, while India drove the rise in global coal consumption in the first half of 2024. In contrast, coal demand declined in Europe while it remained stable in the United States. Global coal consumption is expected to marginally decrease in 2025, and continue falling in 2026, as the transition to renewables and natural gas for power generation accelerates, displacing coal. Demand in China is poised to decline in both years, while India’s demand growth is expected to slow down. If these forecasts prove accurate, global coal consumption will have peaked in 2024—marking an important milestone in the global energy transition.
Global coal supplies are expected to decline in 2025 and 2026, in line with shrinking demand. In the first half of 2024, global coal production contracted, led by a 15 percent drop in U.S. output, reflecting the long-term trend of coal's diminishing role in power generation. In China, production also fell due to stricter regulations aimed at reducing mining accidents. In contrast, coal production in India and Indonesia increased by approximately 10 percent each during the same period. Looking ahead, most major producers, apart from India, are expected to scale back coal production in 2025 and 2026 as the global energy transition accelerates.
Coal prices are expected to decline, with risks to the outlook remaining broadly balanced. Prices are projected to decrease by about 12 percent in both 2025 and 2026, following an anticipated decline of more than 20 percent in 2024. On the upside, the main risk to the forecast is China’s coal consumption continuing to rise in 2025. The baseline assumption that China’s coal demand will peak in 2024 is premised on moderate increases in the demand for electricity and robust output from hydropower and renewables. Extreme weather events, such as heat waves or droughts, particularly in China, could drive higher demand and push prices upward. Conversely, prices may face downward pressure if anticipated supply reductions in Indonesia and the U.S. do not materialize. Additionally, weaker-than-expected economic growth in China and India—together accounting for over two-thirds of global coal consumption—poses an additional downside risk.
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