IEA: U.S. Coal Use to Rise in 2025, China Use to Drop Slightly

---

Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The U.S. coal industry got a bit of good news recently when the International Energy Agency (IEA) (Paris, France) released its mid-year update on the global coal industry. In contrast to several regions around the world that experienced slowing growth or a decline in demand, U.S. coal demand grew by an estimated 12% for the first half of 2025. European coal use also rose during the first half of this year, IEA said.

That good news is expected to last throughout the rest of this year. The IEA report, "Coal Mid-Year Update 2025," released July 24, said that while U.S. demand growth is expected to slow in the second half of this year, full-year demand for the Black Rock is forecast to grow 7%. That would follow last year's 4% reduction, about 14 million tonnes.

The report cited strong electric demand growth and the relatively high price of natural gas, which is leading to an increased amount of gas-to-coal fuel switching among electric generators, as the reasons for its expectation that U.S. demand for coal would grow this year.

The agency acknowledged it was harder to get a clear longer-term projection about U.S. coal use. The Trump administration has taken several steps to boost coal production and use, but legal challenges have been filed to block many of those.

Speaking about U.S. coal demand after 2025, the agency hedged its bets, reversing its previous projected decline to a slight increase. However, it added, "The full impact of other measures will depend on implementation." For more on Trump's moves to support coal, see April 9, 2025, article - Trump Executive Order Seeks to Reverse Decline of Coal, and June 12, 2025, article - EPA Would Axe Regulation of Power Plant Emissions of Greenhouse Gases, Air Toxics.

The IEA report also noted recent strength in U.S. coal production, which rose about 8% during the first half of this year. The agency expects second-half 2025 growth to moderate, bringing full-year 2025 production to about 477 million tonnes. This follows an 11% drop in 2024, as electricity producers reduced their stockpiling of coal. Next year, production is projected to decline 9% to about 434 million tonnes.

The IEA's mid-year coal report tended to combine numbers for thermal coal, used for electricity generation, and metallurgical (met) coal, which is used to make iron and steel. And to a lesser degree, for infrastructure and construction. Thus, demand for met coal tracks the broader economy. The 28-page report contained no detailed breakdown for thermal vs. met coal supply or demand.

Global Demand
Around the world, demand for all forms of coal rose 1.5% in 2024, to 8.79 billion tonnes, a new record, the IEA said, adding that it expected full-year 2025 demand to rise slightly, which would set another record. On a percentage basis, coal use in 2024, and its expected demand in 2025, represented a sharp slowdown from earlier year-over-year demand growth, the agency said, adding that worldwide demand for the Black Rock actually fell about 1% in the first six months of 2025.

Click on the image at right to see a graph detailing global annual coal demand growth.

The increase in 2024 was primarily driven by emerging economies in Asia, particularly China and India, it said. China's coal use increased 82 million tonnes, or 1.7%, last year while India's demand rose 45 million tonnes, or about 4%.

Overall, the world generated a record 10,766 terawatt hours (TWh) of electricity from thermal coal in 2024. But the use of met coal fell about 0.8% last year.

The "Coal Mid-Year Update 2025" report noted some changes to longstanding trends in coal use in power generation for the first half of 2025: China, the world's largest consumer of coal, experienced weaker electricity demand growth and a surge in power output from renewables, leading to reduced use of coal for power generation. In India, the world's second-largest consumer of coal, expansion of wind and solar cut into coal use, and an early monsoon resulted in stronger electricity generation from hydropower. Those factors, plus weaker electricity demand growth in the first half of 2025, led to a decline in thermal coal use for power generation in both nations for the first six months of 2025.

For full-year 2025, IEA predicted China's overall demand for coal would fall about 0.5%, while India's demand is expected to rise about 1.3%, driven by sharp growth in the steel and power sectors.

In the European Union (EU), coal demand grew in the first half of 2025, driven by demand growth in the electricity sector, high gas prices and reduced wind and solar output. The U.S. also expanded its use of coal during the first half of 2025.

Despite the short-term vagaries of weather and gas prices, the agency reiterated its view that "the structural drivers underlying coal demand remain the same, both in the electricity and industrial sectors. On a global level, the main regional changes compared with our December (2024) forecast cancel each other out. In China and India, demand will be weaker than foreseen, but this is offset by higher-than-expected coal demand in the European Union and United States. As a result, global coal demand is still forecast to rise slightly in 2025."

Looking forward to 2026, the report predicted an equally small decrease in coal use globally that year, leaving it essentially at its 2024 level of 8.79 billion tonnes. "Developments in China will largely shape global coal trends," the coal report said. "In our current forecast, China's coal demand declines slightly in 2025 and recovers in 2026, getting close to 5 billion tonnes. Coal consumption in India is expected to grow by 2.5% in 2026, with the ongoing expansion of renewables continuing to limit its growth in the electricity sector."

Turning to Europe, the IEA report predicted a reduction in use in 2026 following this year's gain. In the U.S., coal demand next year is expected to return to 2024 levels, though that could change because "the new administration's measures to support coal use and natural gas market trends (are) likely to affect the trends."

Global Production
Last year, global coal production rose 1.4% to a record 9.1 billion tonnes, driven by strong output in China, India and Indonesia, the report said, adding that 2025 production is expected to set another record at more than 9.2 billion tonnes. Both China and India are expected to set new records for production this year. The agency also said it expects to see an increase in coal production in the U.S. this year.

But market trends, including an expected weakening of demand growth, low prices, plentiful stockpiles and policy shifts in some markets, likely will weigh on production in 2026, the coal report forecast said, dropping it down to 2024 levels of about 9.1 billion tonnes.

"Given the current landscape of abundant supply, low prices and projections indicating stable coal demand through 2026," the IEA wrote, "coal production will decrease across all major producing nations, with the sole exception of India. In India, both state-owned enterprises and private operators of captive and commercial mining blocks are expected to continue increasing coal output. In China, with very high stocks throughout the supply chain and no expected rebound of demand, we expect a decline in 2026, the first since 2022."

"China," it continued, "where more than half of the world's coal is produced, is of paramount importance in shaping global coal trends. We expect Indonesia, the third-largest producer, to reduce production as low prices and weak demand from international markets continue. In the United States, production is expected to decline slightly in 2026, as both domestic and international markets are (expected to be) weaker than in 2025."

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).