In 2024, the coal demand is expected to stay at record highs

The International Energy Agency (IEA) revealed in its latest report, titled 'Coal Market Update,' that global coal consumption reached an unprecedented peak in 2022 and is poised to remain close to that historic level throughout the next year. The surge in demand primarily stems from robust growth in Asia, driven by increased usage for power generation and industrial applications, offsetting reductions in the United States and Europe. The report disclosed a 3.3% upswing in coal consumption in 2023, reaching a staggering 8.3 billion tonnes. Looking ahead to 2024, minor reductions in coal-fired power generation are anticipated, but these are expected to be counterbalanced by upticks in industrial coal use. Regional variations are apparent, with the combined coal consumption of China, India, and Southeast Asian nations projected to contribute to three-quarters of global coal consumption in 2023.

While the European Union experienced marginal growth in coal demand in 2023, largely due to a temporary spike in coal-fired power generation, this trend is predicted to reverse in the current year. The report suggests a significant decline in European coal use as renewables expand and nuclear and hydropower recover from recent slumps. In the United States, the transition away from coal is further propelled by lower natural gas prices. The IEA noted that coal demand in the United States and the European Union declined more rapidly than anticipated in the first half of the current year, dropping by 24% and 16%, respectively. However, China and India, the two largest consumers, witnessed over 5% growth in demand during the same period, offsetting declines elsewhere.

Despite being the largest contributor to carbon emissions from the energy sector, coal demand in Asia remains persistently high. Even as many Asian economies increase their reliance on renewable energy sources, coal remains a dominant force. The geographical shift in coal demand is unmistakable. In 2021, China and India accounted for two-thirds of global consumption, using twice as much coal as the rest of the world combined. The IEA projects that in 2024, their combined share will approach 70%, while the United States and the European Union, which represented 40% three decades ago, now constitute less than 10% of global coal consumption.

In March 2023, both China and India set new monthly records, with China surpassing 400 million tonnes for the second time and India exceeding 100 million tonnes for the first time. Following the volatility and high prices of the previous year, coal prices in the first half of 2023 decreased to levels observed in the summer of 2021. This decline was attributed to abundant supply and lower natural gas prices, with thermal coal once again priced below coking coal and the substantial premium for Australian coal narrowing due to the alleviation of disruptive La Niña weather affecting production.