Global coal consumption climbed to a new all-time high in 2022 and will stay near that record level this year as strong growth in Asia for both power generation and industrial applications outpaces declines in the United States and Europe, according to the IEA’s latest market update.
Coal consumption in 2022 rose by 3.3% to 8.3 billion metric tons (mt), setting a new record, according to the IEA’s mid-year Coal Market Update, which was published in late July. In 2023 and 2024, small declines in coal-fired power generation are likely to be offset by rises in industrial use of coal, the report predicts, although there are wide variations between geographic regions.
China, India and Southeast Asian countries together are expected to account for 3 out of every 4 tons of coal consumed worldwide in 2023.
Global coal demand is estimated to have grown by about 1.5% in the first half of 2023 to a total of about 4.7 billion mt, lifted by an increase of 1% in power generation and 2% in non-power industrial uses.
By region, coal demand fell faster than previously expected in the first half of this year in the United States and the European Union — by 24% and 16%, respectively. However, demand from the two largest consumers, China and India, grew by over 5% during the first half, more than offsetting declines elsewhere.
The shift of coal demand to Asia continues. In 2021, China and India already accounted for two-thirds of global consumption, meaning together they used twice as much coal as the rest of the world combined. In 2023, their share will be close to 70%.
The same split is observed on the production side. The three largest coal producers — China, India and Indonesia — all produced record amounts in 2022. In March 2023, both China and India set new monthly records, with China surpassing 400 million mt for the second time ever and India surpassing 100 million mt for the first time. Also in March, Indonesia exported almost 50 million mt, a volume never shipped by any country before.
Coal prices fell in the first half of 2023 to the same levels as those seen in summer 2021, driven by ample supply and lower natural gas prices. Thermal coal returned to being priced below coking coal, and the big premium for Australian coal narrowed following the easing of disruptive La Niña weather that had hampered production. Russian coal has found new outlets after being barred in Europe, but often at considerable discounts.
Cheaper coal has made imports more attractive for some price-sensitive buyers. Chinese imports have almost doubled in the first half of this year, and global coal trade in 2023 is set to grow by more than 7%, outpacing overall demand growth, to approach the record levels seen in 2019. Seaborne coal trade in 2023 may well surpass the record of 1.3 billion mt set in 2019.