Global coal trade is forecast to shrink in 2025, the first drop since the covid-19 shock of 2020, with another fall expected in 2026. If confirmed, this would be the first consecutive two-year decline in seaborne coal trade in the 21st century, according to analysis by The Signal Group — a turning point that could alter freight flows and vessel deployment patterns across the bulk market.
The expected slowdown comes after coal demand hit a record 8.79bn tons in 2024. The International Energy Agency projects that consumption will plateau in 2025 before edging lower in 2026.
China, the world’s largest coal consumer, is already showing signs of easing demand. First-half 2025 consumption slipped 0.5% as electricity growth slowed and renewable generation gained ground. Coal-fired power generation dropped 3% over the same period, though coal continues to underpin system stability.
India’s power-sector demand also dipped in the first half of 2025 (–2.1% year-on-year). Still, the IEA expects a 1.3% increase for the full year, with steel production driving long-term coking coal imports. Meanwhile, the US remains an outlier among advanced economies. Coal demand there rose 12% in the first six months of 2025, lifted by robust electricity needs and high natural gas prices.
For shipping, the trade contraction could mean reduced tonne-mile demand, particularly if Asian buyers lean more heavily on domestic production. Indonesia, the world’s largest coal exporter, has faced volatility this year after scrapping its minimum benchmark price rule in August. Shipments to China fell sharply in the second quarter but rebounded later in the summer as domestic supply disruptions tightened the market.
Australia and Russia are regaining ground in India’s import mix, with Australian metallurgical coal shipments peaking at 4.4m tons in June 2025, while Russian volumes averaged above 2.5m tons per month between June and August. Still, Indonesia’s July shipments sank to 7m tons, one of the weakest showings since 2022.
Signal suggests that longer-haul flows from South Africa and Colombia may help offset Asia’s expanding domestic production, but the outlook points to increased competition among exporters. For dry bulk owners, the prospect of two consecutive years of lower coal volumes highlights the shifting role of the commodity in vessel employment strategies.
“The key question is whether longer-haul flows from exporters such as South Africa and Colombia can offset the gradual erosion of Indonesia’s market share, and how this balance will influence tonne-mile demand going forward,” analysts at Signal noted.
