Rising production in India is expected to “significantly” outpace the demand for thermal coal in the current calendar year, pulling down imports, says the International Energy Agency (IEA).

IEA, in its mid-year update on the coal sector, projected that the India is likely to produce 1.11 billion tonnes (bt) of thermal coal in 2025, and 1.15 bt a year later. During both the years, the annual rate of production growth is expected at 3 per cent.

“In India, the continued expansion of domestic thermal coal production is expected to significantly outpace demand growth in 2025. As a result, India’s reliance on thermal coal imports is projected to decline to just over 150 million tonnes (mt),” IEA said.

Oversupply in 2025

IEA anticipates that the expected oversupply in 2025 will weigh on global coal import demand. India’s imports are set to decrease down to around 219 mt, as domestic production continues to expand and displace imported volumes.

India is the world’s second largest producer and consumer of coal.

“Looking ahead to 2025, we expect global coal trade to decline, reversing the upward trend observed in 2024,” it added.

Higher production of the critical commodity also reflected in lower prices.

In Spring 2025, coal markets exhibited greater stability, with more muted movements compared to the volatility of previous years. Thermal coal prices declined due to ongoing stock surpluses in China and India and falling demand in Europe, IEA explained.

“By February 2025, prices for high-calorific value thermal coal had declined to levels last seen between 2017 and 2019. Demand in China and India was less than expected. Newcastle FOB and ARA CIF, both with a calorific value of 6,000 kcal per kilogram, were trading near $100 per tonne,” it added.

In 2025, we expect global coal production to rise slightly to 9.2 bt — setting a new record. This increase is once again led by China and India, it pointed out.

Global coal production reached a record 9.15 bt in 2024, driven primarily by strong output in China, India and Indonesia. Domestic coal is the largest source of energy supply in both China and India making coal production central to their energy security strategies. After shortages in 2021, both countries boosted production, a push that lasted a few years to reach an all-time high in 2024.

Weak power demand

In India, the IEA pointed out that expansion of wind and solar as well as an early monsoon resulted in stronger electricity generation from hydropower.

Besides, weaker electricity demand growth in the first half of 2025 pushed coal power generation and overall coal demand into decline from the high consumption levels seen in the same period a year earlier, it added.

“India experienced a 2.1 per cent year-on-year (y-o-y) drop in coal demand for power generation in the first half of the year (2025). This was primarily due to an early onset of the monsoon season and a high baseline of consumption in 2024, which was marked by an intense heatwave,” it said.

On the other hand, the Indian steel sector showed signs of strength, as overall industrial coal demand was estimated to have risen by 6 per cent y-o-y in the first six months of the year.

Total annual demand is projected to increase to 1,314 mt, up 1.3 per cent, due to an expected rebound in coal-fired power generation in the second half of the year. 

Source: The Hind Business Line

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