For the foreseeable future coal will be the mainstay energy source in China, India and Indonesia, three Asian powerhouses that together account for 70 per cent of global consumption of the fossil fuel. In fact, with their economies on fast wheels, these nations are on track to scale new highs in coal consumption, says a just released S&P Global Commodity Insights report.
These facts are contrary to pledges made by the countries to taper the use coal over time. In 2020, former coal minister, Prahlad Joshi had said that India would stop importing the fuel by 2023, a deadline later extended to 2025-26. As we stand at the cusp of 2025, that promise seems set to go up in smoke.
This shouldn't be surprising anyone. Indian coal is of poor quality, with high ash-moisture content and low heating value. That, coupled with the fact that power plants in the country using imported coal were at an early stage of their life cycles, meant India could simply not stop importing coal.
Reflecting on the past trends in China and Indonesia, two critical players in the global coal sweepstakes, the report reiterates that in 2014 China's coal imports cooled for the first time since the recession in 2008. This led the International Energy Agency (IEA) to speculate that Chinese coal consumption had peaked the year before. The IEA remarked: "The golden age of coal in China seems to be over."
Similarly, Indonesia’s coal exports declined in 2014, the first drop since its export boom began in the 1990s. This slump was attributed to falling Chinese demand, rising domestic consumption and tougher regulatory constraints. These shifts raised concerns about the long-term feasibility of Indonesia’s export-driven coal industry.
India's Coal Landscape in 2024
Despite these trends, however, India’s coal consumption continues to surge. Pritish Raj, Managing Editor for Asia Thermal Coal at S&P Global Commodity Insights, highlighted India's robust coal import figures: 220 million metric tons (MT) so far in 2024, matching the 2023 levels. He noted that 70 per cent of these imports were thermal coal and the remaining 30 per cent was coking coal.
India's domestic coal production is also on the rise and is projected to exceed one billion MT in 2024. Raj attributed this sustained growth to stable seaborne coal prices in 2024, following the price volatility caused by the Covid-19 pandemic and the Russia-Ukraine conflict.
Price Stability Stokes Demand
Price stability has been a significant factor in coal’s resilience this year. Platts, a division of S&P Global Commodity Insights, reported that the most traded grade of thermal coal in Asia, FOB Kalimantan 420 kcal/kg GAR, has been priced between $50 and $55 per MT since April. Other benchmark grades, such as FOB Newcastle 5500 kcal/kg NAR, hovered between $87 and 91 per MT during the same period, while CFR India West 5000 kcal/kg GAR, remained in the low $80s/mt.
Outlook
India's commitment to coal, alongside China and Indonesia, underscores the enduring role of the fossil fuel in powering Asia's economic growth. With domestic production scaling new heights and imports remaining robust, India seems poised to remain a key player in the global coal market, even as the world grapples with the need for cleaner energy alternatives.
