Benchmark prices for seaborne thermal coal have plummeted to their lowest level in four years, with analysts warning of further declines due to a global oversupply largely fueled by surging production in China.

Thermal coal, used primarily in power generation, has now fallen to one-quarter of its 2022 peak, when Russia’s invasion of Ukraine sent energy markets into turmoil and sparked a coal price rally that generated outsized profits for miners and hedge funds alike.

The subsequent boom period in 2022 and 2023 incentivized a wave of new production across major coal-producing countries, particularly China, India, and Indonesia. This rapid expansion has since outstripped demand, especially in China, the world's largest producer and consumer of thermal coal.

China and India Hold Excess Inventory

So far in 2025, China’s domestic coal output has hit record highs, slashing its need for imports and creating a ripple effect in global markets. High inventory levels in both China and India, the second-largest coal user, have also dampened buying activity, reducing pressure on prices to rise.

“There is not too much price support at the moment,” said Firat Ergene, an energy analyst at Kpler. “Even if prices were lower, no one is going to buy more coal,” he added, pointing to the stockpiles already accumulated.

Coal market weakness is also seasonal. The current “shoulder season” — the spring and autumn months — typically sees a lull in demand, particularly from Asian power producers who ramp up usage during the hot summer months for air conditioning.

Prices May Recover in Second Half of 2025

Despite the bearish outlook in the short term, analysts expect a modest recovery in coal prices in the second half of the year, driven by increased summer demand in the northern hemisphere.

“We are right at the start of the restock before the summer peak,” said Tom Price, an analyst at Panmure Liberum. “I’m not expecting shock and awe moves, but demand will pick up.”

Alex Thackrah, analyst at Argus, echoed the sentiment, noting that supply-side responses are already under way. Miners in Colombia, such as Glencore and Drummond, have begun to curtail output in response to low prices — a sign that some producers are now feeling the pinch.

Exporters Under Pressure

The global seaborne coal market, which represents just 10% of total thermal coal consumption, has been particularly volatile. Major exporters like Indonesia, Australia, South Africa, and Colombia are bearing the brunt of the price collapse, especially as European nations continue their coal phase-outs in line with green energy policies.

Still, global demand for coal remains historically high, setting a new record last year, as some emerging economies turn to the fuel for baseload power amid energy security concerns.

While prices are not expected to return to 2022 highs, analysts say a seasonal rebound is likely, offering a temporary reprieve for producers. Until then, markets remain in a state of oversupply, with weak demand and heavy inventories continuing to cap prices.

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