Fuel coal prices expected to decline in 2025

The FOB New Castle, Australia fuel coal market started in the mid-$130's/mt in 2024. The market was on the decline toward February and rebounded later. New Castel coal prices moved up and down but were largely on the rise toward the second half of 2024. The market once surpassed $150/mt. Although decarbonization movements are widely seen in the world, demand for coal is growing in China, India and Southeast Asian countries. This supported the market. In Japan, temperatures were higher than previous years from summer to early autumn and power demand was firm. In many months, imports of fuel coal were higher than the corresponding months last year.

However, prices for fuel coal are expected to drop slightly from 2024 since demand might decrease in the world largest importer China. In China, sluggish economy is prolonged and demand for power is dull. On the other hand, renewable energy including solar power are more widely used. Moreover, consumption of coal is falling in Europe, which is leading the efforts to tackle environmental issues in recent years. This is also forecast to be a bearish factor.

At the 29th Conference of the Parties (COP29) held in Azerbaijan in November 2024, 25 countries and the European Union (EU) declared opposition to build new coal-thermal power stations. These 25 countries included five Group of Seven nations excluding the US and Japan. Further, some participants criticized that carbon dioxide capture and storage (CCS) did not have enough effect to reduce carbon dioxide. CCS is regarded as a key to continue coal thermal power generation.

On the other hand, Donald Trump would be inaugurated as the US President in January, which is expected to work as a bullish factor. As Trump shows active stance to use fossil fuel, consumption volumes of coal, which remained unchanged in the past few years, might sharply rise. A rise in demand from India, where economy is growing, is also forecast to lead the market.

In Japan, the seventh Basic Energy Plan is drawing attention. Until the sixth plan, coal thermal power generation was placed as a major power source. Although coal thermal power still accounts for around 30% of energy mix at present, the seventh plan might insist less reliance on coal as more renewable energy is used and nuclear power stations restarted in recent years.