More than half of the coal mined worldwide is consumed by China. Demand is so high, despite the country’s rich reserves of raw materials, that large quantities have to be imported.
According to one analysis, China is importing significantly less coal than in the previous two years. There are several reasons for this.
“We expect coal shipments to China to fall by 15% year-on-year in the first quarter of 2025, reaching a three-year low,” says Filipe Gouveia, Shipping Analysis Manager at the shipping organization Bimco. “Sea freight traffic has slowed down due to weaker domestic demand and increased competition from domestic shipments and land imports. Thermal coal shipments have been particularly affected, but coking coal shipments have also declined.”
Total coal consumption in the world’s most populous country after India (1.42 billion people) since 2023 recently stood at 5 billion tons annually, more than half of global demand.
Part of the decline can be explained by the increased focus on renewable energies: China is massively expanding wind and solar power, which has led to a 6% drop in coal-fired power generation. At the same time, total electricity generation fell by 1% compared to 2023 due to an unusually warm winter, which further increases the proportion of renewable energies. Demand for coking coal also fell by 1% due to a decline in steel production.
China produces more of its own coal
The decline in imports continues to be due to the fact that China has significantly expanded its domestic mining industry again. In 2024, 8% more coal was mined from domestic mines compared to the previous year, after safety problems had previously led to a decline. Imports by rail, particularly from neighboring Mongolia, also continued to increase, which weakened demand for sea freight.
“Demand is estimated to have developed even worse than volumes, falling by 25% in the first quarter of 2025 compared to the previous year,” says Gouveia. “Average transportation distances have shortened due to lower volumes from Colombia and shorter distances for Russian cargoes.”
Most coal shipments to China come from neighboring countries such as Indonesia, Australia and Russia. According to Bimco, these countries have accounted for 57%, 16% and 14% of volumes so far this year. While the USA, Canada and Colombia only contributed 6% of volumes, they still accounted for 17% of demand.
Panamax most popular for coal
Of the larger exporters, Indonesia performed the best with a volume decline of only 11% compared to the previous year. North American shipments also performed well. Canadian cargoes rose by 42% compared to the previous year, while US cargoes fell by only 10% – despite the increase in Chinese import tariffs in force since February 4.
The Panamax segment was the most popular for coal transportation to China, accounting for 57% of year-to-date shipments. Despite weaker freight, Panamax volumes were up 1% year-on-year, edging out the other segments, partly due to comparatively lower freight rates.
“The outlook for coal shipments to China appears subdued,” Gouveia continued. “Import demand could remain low as the country expands renewable power generation, domestic mining and rail links with Mongolia and Russia. Nevertheless, there could still be peaks in demand due to increased electricity consumption during extreme temperatures or periods of lower production from renewable energy sources.”
