Peak Coal? Why Asia's Demand Story Isn't Over Yet

For years, speculation has swirled around the idea of "peak demand" for hydrocarbons as the world transitions its energy mix. The debate reignited this week with new data showing a 4.4% dip in Asian seaborne coal imports in 2025 from the previous year's all-time high.

While this drop might seem significant, a closer look suggests that declaring "peak coal" is premature.

Decoding Asia's 2025 Coal Import Dip

Data from Kpler revealed that Asian buyers imported 1.09 billion metric tons of coal in 2025, down from 1.14 billion tons in the prior year. Reuters columnist Clyde Russell pointed to this as a potential signal that demand in the world's largest coal-importing region has peaked.

However, focusing solely on imports misses the bigger picture. In the same year that imports fell, China’s domestic coal production soared to a record high of 4.83 billion tons. This surge in local supply was a major reason for its weaker import appetite, which stood at 490 million tons.

Meanwhile, India’s coal production saw a modest 0.64% decline in the first three quarters of its current fiscal year. This wasn't due to flagging demand but was primarily the result of weather-related disruptions.

China and India Double Down on Coal Power

The actions of Asia's two largest economies signal continued reliance on coal. China, despite being a global leader in wind and solar power, plans to commission 85 new coal-fired power generation units this year. This move comes even after the country's coal-fired power generation declined in 2025, thanks to higher output from sources like hydropower.

India is also reconsidering its long-term energy strategy. The government had previously planned to halt all coal capacity expansion after 2035. Now, officials are contemplating pushing that deadline to 2047. This reflects deep uncertainty about whether wind and solar can reliably replace coal, which currently generates over 70% of India's electricity, according to the International Energy Agency.

Price Signals and Renewable Headwinds

The economics of the coal market also played a role. Last year, thermal coal prices hit a four-year low in June before rebounding. Australian coal prices gained 16%, while Indonesian coal rose 12%. Higher prices naturally tend to curb import demand, which likely contributed to the overall decline in Asian imports.

At the same time, the expansion of renewable energy is facing challenges. A recent report from Rystad Energy noted that the addition of new wind and solar capacity is slowing down. While the firm predicts that global electricity output from all renewables—including hydro and geothermal—could overtake coal for the first time this year, producing 11,900 TWh, this forecast comes with caveats.

The prediction is based on the assumption that new demand will be met by renewables and that coal generation has "plateaued." Yet, the aggressive capacity expansion in both China and India suggests this plateau may not last. Building expensive new coal plants only makes sense if you expect to use them, indicating that both nations anticipate burning more coal in the coming years.

Why Import Data Tells an Incomplete Story

Ultimately, relying on import data alone to gauge total demand can create a misleading picture. Both China and India are actively working to reduce their reliance on foreign energy supplies.

India, for instance, has announced a goal to attract $100 billion in investments for its domestic oil and gas production by 2030. This push for energy self-sufficiency means that domestic production trends are becoming just as critical—if not more so—than import volumes when analyzing the future of coal demand.