In Issue 150 of this publication, we dissected China’s coal appetite. This week, we aim to broaden the discussion by looking at India's fossil fuel demand and the associated trends in the coal market. Last year, coal-fired power plants account for approximately 35% of global electricity generation, down from 41% in 2014, reflecting a gradual transition toward cleaner energy sources. Despite this shift, coal remains a reliable base-load power source, ensuring a stable electricity supply, especially nations like India and China which are still developing their renewable energy infrastructure.
India’s Energy Mix: Balancing Coal Dependence and Renewable Growth
India’s reliance on thermal coal is driven by its energy-intensive economy, with thermal power plants accounting for over 75% of the country’s electricity generation. According to the Indian Central Electricity Authority, the country's power generation mix increased by 5% this year, reaching 1,561 billion units (Bu). Power generation from fossil fuels rose by 5% y-o-y, amounting to 1,362 Bu. Meanwhile, nuclear power generation grew by 13% y-o-y, and hydro power output saw a 4% y-o-y increase. This reflects India’s rising electricity consumption which is being driven by its economic growth.
India maintains a pragmatic approach to coal as it balances meeting its energy needs with a gradual shift towards cleaner sources. While coal continues to supply over 75% of electricity, it remains vital for energy security and economic stability. At the same time, the government is investing in renewable energy, aiming for 500 GW of non-fossil fuel capacity by 2030, and implementing policies to phase out coal.
Last year, India’s coal output increased by 6.8% y-o-y, totalling 1.1 billion tonnes, this is especially important as India looks to reduce its reliance on coal imports, focusing on boosting domestic production to improve energy its energy security.
Although coal is crucial for stabilizing power supply during peak demand and supporting industrial production in short term, India's long-term strategy focuses on diversification and sustainability. As such, it has successfully diversified its supplies to import from all major nations such as the, Australia, South Africa, Russia, US, and Colombia etc. Imports from these nations remained steady except for the shipments from Australia which declined by 22% in 2024. Overall, Indian coal imports fell 5% y-o-y in 2024, the first annual decline in four years, following a sharp drop in 2021 after the initial COVID-19 impact in 2020.
Last year, India imported 235 mln mt of seaborne coal. Of this, thermal coal accounted for 162 mln mt (68%) This was required to bridge gaps in domestic production and quality. Domestic coal often has higher ash content, making imported coal more suitable for efficiency-driven power plants. Moreover, coastal plants prefer imports due to their lower transportation costs especially since international markets sometimes offer competitively priced coal. Last year, steam coal shipments declined by 5% reflecting an increased reliance on domestic production. Similarly, anthracite imports dropped by 736,000 mt y-o-y (-47%). However, coking coal imports notably increased by 8% y-o-y, totalling 72 mln mt. This reflects continued strong demand for high-quality coal used in steel production.
Global Coal Trade 2024: Asian Dominance Amid Renewable Transition
In 2024, the global coal market witnessed significant developments, as, despite the rising adoption of renewables, coal shipments hit a record. According to AXSMarine data, a total of 1.3 billion tonnes of seaborne coal was discharged globally last year. Asia—comprising China (428 mln mt), India (235 mln mt), Japan (158 mln mt), South Korea (111 mln mt), Vietnam and Taiwan (56 mln mt)—accounted for 76% (1 billion tonnes) of the trade. This represents a substantial 21% increase compared to 2022.
Away from Asia and growth appears more moderate. This reflects the rising deployment of renewables plus geopolitical issues such as the Red Sea conflict and the Russia-Ukraine war. For example, Europe and other regions such Middle East, Africa, North & South America, have continued to experience a decline in coal imports. In 2024, coal imports in these areas dropped by 5% y-o-y, amounting to 322 million tonnes, driven by similar factors.
Asia has consistently dominated the seaborne coal trade market, with demand driven by China, India, Japan, South Korea, Vietnam, and Taiwan. This trend reflects a sustained or growing reliance on coal as a primary energy source in Asia. However, in 2024, shipments to India, Japan, South Korea, and Taiwan decreased which reflected a broader shift toward cleaner, more sustainable energy sources.
India is focusing on reducing coal imports by boosting domestic production and removing the blending mandate for imported coal in thermal power plants, thereby aiming for greater energy self-sufficiency. Meanwhile, Japan is decommissioning aging coal plants and increasing investments in renewables, with a commitment to achieve net-zero emissions by 2050. On the other hand, South Korea is ramping up nuclear energy to 30% of its mix by 2030, alongside investments in offshore wind and solar. It is also reducing reliance on fossil fuel imports from Russia. Taiwan is expanding its solar energy capacity while phasing out nuclear power by the end of this year, driven by stricter safety concerns and a clear push for cleaner alternatives. Collectively, these nations are navigating a delicate balance of reducing their reliance on imported coal while accelerating renewable energy adoption.
Conversely, China and Vietnam hiked their coal imports, rising by 13% and 19%, respectively. In contrast, Dutch coal imports fell , a symptom of Europe’s emphasis on climate policies.
Panamax Leads India Seaborne Coal Trade Amid Capesize Setback
According to AXSMarine data, India seaborne coal imports rebounded steadily over the past two years from the lows of 2022. The recovery in Panamax (68-100K Dwt) coal shipments was especially strong, rising by 24% in 2024 to hit 108 mln mt. Panamax tonnage dominated the India coal market in 2024, with Paradip (15.4 mln mt), Visakhapatnam (11 mln mt), Krishnapatnam (11 mln mt), Dhamra (9 mln mt) and Gangavaram (8 mln mt), which together accounted for 52% of Panamax coal discharge. However, coal handling at Haldia Port in the ECI region dropped by 85% for Panamaxes, mainly due to a sharp decline 82% in coking coal shipments in Panamaxes. This shift was driven by a preference for deeper draft ports like Paradip and Dhamra for cost efficiency, along with increased logistical challenges from Haldia’s lower draft.
Meanwhile, Capesize (160-220,000 Dwt) vessels have struggled to maintain momentum over the past two years, as the share of Capesizes in seaborne coal trade fell by 20% in two years. In 2022, Capesize vessels gained some traction in the market due to India’s growing economy and increased electricity consumption, which led to higher demand for thermal coal imports. India experienced a notable increase in Capesize arrivals, with 618 fixtures discharging 96 mln mt. However, this number dropped by 20% to 479 fixtures in 2024, totalling 76 mln mt.
In 2024, Capesize shipments at Indian ports included Dhamra (13 mln mt), Krishnapatnam (9 mln mt), and Jaigad (6 mln mt). However, Gangavaram's shipments fell sharply to 2.5 mln mt over the past two years, mainly due to Adani Ports and Special Economic Zone Ltd. (APSEZ) imposing a $3/tonne cargo lightening charge in 2021 on vessels partially unloading before heading to other ports. This fee, applied to the entire cargo, raised costs, discouraging shipowners and charterers from using Gangavaram for partial discharges. Meanwhile, Capesize coal handling at Mundra increased by 18% to 26 mln mt.