The global coal market has undergone a gradual normalisation since the peak of the 2022 energy crisis, when thermal coal prices soared above USD 400 per tonne across multiple benchmarks. This extraordinary price spike briefly saw thermal coal trading at a premium to coking coal.

By 2023, as energy markets broadly recalibrated, coal prices began to ease. The traditional pricing hierarchy reasserted itself, with coking coal once again priced above thermal coal. This shift reflected a normalisation of market conditions, improving supply-demand balances. Notably, tight coking coal supply from Australia between September 2023 and March 2024 supported elevated prices during that period. Throughout 2024, however, coal prices continued to ease. By year-end, Australian low-volatile coking coal (FOB) had declined to below USD 200 per tonne. Thermal coal benchmarks also fell: Newcastle 6 000 kcal/kg FOB went down to USD 125 per tonne, while Indonesian 4 200 kcal/kg FOB hovered around USD 50 per tonne.

In Spring 2025, coal markets exhibited greater stability, with more muted movements compared to the volatility of previous years. Thermal coal prices declined due to ongoing stock surpluses in China and India and falling demand in Europe. However, first-quarter 2025 European demand exceeded expectations as coal offset low wind and hydro power generation. The metallurgical coal market experienced a moderate decline in prices over the same period. Although adverse weather conditions and logistical disruptions in Queensland constrained Australian export volumes, demand from Asian steelmakers remained insufficient to provide sustained upward pressure on Australian Premium Hard Coking Coal prices. As a result, prices remained below USD 200 per tonne, a level that has placed increasing pressure on the profitability of several coking coal producers.

After the historic price spikes and extreme volatility of 2022, global thermal coal markets entered a phase of significant correction in 2023. This shift was driven by a combination of expanding supply, softening natural gas prices, reduced concerns over energy security, and the realignment of trade flows in response to sanctions on Russian coal exports. The ARA and Newcastle FOB price benchmarks began to decline from late 2022, reflecting a broader rebalancing of market fundamentals.

In 2023 and 2024, thermal coal prices peaked at European ports, reaching approximately USD 152 per tonne. Australian ports followed with peak prices around USD 121 per tonne. The average price for mid-calorific value coal delivered to South China, with a calorific value of 5 500 kcal per kilogram, stood at USD 109 per tonne. Since 2022, China's production has outpaced domestic demand, leading to rising stockpiles and putting additional downward pressure on prices.

By February 2025, prices for high-calorific value thermal coal had declined to levels last seen between 2017 and 2019. Demand in China and India was less than expected. Newcastle FOB and ARA CIF, both with a calorific value of 6 000 kcal per kilogram, were trading near USD 100 per tonne. The South China CFR price for 5 500 kcal per kilogram coal fell further to USD 76 per tonne by June 2025. Although prices moderated, volatility remained elevated. The standard deviation of prices in 2024 and the first half of 2025 was significantly higher than during the 2017–2019 period. This indicates that while price levels have normalised, uncertainty in the market has not yet fully dissipated, amid geopolitical tensions and more weather-dependent electricity systems across the world.

Thermal coal prices from Australia and South Africa have historically moved in close alignment with Russian export prices. This correlation was disrupted following Russia’s full-scale invasion of Ukraine, as a wave of sanctions imposed by Western countries altered global trade dynamics. In response, coal markets began applying a risk premium to Russian-origin coal, which led to substantial price discounts relative to other major exporters.

As global coal prices began to recover towards levels closer to historical trends in late 2022, the price differentials narrowed. Discounts on Russian coal shipped from eastern ports such as Vostochny declined, supported redirection of volumes from traditional buyers like Japan to alternative markets within the region. This shift contributed to a stabilisation of prices in Russia’s eastern export corridors. However, despite this partial recovery, Russian producers continued to face profitability challenges. These were driven by persistent price discounts, lower overall price levels, and the temporary imposition of an export duty by the Russian government. Ruble appreciation versus dollar in 2025 does not help producers either.

Russian coal exported through Black Sea ports performed even worse. In 2023 and 2024, prices at these ports averaged USD 77 per tonne below Newcastle FOB and USD 37 per tonne below Richards Bay FOB, reflecting more limited market access.

At the start of 2025, coal prices across all major regions fell below USD 100 per tonne. Against this backdrop of declining prices, maintaining steep discounts on Russian exports became increasingly unsustainable, further straining the financial viability of producers.

Throughout 2024, API2 spot prices, representing coal deliveries to Europe on a cost, insurance and freight (CIF) basis, showed a marked reduction in volatility, stabilising at levels more aligned with historical trends than in the preceding year. This moderation reflected a broader market sentiment anticipating a loosening of supply constraints, which had been exacerbated by geopolitical disruptions following Russia’s full-scale invasion of Ukraine. By mid-2023, future markets had already begun to price in a normalisation of trade flows, with risk premiums gradually receding.

The forward curve during this period transitioned from a marginal backwardation, where spot prices exceeded futures, to a slight contango, indicating a return to structurally driven pricing. By June 2024, market expectations coalesced around a relatively flat trajectory for API2 futures, hovering above USD 120 per tonne. This configuration remained largely unchanged until mid-2025, when the curve still slopes gently upward, albeit from a lower base of approximately USD 100 per tonne, suggesting a modest recovery in forward valuations over the subsequent two years.

This evolution marks a departure from the heightened volatility and fears of a shortage observed in recent years. Both financial and physical coal markets now exhibit a degree of stability not seen since before the 2022 energy crisis period. The coal market is closely tied to the gas sector, as both serve as marginal suppliers in electricity markets and are sometimes traded together. As a result, increased volatility in gas markets can quickly affect coal prices due to their interdependence.