Research firm BMI has lowered its forecast for the Newcastle thermal coal price for the year to $180/t, down from the previous estimate of $220/t, due to a decline in global coal demand. Although prices have averaged $192/t year-to-date, they are currently around $150/t as of August 24. BMI anticipates coal prices to range between $150/t and $200/t for the remaining months of the year.

While the new forecast remains notably higher compared to levels before Russia's invasion of Ukraine in February 2022, and from historical standards, it marks a significant departure from the average thermal coal price of $358/t in 2022. BMI attributes this decline to increased global coal supply and a stronger dollar, influencing demand for coal. China and India, in particular, have seen significant growth in thermal coal production.

Looking ahead, BMI projects a continued easing of prices to an average of $170/t in 2024 and $160/t in 2025, eventually reaching $130/t by 2027. This trend aligns with the global shift away from fossil fuel-derived energy.

BMI's forecast suggests a modest 0.69% year-on-year growth in global thermal coal consumption for this year, compared to a growth rate of 4.7% in 2022. Thermal coal production is expected to grow by 3.2% year-on-year this year, in contrast to the 7.2% growth rate recorded in 2022. As a result, a larger global surplus of thermal coal is projected, rising from 293 million tonnes in 2022 to 521 million tonnes this year.

Europe is expected to lead the weakening demand for coal, as the region seeks to diversify away from Russian energy resources. China, however, will remain committed to coal due to concerns about energy security and the challenges it faced with renewable power generation capabilities during droughts and adverse climate conditions in recent years.

Despite these shifts, both China and India have not explicitly committed to halting new coal projects locally, and domestic financing for such projects remains available. Although there are 96 operational, expansionary, and new mines being tracked in Asia, these are likely to represent the final wave of such developments. Asia's dependency on coal for power generation is expected to persist in the coming decade, primarily due to energy security concerns and the prevalence of young coal power plants established in the last ten years.