Why betting on rising demand for met coal in Asia is a losing strategy

The report argues that betting on long-term growth for metallurgical coal (met coal) is a losing strategy as demand plateaus due to China's economic shift and the rise of low-carbon steel production. It highlights the risk of stranded assets given the volume of planned mine expansions and recommends that governments accelerate the transition to green steel through subsidy reform and public procurement.

• Global demand for metallurgical coal has plateaued and is projected to decline, specifically falling faster than thermal coal and lignite. The International Energy Agency (IEA) projects met coal consumption will drop by 4.8% between 2025 and 2030, compared to a 2.8% decline for power generation coal.
• Regional demand shifts are driving the decline in met coal use. China's demand could drop by 77 million tonnes (Mt) between 2025 and 2030, and the European Union, Japan, and Korea are expected to see a combined fall of 21 Mt in the same period. These decreases are expected to outweigh growth in India (26 Mt) and Indonesia (12 Mt).
• The steel industry is transitioning toward low-carbon methods, such as electric arc furnaces (EAFs) using scrap steel or 'green iron' produced via green hydrogen. While current operational capacity is low—270,000 tonnes per year for green iron and 60,000 tonnes per year for green steel—planned capacity by 2050 includes an additional 28 million tonnes of green steel and 18 million tonnes of green iron annually.
• There is a significant risk of stranded assets in the met coal sector. Between 2022 and 2024, banks provided nearly USD 22 billion in financing to developers, and institutional investors held USD 30 billion in securities. With 145 companies planning expansions and over 250 projects in the pipeline, global annual capacity could increase by 580 million tonnes, raising production by 52%.
• Australia is the world's leading supplier of met coal, accounting for 42% of global exports in 2024. Other major suppliers include Mongolia (15%), the US (14%), Russia (13%), and Canada (8%). Australia continues to develop new mines, such as the Moranbah South, Winchester South, and Isaac River projects in Queensland.
• China is implementing strategies to lower the cost of green hydrogen to accelerate the transition, aiming for a price below 25 yuan (USD 3.6) per kilogram by 2030. Additionally, the Chinese government set a 2022 target to increase the share of EAF steel to 15% of total production by 2025, though it remained at approximately 10% as of mid-2025.
• To facilitate the transition to green steel, the report recommends that governments remove subsidies for traditional high-carbon steel products, lower industrial electricity prices, and prioritize green steel in public infrastructure procurement.

APA

Hedley, N. (2026). Why betting on rising demand for met coal in Asia is a losing strategy. Zero Carbon Analytics. https://zerocarbon-analytics.org/energy/why-betting-on-rising-demand-for-met-coal-in-asia-is-a-losing-strategy/

Chicago

Hedley, Nick. Why betting on rising demand for met coal in Asia is a losing strategy. Zero Carbon Analytics, 2026. https://zerocarbon-analytics.org/energy/why-betting-on-rising-demand-for-met-coal-in-asia-is-a-losing-strategy/.

Wikipedia

{{cite report |last1=Hedley |first1=Nick |title=Why betting on rising demand for met coal in Asia is a losing strategy |publisher=Zero Carbon Analytics |date=23 April 2026 |url=https://zerocarbon-analytics.org/energy/why-betting-on-rising-demand-for-met-coal-in-asia-is-a-losing-strategy/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{hedley2026why, author = {Hedley, Nick}, title = {{Why betting on rising demand for met coal in Asia is a losing strategy}}, institution = {Zero Carbon Analytics}, year = {2026}, month = apr, url = {https://zerocarbon-analytics.org/energy/why-betting-on-rising-demand-for-met-coal-in-asia-is-a-losing-strategy/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }