Coal Outlook: Budget Done, Policy in Play - Aum Thakkar

diyakaravdra
6 days ago
3 min read

1. Market Overview

• The latest U.S. budget measure strongly favours fossil fuels by cutting support for wind and solar power, lowering royalties for coal firms, and expanding access to land for coal mining with the U.S.

The Trump administration is attempting to bring coal back to life through regulatory relaxations, freeing up millions of acres of public land for coal mining leases, and $625M in subsidies for coal plants.

Even with advantageous policies, coal is still challenged by long-term factors such as gas competition, renewable energy, emissions regulations, logistics cost, and dwindling demand across many areas.

2. Technical View

Trend: Coal prices have been facing downward pressure globally, as demand in Asia slows and supply remains solid

Support/Resistance: Support zones likely around levels where production becomes unprofitable for high-cost mines, and resistance could be reached, should U.S. and policy-driven demand temporarily surge.

Signals To Watch: U.S. demand growth, particularly from utilities balancing energy costs, coal lease auction uptake, coal vs natural gas spread, as fuel is cheaper, and global import demand, especially in Asia.

3. The Big Help: Government & Industry Actions Currently

• The U.S. budget favours coal; granting tax breaks, lower royalties, and expanding mining leases on federal lands.

• Agencies are reducing regulatory constraints, such as permits and emissions laws, to help coal plants operate longer.

• Despite this, environmental groups and clean-energy advocates are pushing back, warning that these moves are regressions in climate policy.

4. Fundamentals (with New Inputs)

Aspect:	Simple Take in Current Context:
Demand	U.S coal demand is forecast to rise ~7% in 2025, partly supported by high natural gas prices and energy demand growth.
Supply	Supply is adequate globally, and U.S. coal plant stockpiles are strong, with coal plants wellstocked through 2026.
Prices/Cost	Global coal prices are forecasted to decline by ~27% in 2025 (year-on-year), because important demand has weakened in some regions.

5. Forecast (Next 12-36 months) Under Current Conditions

Base Case: U.S sees a modest rebound in coal consumption in 2025, driven by policy support and high gas prices. Globally, coal prices soften. Over time, renewable growth and emissions regulations gradually erode coal’s share.

Bull Case: If U.S policy support is robust, coal plant usage increases, export markets hold up in Asia and Europe, and global demand surprises on the upside. Prices may stabilise or even recover regionally.

Bear Case: If renewables and gas remain cheaper, and global demand falls sharper than expected, the export markets weaken, policy pushbacks happen, oversupply emerges, coal prices drop substantially, and many mines or plants become unprofitable.

6. Risks To Lookout For

• Policy Reversals or Legal Challenges: to the new U.S budget and coal policies through courts and state opposition.

• Natural Gas Prices Falling: if gas become cheaper, many utilities will switch away from coal.

• Global Important Demand Weakness: this risk is higher in Asia (China and India specifically), or Europe.

• Emissions/Carbon Pricing Increases: this has ramped up in international markets, making coal usage costly.

• Logistics/Transport Constraints: remote mines far from plants can make coal uneconomic compared to alternatives.

• Public/Environmental Backlash: protests, regulatory blocks, and financing restrictions could limit progress.

7. What To Track Every Week

• Coal lease auction announcement and results in the U.S.

• Coal versus natural gas spread in U.S power generation.

• U.S coal plant utilisation and stockpile data.

• Export demand and contracts, particularly in Asia.

• Regulatory and policy news, such as court challenges and state reactions.

• Utility decisions, such as retirement policies.

• Global coal import and demand updates in China, India, and ASEAN nations.

References

Reuters Staff (2025c). Trump’s budget bill boosts fossil fuels, hits renewable energy. Reuters. [online] 2 Jul. Available at: https://www.reuters.com/sustainability/climate-energy/trumps-budget-bill-boosts-fossil-fuelshits-renewable-energy-2025-07-02/.

Noor, D. (2025a). Trump administration spending $625m to revive dying coal industry. [online] the Guardian. Available at: https://www.theguardian.com/us news/2025/sep/29/trump-spending-coal-industry .

Maguire, G. (2025a). Key trends to track as US aims for coal sector revival. Reuters. [online] 30 Sep. Available at: https://www.reuters.com/markets/commodities/key-trends-track-us-aims-coal-sector-revival-2025-09-30/.

World Bank Blogs. (2025). Weakening demand, steady supply: What’s driving coal’s price decline in 2025? [online] Available at: https://blogs.worldbank.org/en/opendata/weakening-demand--steady-supply--what-sdriving-coal-s-decline-i .

Daly, M. (2025). Trump opens land for coal mining, offers to boost coal-fired power plants. [online] AP News. Available at: https://apnews.com/article/trump-coal-mining-power-climate-burgum-electricityeebec80c6060f37890de8dc18a1732ec .

Reuters Staff (2025d). US coal auctions will test industry appetite for Trump mining revival. Reuters. [online] 30 Sep. Available at: https://www.reuters.com/sustainability/climate-energy/us-coal-auctions-will-test-industryappetite-trump-mining-revival-2025-09-30/.

U.S. Energy Information Administration (2023). Short-Term Energy Outlook - U.S. Energy Information Administration (EIA). [online] www.eia.gov. Available at: https://www.eia.gov/outlooks/steo/report/elec_coal_renew.php .