The Coal market in the USA showed a downward movement in February 2025. Prices dropped marginally by 0.8%. The decline in prices was driven by a rise in supply alongside moderate demand growth in major downstream sectors like steel production and power generation. Demand growth was primarily contributed by the steel sector as domestic production increased. The power generation sector also pushed the demand as coal consumption increased.

Moving further, the prices of Coal are expected to gain momentum in the coming months owing to increased demand from the power generation sector. As temperatures are expected to rise, energy consumption is also very likely to increase which may lead to increased reliance on coal-fired power plants to meet the growing electricity needs. Additionally, if supply levels fail to keep up with the current demand, shortages may emerge further driving the prices of Coal higher. Furthermore, factors such as mining constraints, transportation bottlenecks, and policy changes may further drive the prices higher.

In the current market, the decline in the prices was attributed to a rise in supply which was not completely offset by moderate demand growth from downstream sectors leading to downward pressure on the prices. The supply rose significantly with estimated production reaching 10.6 million short tons (MMst) in the last week of February 2025.

This surge aligned with the heightened demand from the steel sector while still putting downward pressure on the prices. However, long-term trends towards renewable energy sources and regulatory constraints, and stockpiling efforts may impact the availability soon. Some electric generators reported the planning to retire 8.1GW of coal-fired power plant capacity in 2025, or 4.7% of the total U.S coal fleet that was still operational at the end of 2024. This move is expected to exert downward pressure on coal demand, potentially impacting the prices negatively as more power plants transition away from coal.

On the demand side, the 25% tariff on steel imports led to increased steel mill activities in the domestic market, boosting the demand for coal in the sector. Steel mills already announced a price increase of 2-4% per square foot between January and February 2025 indicating heightened activity in the market and therefore increased consumption of coal. In the power generation sector, a decline in natural gas consumption prompted some utilities to shift to coal as an alternative energy source, though warmer weather conditions reduced overall electricity demand in the market. Overall, coal demand in February rose due to industrial needs, particularly in steelmaking, while power generation saw a limited but noticeable impact.