Jakarta,- After experiencing a weakening trend for four consecutive days, coal prices finally returned to strength and broke the US$100 per tonne mark. This strengthening occurred amid Glencore's move to cut production from their coal mines.

Reporting from Refinitiv, on 26 March 2025, the price of coal was recorded at US$100.4/ton, up 2.19% compared to the previous day's trading close at US$98.25/ton.

Glencore's move to reduce production from its Cerrejón coal mine is one of the factors influencing this price movement.

The company announced on Tuesday that it would cut production by five to 10 million tonnes from the initial estimate. With this cut, Cerrejón's production is expected to reach only 11 to 16 million tonnes this year.

‘The main reason for the cut is driven by unsustainable marine thermal coal prices,’ Glencore said in a Bloomberg News article.

As a Swiss commodity giant, Glencore has long adopted a strategy of adjusting production based on market prices. If coal prices weaken, they will reduce production to maintain market balance.

Since acquiring a full stake in Cerrejón from Anglo American and BHP in 2021, they have taken similar measures to adjust production to global price dynamics.

Meanwhile, Australia's Newcastle coal futures prices have also fallen to around US$100 per tonne, down around 20% since the beginning of the year.

In fact, in September 2022, coal prices touched a record of more than US$450 per tonne due to the impact of Russia's invasion of Ukraine. Since then, mining activity has increased due to the price surge and concerns over global energy security.

On the other hand, the outlook for coal going forward is still seen as bleak by a number of analysts. Bank of America, in its report, said that a price recovery in the near future remains elusive.

‘We see no signs of a price recovery in the near term,’ the bank said in relation to China's coal market, which by 2024 accounts for around 219 million tonnes or one-fifth of the total global seaborne trade.

Nevertheless, Glencore CEO Gary Nagle remains optimistic about the future of the coal industry.

‘Coal is no longer a taboo,’ he said during the company's year-end presentation in February. ‘In today's world, the balance has shifted and recognises that coal energy is still needed during the energy transition.’

This optimism is also supported by coal demand remaining strong in India and Southeast Asia, although consumption in Europe is starting to decline. Bank of America also highlighted the shift in the global economy away from China. ‘Along with advances in renewable energy, it is worth noting that the engine of the global economy is now beginning to shift away from China,’ it added.

Recent data from the International Energy Agency (IEA) shows that Asia's share of global coal consumption will rise again by 2024, reaching nearly four-fifths, up significantly from less than two-fifths in 2000. In China alone, coal demand grew 1.2% or around 43 million tonnes this year, setting a new record high.

‘The country now consumes nearly 40% more coal than the rest of the world combined, mainly for power generation,’ the IEA said.

Overall, coal demand in 2024 saw an increase of 1.1% in energy terms, or about 67 million tonnes of coal equivalent (Mtce), as well as a 1.4% increase in physical terms, or about 123 million tonnes, according to the IEA report.

Given these dynamics, despite the pressure on coal prices, Glencore's strategic move and continued strong demand in Asia signal that the coal industry still has an important role to play in the global energy transition.