LITTLETON, Colorado, Jan 21 (Reuters) - Thermal coal exporters are on the lookout for expansion opportunities following their first annual contraction in sales volumes last year since COVID-19 slammed fuel demand in 2020. Problem is, growth markets are hard to find.

Half of the top 10 thermal coal importers in 2025 registered year-over-year drops in purchase volumes, data from commodities intelligence firm Kpler showed, including the top three buyers which cut collective imports by nearly 50 million metric tons.

That top-heavy drop in purchases resulted in total thermal coal export volumes dropping by 33 million tons, or by 3%, to around 936 million tons last year, and to the smallest annual shipment total since 2022.

The synchronized drop in imports into key markets has raised the prospect that coal exports may have peaked, and could undergo a persistent slide going forward as a growing number of energy systems opt for cleaner power generation sources.

However, even as coal use in certain primary markets looks to be in terminal decline, there remain a number of countries that are locked in coal use growth phases, and will be hotly contested by exporters in the coming years.

THE BIG 3

China, India and Japan have been the top three importers of thermal coal for more than a decade, and between them have accounted for around 60% of annual imports since 2017.

In 2025, their collective purchases were around 565 million tons, or just under 59% of the global total. That total was 49 million tons, or 8%, down from 2024, and the lowest since 2022.

China is by far the top coal importer, and scooped up 308 million tons last year, followed by India's 157 million tons and Japan's 100 million tons, Kpler data shows.

At well over half a billion tons a year, the collective appetite by the top three coal importers remains the primary focus of major coal exporters such as Indonesia and Australia.

However, the synchronised downturn in the big three's collective imports is likely a sign of things to come as coal is gradually squeezed out of power generator and industrial boilers and replaced by other power sources.

In China, the rapid deployment of renewables and other clean power sources, alongside efforts to sustain the domestic coal mining sector, are likely to further reduce China's coal import requirements in the years ahead.

India also has a large coal mining industry that is a major recipient of government support designed to sustain jobs and reduce national import purchases of energy products.

And in Japan the steady restarting of its nuclear power sector - which was largely shuttered for a spell following the 2011 Fukushima meltdown - is reducing the power sector's reliance on coal for generation.

In these countries - plus the likes of the Philippines and Taiwan - coal's share of utility power generation mixes is on a steadily declining trajectory, which means that coal exporters need to look elsewhere for growth.

BRIGHT SPOTS

While the top three coal importers cut their collective imports by nearly 50 million tons in 2025, the next ten largest importers last year boosted their total purchases by a combined 13 million tons.

That total represents only 4% of China's total imports last year, but still represents sales potential for exporters trying to offset the declines seen in the largest coal markets.

Among those next largest coal markets, Bangladesh registered the biggest annual rise in coal imports last year with a 4.9 million ton increase, to a record of around 17 million tons.

Turkey reported a 4.5 million ton rise, to 32 million tons, while South Korea - the fourth largest coal importer - lifted purchases by 3.65 million tons to around 76 million tons.

Vietnam, Malaysia, Thailand and the Netherlands also posted year-over-year increases in coal imports in 2025, by an average of around 1.3 million tons each.

ELECTRIC GROWTH

The key driver of the higher coal imports by the likes of Bangladesh, Turkey, South Korea and Vietnam has been a durable rise in coal's share of the electricity generation mix.

In Bangladesh, coal's share of utility-supplied electricity output rose above 40% for the first time in 2025 because of steadily rising power and energy demand.

In South Korea, the coal share hit its highest in four years following cuts to domestic nuclear power generation, while in Malaysia, Vietnam and the Philippines coal's average generation share remained well above 40%.

Coal's share of Turkey's electricity generation mix declined slightly in 2025 to around 34% from over 35% in 2024, but it remains the country's single largest power source.

Indeed, throughout most emerging markets, coal's position as the primary power source looks to have staying power for the next decade at least, as utilities struggle to boost power supplies by the cheapest and quickest means possible.

In Turkey, Southeast Asia and parts of Africa, coal is that cheapest power source, at least until renewable installations and battery systems grow large enough to displace coal in the utility mix.

Those markets are only a fraction of the likes of China and India, but coal exporters facing steady volume falls into top economies may not be in a position to be picky, and will have to look farther afield for growth from now on.