Since the beginning of the year, China’s coal supply has continued to grow rapidly, while demand has remained weak.
Source: China Coal Market Network（CCTD）
Since the beginning of the year, China’s coal supply has continued to grow rapidly, while demand has remained weak. Rising inventories across the industry have put downward pressure on prices, leading to significant declines across various coal types. According to CCTD data, as of March 17, the price of 5,500 kcal Bohai Rim thermal coal stood at 689 yuan per ton, down 80 yuan (10.4%) from the start of the year. Yulin 6,100 kcal chemical coal was priced at 560 yuan per ton, a drop of 100 yuan (15.2%). Meanwhile, Shanxi low-sulfur primary coking coal fell by 171 yuan to 1,255 yuan per ton, marking a 12.0% decline.
In the short term, coal production and imports are expected to remain high. On the production side, data from the National Bureau of Statistics shows that large-scale coal enterprises produced 765 million tons of raw coal in the first two months of the year, a 7.7% increase from a year earlier. High-frequency monitoring by CCTD suggests that stricter safety regulations and falling prices have put some pressure on coal production since March. However, the overall impact remains limited, with the capacity utilization rate of 442 sample coal mines down just 0.2 percentage points year-on-year.
Coal imports, meanwhile, totaled 76.12 million tons in January and February, up 2.1% from the same period last year, according to customs data. But with the price gap between domestic and imported coal widening and inventories at ports remaining high, import volumes have started to decline in March. Despite this, overall imports are still at historically high levels.
On the demand side, coal consumption is unlikely to see a short-term rebound. One major factor is the seasonal slowdown in power sector demand. Historically, mid-March to May is a low season for coal consumption by power plants, which often schedule maintenance during this period. With plant inventories already sufficient, purchases will likely remain limited.
Demand outside the power sector is also providing little support. Pig iron and cement output both declined in the first two months of the year, weighing on coal consumption. Although industrial activity typically picks up in March and April, the steel, coke, and construction materials industries are still facing weak demand. As a result, any increase in non-power coal consumption is unlikely to offset the seasonal decline in power-sector demand.
Adding to market pressure, high inventories are curbing buying activity. As of mid-March, coal stockpiles at major Bohai Rim ports had reached 31.37 million tons, up 10.11 million tons (47.6%) year-on-year. Qinhuangdao Port, in particular, has maintained coal inventories above 7 million tons for an extended period. With stockpiles high and port congestion adding to the strain, market sentiment remains weak, and trading activity has slowed.
Reproduced article do not represent the position of New Energy Era.