Why China’s thermal coal demand remains supported despite demand peak concerns

• Rising crude, unreliable wind power keep coal demand firm
• Coal consumption for chemicals rises 9% y-o-y in 2025

Chinese thermal coal prices (5500 kcal per kg, Qinhuangdao) rose 12% from RMB 689/t in January to RMB 773/t in April 2026, as per the China Coal Transportation and Distribution Association (CCTD). Inventories fell as power plants burned more coal.

This shows that thermal coal demand remains robust despite talk of gradually reducing coal consumption. Four forces are breaking this outdated demand peak narrative.

First, oil prices have changed the economics. With Brent crude above $100 per barrel for most of early 2026, users switched from oil and gas to coal wherever possible. For example, while power plants can substitute coal for 15-20% of gas generation, industrial boilers can switch fully.

Second, coal chemicals are booming. China is deliberately building a massive coal-chemical industry. Coal consumption for chemicals rose from 310 million tonnes (mnt) in 2021 to 430 mnt in 2025, with 2025 also witnessing an 8.9% y-o-y increase, according to CCTD and the China Coal Industry Association.

Third, imports have become unreliable. Indonesia shipped 211 mnt to China in 2025. That number is expected to fall 18-24% to 160-175 mnt in 2026. When cheap imports disappear, coastal buyers turn to domestic mines, pushing up domestic prices.

Fourth, the weather has added unexpected demand. La Nina brought colder temperatures to northern China in early 2026. Low wind speeds reduced wind output. Early summer heat arrived in the south. Coal-fired power generation rose 3.2% y-o-y in January, 4.1% in February, and 5.5% in March.

Consequently, thermal coal demand is unlikely to fall off significantly. The China Coal Industry Association projects demand of 4.40 billion tonnes (bnt) in 2026, 4.38 bnt in 2027, and 4.35 bnt in 2028. Even by 2030, demand is forecast at 4.22 bnt, just 3% below 2025 levels.

For coal miners, this means a longer window of profitable operations. For policymakers, the energy transition will take longer than hoped.

Market tone is cautiously bullish for thermal coal prices in 2026, with a plateau forming from 2027 onward rather than a sharp decline.

Note: Price and demand data sourced from China Coal Transportation and Distribution Association (CCTD), China Coal Industry Association, National Bureau of Statistics (NBS), China Electricity Council, and General Administration of Customs. Forecasts from the National Development and Reform Commission (NDRC) and industry association projections.