- Falling spot freights reduce delivered costs, sustaining import arbitrage
- Stable domestic supply, weak thermal power output cap import demand
China’s non-coking coal import arbitrage remains open but has narrowed in recent weeks as higher FOB prices in key export regions have eaten into delivered margins. A stronger Renminbi and softer freights have partially offset these increases, allowing imports to remain viable — particularly from Russia and Australia — though with reduced competitiveness compared with late 2025.
FOB prices, delivered economics
Mid-CV Australian coal (around 5,500 kcal/kg) was traded near $74/t FOB, while comparable Indonesian material rose to around $79/t FOB, narrowing the price gap between the two origins. Russian mid-CV coal continued to arrive at a discount, but that advantage fell to roughly $11/t, down sharply from discounts of around $30/t seen in November.
South African and Colombian material remained uncompetitive in China, arriving at delivered premiums of roughly $10-22/t, effectively excluding these origins from the current import mix.
Currency strength, freight relief
The Renminbi has strengthened to around RMB 6.97 per US dollar, its strongest level since mid-2023. This has improved the purchasing power of Chinese importers, offsetting part of the increase in FOB prices.
At the same time, falling spot freights reduced delivered costs, helping to keep the arbitrage open even as international coal prices firmed.
Domestic prices cap import appetite
China’s domestic spot coal prices at Qinhuangdao have remained flat near RMB 700/t ($100/t), providing a stable benchmark against which import economics are assessed. With domestic prices steady and inventories adequate, Chinese buyers have shown little urgency to chase higher-priced imports.
Coal consumption at China’s top thermal power plants has slipped below seasonal averages, reinforcing a cautious buying approach despite favourable currency and freight conditions.
Structural shifts reduce import dependence
Coal production growth in China slowed sharply in the second half of 2025, and early 2026 is expected to see a y-o-y decline. However, this has not translated into stronger import demand, as coal-fired power generation fell on an annual basis in 2025 for the first time in a decade.
Record output from hydro, wind, solar, and nuclear has reduced structural reliance on imported thermal coal, limiting the upside for seaborne demand even when arbitrage windows remain technically open.
Outlook
China’s coal import arbitrage is expected to remain open but increasingly fragile. If FOB prices continue to rise or freight and currency support fades, delivered margins could narrow further, discouraging discretionary buying. Imports are likely to remain tactical and origin-selective rather than volume-driven through early 2026.
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