China’s thermal coal prices seen stabilising in Sept’25

• Chinese thermal coal prices steady, supply recovery offsets demand
• Utilities cautious on spot buying, eye October holiday restocking

Mysteel Global: Chinese spot thermal coal prices are expected to drift sideways in September after a modest early-month decline, as potential collective buying ahead of the week-long October holiday may be balanced by rising supply, according to Mysteel’s latest report.

August highlights

In August, Chinese domestic thermal coal prices climbed during the early and middle weeks of the month before turning downward towards the end. Mysteel’s assessment showed that the price of benchmark 5,500 kcal/kg NAR coal extended its July rally into August, rising from Yuan 657/tonne ($92.1/t) on August 1 to Yuan 702/t by August 19, FOB northern transfer ports with VAT. After holding steady for about a week, the price retreated, slipping from Yuan 702/t on August 26 to Yuan 695/t on August 29.

The price rally in early- and mid-August was primarily fuelled by the prolonged summer heat, which sustained high coal consumption. This prompted utilities to step up purchases of both contracted and spot coal. In addition, speculative trading further amplified the upward momentum.

In the final days of August, demand eased as temperatures began to cool, particularly in northern regions, which curbed spot coal purchasing. Although heatwaves persisted in East and South China, utilities there grew cautious about buying in the spot market and instead, opted to rely more on long-term contract supplies and competitively priced imported coal.

Mysteel’s survey among 493 coal-fired power plants across the nation showed that by August 29, their coal stockpiles had fallen from 100.3 million tonnes on August 1 to 96.49 million tonnes, while their daily consumption had contracted from 4.67 million tonnes/day in mid-month to 4.32 million t/d in the fourth week.

Domestic thermal coal supply, however, remained tight throughout the month, constrained by frequent rains, intensified safety inspections, and strict crackdowns on overproduction in key producing hubs. Output at the 462 Mysteel-surveyed coal mines averaged 5.5 million tonnes/day in August, down from 5.7 million t/d in July and below the year-to-date average of 5.6 million t/d, new Mysteel data show.

Port inventories reflected the squeeze, with stocks at the eight northern hubs regularly tracked by Mysteel dropping 12% on month to reach 20.42 million tonnes as of August 31 – a low not seen since mid-April 2024.

Policy requirements

After issuing a regulation in July to clamp down on overproduction in eight key mining regions, the National Energy Administration did not release updates on its enforcement in August.

Instead of signalling production cuts, authorities shifted their focus to optimizing supply and strengthening safety. For instance, Shaanxi province in Northwest China recently issued a circular urging coal miners to align supply with market demand to help stabilize the market, an initiative that emphasizes optimization rather than outright reduction.

Meanwhile, in late August, the National Mine Safety Administration released a draft on coal production license approvals, raising entry thresholds, tightening penalties, and expanding oversight.

September Forecast

Looking into September, Mysteel expects overall fundamentals to loosen slightly. Following the September 3 military parade, safety inspections are expected to ease, while coal mines previously affected by heavy rains are set to resume normal production.

However, demand is still the linchpin to determine the market trend. Market attention is focused on the time and intensity of potential restocking by utilities firms ahead of China’s week-long National Day holiday in October.

At the same time, industry insiders are watching to see if coal demand from non-power industries, such as cement production, will pick up significantly, as September typically marks the peak season for their production.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.