Commodity Market Dynamics, Analysis, and Forecast for Thermal Coal (Recent Update)
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I. Market Dynamics
(A) Price Trends
1. Spot Prices: As of December 22, 2025, the ex-warehouse price for 5,500 kcal/kg thermal coal at Qinhuangdao Port stood at approximately RMB 745/ton, down by about RMB 90/ton month-on-month and RMB 50/ton year-on-year. The price for 5,000 kcal/kg thermal coal was around RMB 659/ton, down roughly RMB 70/ton from the November peak. Since early December, thermal coal prices have continued declining steadily; the benchmark price fell below RMB 800/ton on December 3 and has since trended lower.
2. Futures Prices: Thermal coal futures also exhibited weakness. As of December 12, 2025, the front-month futures contract traded at approximately RMB 801.4/ton, with most contracts showing little to no movement—indicating a relatively stable yet bearish market sentiment.

(B) Supply-Demand Conditions
1. Supply Side
– Domestic Output: In November 2025, output of raw coal by designated large-scale industrial enterprises totaled 430 million tons, down 0.5% year-on-year; cumulative output from January to November reached 4.4 billion tons, up 1.4% year-on-year. Since December, most coal mines have maintained normal production operations. Overall coal supply remains relatively stable, although a small number of mines have reduced or halted production after fulfilling their annual output targets.
– Imports: In November 2025, China’s coal imports amounted to 44.053 million tons, down 19.9% year-on-year; cumulative imports from January to November totaled 431.676 million tons, down 12% year-on-year. Import volumes in 2026 are expected to grow only marginally, keeping overall supply stable.
2. Demand Side
– Power Sector: In November 2025, thermal power generation by designated large-scale industrial enterprises declined by 4.2% year-on-year (compared to a 7.3% increase in October). From January to November, solar PV, wind, hydro, and nuclear power generation increased by 23.4%, 22.0%, 17.1%, and 4.7%, respectively—demonstrating a pronounced substitution effect of new energy sources on coal-fired power.
– Non-Power Sectors: Industries such as chemicals and building materials face cost pressures, resulting in weak demand. For instance, sustained price increases in thermal coal during Q3 raised energy costs, leading to declines in average operating rates for coal-to-methanol and coal-to-urea facilities.

(C) Inventory Levels
As of December 19, 2025, according to Mysteel’s survey of 55 major ports nationwide, thermal coal inventory stood at 70.928 million tons—a weekly increase of 0.645 million tons. Inventories at Bohai Rim ports continued rising; those at East China and South China ports also rose moderately, while inventories at Northeastern and Jiangnei (inland river) ports edged slightly downward. Overall, port inventories remain on an upward trajectory. With high long-term contract (LTC) coverage, power plants exhibit limited motivation to replenish spot coal inventories, maintaining procurement plans strictly aligned with rigid demand requirements.

II. Analysis and Assessment
(A) Reasons for Price Decline
1. Oversupplied Market: Domestic coal output remains relatively stable; although coal imports declined year-on-year, they still provide supplemental supply. Moreover, the impact of reduced or suspended production at a few mines—having met their annual quotas—is limited. Meanwhile, traders actively ship LTC coal to fulfill delivery obligations, further boosting market supply.
2. Weak Demand: Thermal power generation faces mounting pressure from new energy sources, resulting in lower coal consumption; non-power sectors, constrained by cost and sluggish market demand, have lowered operating rates. End-users, burdened by high inventories and weak demand, have slowed purchasing pace, limiting market trading activity.
3. Climatic Factors: Nationally averaged temperatures in November 2025 were above normal, weakening the traditional winter heating-driven support for coal demand. Peak heating electricity demand arrived later than usual, contributing to a year-on-year decline in thermal coal consumption.

(B) Key Market Contradiction
The prevailing market contradiction lies in the tension between the current reality of 'high inventories and weak demand' and the market’s lingering expectations of a 'winter coal consumption peak'. Although the market has entered its traditional high-demand season, elevated inventory levels and sub-par daily consumption rates continue suppressing coal markets. Absent a tangible improvement in demand, the market is unlikely to reverse its weak trend.

III. Outlook
(A) Short-Term Outlook (December 2025 – Q1 2026)
1. Price Trend: Thermal coal prices are expected to remain range-bound and weak in the near term. Although a new cold snap may lift northern heating-related coal demand, providing some price support, persistently high inventories at power plants constrain spot procurement. Additionally, continuous downward adjustments to external purchase prices by major coal groups are reinforcing traders’ bearish sentiment—leaving room for further downside. However, the probability of prices falling below RMB 700/ton is extremely low; the bottom of this correction cycle is projected to settle within the RMB 750–770/ton range.
2. Supply-Demand Balance: On the supply side, domestic mine output will remain broadly stable, and imported coal will offer only limited incremental supply. On the demand side, winter heating demand and industrial electricity consumption will provide modest support—but overall growth in demand will be limited. Consequently, the supply-demand balance is expected to remain relatively loose.

(B) Medium-to-Long-Term Outlook (Full Year 2026)
1. Price Trend: The average 2026 thermal coal price is likely to rise compared to 2025, possibly following a 'low-in-first-half, high-in-second-half' pattern. The first half may continue under conditions of relative oversupply, while the second half could see tightening supply-demand fundamentals—driving a gradual upward shift in price benchmarks. Market analysts project that the annual average price for Q5000 thermal coal in Shandong Province may reach approximately RMB 715/ton in 2026, representing an increase of about RMB 80/ton (or +12.6%) versus 2025.
2. Supply-Demand Balance: Domestic capacity additions will be limited, while phased-out outdated capacity continues to exit the market—keeping domestic output largely flat. Import volumes are expected to grow only marginally, ensuring overall supply stability. On the demand side, China’s coal consumption has entered a plateau phase; however, steady economic growth and sustained industrial activity will maintain coal demand at a significant scale. Overall, the 2026 coal market is expected to achieve a basic balance—with a slight surplus.