China’s thermal coal prices fell to their lowest level in nearly four years in February, as market oversupply continued to weigh on prices.
Source: Securities Times
China’s thermal coal prices fell to their lowest level in nearly four years in February, as market oversupply continued to weigh on prices. Meanwhile, coal inventories remained high, with major ports holding approximately 74.99 million tons and power plants stockpiling around 106 million tons, both at their highest levels in three years. In response, the China National Coal Association and the China Coal Transportation and Distribution Association issued a joint statement on February 28, urging coal producers to curb output, balance supply and demand, and restrict imports of low-quality coal to stabilize the market.
The coal industry is facing mounting pressure as supply outstrips demand. The statement called on coal companies to adjust production levels while maintaining safe operations, warning against a significant supply glut that could further depress prices. It also emphasized the need for power companies to honor long-term coal supply contracts to ensure market stability. Since the last heating season, coal producers have been steadily increasing production to meet government requirements for power generation and residential heating. However, demand from industrial users has fallen short of expectations, leading to a worsening supply-demand imbalance and prolonged price declines.
China’s coal imports surged to a record 540 million tons in 2024, a 14.4% year-on-year increase, according to China’s General Administration of Customs. Notably, lignite imports reached 190 million tons, making up 35% of total coal imports. Lignite, the least carbonized form of coal, has high moisture content and low energy efficiency, making it a low-grade fuel often seen as undesirable in a market struggling with oversupply. In light of these concerns, the industry statement called for strict controls on the import and use of low-calorific-value coal, a move expected to help ease the oversupply crisis.
Adding to market adjustments, reports indicate that China Shenhua Group, one of the country’s largest coal producers, has instructed its subsidiary power plants to suspend coal imports, with plans to completely halt purchases starting in April. The decision is expected to reduce imports by 1 to 2 million tons in the first quarter, potentially easing downward pressure on domestic coal prices.
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