Last week, the thermal coal market led the upward trend. At northern ports, quotes for 5,500 kcal thermal coal, a market bellwether, climbed to between 860 and 865 RMB/ton; 5,000 kcal thermal coal also reached 760 to 765 RMB/ton. Notably, coal prices at ports along the Yangtze River are generally 80 to 100 RMB/ton higher than those at northern ports due to higher costs such as inland shipping. Prices for 5,500 kcal thermal coal have reached as high as 900 to 910 RMB/ton.

By source, the price of high-calorific-value Q6000 thermal coal in Shenmu, Shaanxi Province, has risen to between 680 and 710 RMB/ton. It is important to note that the monthly average price of Q5500 thermal coal in Ordos, Inner Mongolia, was 342.31 RMB/ton. This price is the "pithead price" and does not include subsequent transportation costs, so it cannot be directly compared with port prices.

The international market is also buoyant. The reference price of Indonesian 5,800 kcal thermal coal is reported at $95.35 per ton, continuing its upward trend and supporting domestic coal prices.

In the short term, coal prices have recently experienced a period of V-shaped fluctuations. After briefly bottoming out on October 22nd, prices quickly rebounded, clearly reflecting strong demand for bargain hunting, supported by strong fundamentals.

In the long term, this upward trend has seen cumulative gains of 20% to 40% since it began in early 2025, driven by multiple factors:

1. Continued tight supply: Major producing areas such as Shanxi, Shaanxi, and Inner Mongolia are facing strict safety inspections and environmental protection production restrictions, resulting in low overall capacity utilization. Furthermore, the Daqin Line, a major coal transportation artery, is undergoing autumn maintenance, significantly reducing daily coal deliveries to ports and causing inventory levels at northern ports to drop by over 10% compared to the same period last year.

2. Stronger demand: On the one hand, market expectations of a weak season have led to an early initiation of coal storage for winter heating. Daily coal consumption at coastal power plants has increased significantly year-over-year, pushing the number of days of available inventory down to near-critical levels and creating significant pressure to replenish stocks. On the other hand, a rebound in coal demand in industrial sectors such as chemicals and building materials has provided additional impetus to the market.

3. High costs: The combined shipping costs from coal mines to consumption locations are high, even leading to a "shipping inversion" phenomenon. This means that traders see little profit from transporting coal from production sites to ports for sale, exacerbating supply constraints and providing rigid support for port prices.

In summary, the current thermal coal market is facing significant upward pressure due to a combination of strong realities and expectations. All market participants are advised to monitor not only prices themselves but also policy trends, inventory fluctuations, and weather conditions to make prudent decisions in this complex and volatile market.

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