As the winter heating season in 2025 arrives, the Chinese coal market has not witnessed the booming market conditions of previous years. Instead, it presents a stable trend of "a slack peak season". Data from the China Coal Market Network shows that on December 9th, the price of 5,000 - kcal thermal coal was reported at 645 yuan per ton, basically the same as the same period last year. The coking coal market showed an even more subdued performance. The spot price of the China Price • Xinhua Index recorded 1,257 yuan per ton on December 4th, a decrease of 58 yuan compared with the same period last year, and a drop of 228 yuan compared with the same period in 2023. The decline rate in both years exceeded 4%.

The performance of the capital market has synchronously confirmed the industry trend. The A-share coal sector has experienced fluctuations of "first rise, then fall, and then rebound" from December 2024 to December 2025, and the recent trend has gradually stabilized.

Behind this stability are multiple factors, such as the transformation of the energy structure and the adjustment of the supply and demand pattern, said an industry official. The economic recovery after the pandemic did not lead to a corresponding warming of the coal market, but instead reflected the profound structural transformation of China's energy system, the official said.

New Equilibrium of Supply and Demand: Capacity Growth Meets Demand Differentiation

As the world's largest producer and consumer of energy, China is reshaping its energy landscape with the rise of new energy sources. The rapid expansion of wind and solar power has directly squeezed the traditional share of coal in the power system. Data from the National Energy Administration shows that the installed capacity of renewable energy power generation in the country has exceeded 1.5 billion kilowatts, surpassing coal-fired power for the first time in history, accounting for more than 50% of the total installed capacity, with solar and wind power installations reaching 610 million kilowatts and 440 million kilowatts, respectively. In 2023, the electricity generated from renewable energy sources accounted for a third of the total electricity consumption in society, while the share of coal-fired power generation dropped to around 58%. With the slowdown in the growth rate of electricity consumption in 2025 and the large development of new energy, coal-fired power units are transitioning from base-load power sources to peak-load and reserve roles, and the average utilization hours continue to decline.

The differentiation of downstream demand further exacerbates the adjustment of the coal market.

Since the beginning of this year, along with the adjustment of China's economy, the once hot real estate market has been plunged into a state of depression. According to the data from the National Bureau of Statistics, the sales area of newly built commercial housing in 2025 was 71,982 million square meters, a year-on-year decrease of 6.8%; the national fixed asset investment (excluding farmers) decreased by 1.7% year-on-year. The slowdown in the real estate industry directly affects steel demand. Although infrastructure construction is still an important area for steel consumption, after years of rapid development, the growth space has been significantly narrowed. In 2024, the year-on-year growth of the national infrastructure investment was only 2.1%, a significant slowdown from the double-digit growth five years ago.

The slowness of the steel market has also been transmitted upstream, affecting the coal market. "This is not just a cyclical fluctuation, but a reflection of structural changes. In the past twenty years, China's steel demand has been mainly driven by real estate and infrastructure construction. The simultaneous deceleration of these two engines has inevitably impacted the upstream of the industrial chain," an industry insider said.

The supply side has also shown new characteristics, with China coal production maintaining rapid growth and coal imports returning to around 50 million tons in 2025. It is expected that the growth rate of production will slow down in 2026, with new production capacity in Xinjiang and Inner Mongolia becoming the main growth point, while traditional producing areas such as Shanxi and Shaanxi will optimize their production capacity structure through "removing the inferior and keeping the superior". Overall, coal consumption has entered a platform period. Many authoritative institutions predict that during the "15th Five-Year Plan" period, China's coal consumption will be at a peak platform of 48-50 billion tons, and will decrease to about 35 billion tons in 2035 and further decrease to 30 billion tons in 2040.

Policy focus: ensuring supply and promoting transformation.

Starting from July 2025, the National Energy Administration conducted an overproduction inspection in major coal-producing provinces such as Shanxi and Inner Mongolia, covering all operating coal mines. It was made clear that coal mines with a monthly production exceeding 10% of the announced capacity would be required to immediately cease production and rectify the situation, and a province-wide notification would be issued. Several coal mines in Inner Mongolia have been ordered to suspend operations due to overproduction, involving a capacity of more than 30 million tons. Shanxi and Shaanxi have also simultaneously carried out penalties and rectification. Strict supervision not only stabilized production fluctuations and market supply but also accelerated the exit of inefficient and high-risk capacity, promoting a significant increase in the proportion of high-quality capacity and laying a foundation for the long-term stable operation of the industry.

In the short term, from the end of 2025 to the first quarter of 2026, heating demand and cold waves will likely push the price of thermal coal to rise temporarily. The main driving force will be the increase in the daily coal consumption of power plants. However, after the heating season ends, a decline in demand may lead to a price adjustment. Overall, the coal market in 2026 is expected to show a pattern of "loose in the off-season and tight in the peak season", with a slight surplus in supply and demand basically balanced throughout the year. In the medium and long term, the improvement of industry concentration and policy control will enhance the elasticity of supply and regulate market order. However, the acceleration of new energy substitution and the strengthening of carbon constraints will limit the upside potential of prices. The market characteristics of "big ups and downs" are expected to gradually disappear.

Accelerating Transformation: The Path to Breaking the Coal Industry's Deadlock

In the future, the construction of a "clean, low-carbon, safe, and efficient" modern energy system still needs coal to play an important supporting and regulating role for a certain period of time, but the main theme of industrial development has clearly shifted to new energy.

The alternative effect of new energy has forced the coal industry to accelerate transformation and upgrading. The "three transformations" (energy conservation and carbon reduction transformation, flexibility transformation, and heating transformation) of coal-fired power generation have been fully promoted, and the "coal-fired power generation and new energy joint venture" model has become a new direction for transformation. Photovoltaic power stations are built in the subsidence area and the waste disposal site of coal mines, relying on the regulation capability of coal-fired power generation to achieve multi-energy complementarity, which not only enhances the stability of the power system but also opens up a transformation path for coal enterprises. Nevertheless, the role of coal as a "ballast" for energy security is still irreplaceable in the short term, and the controllability of coal-fired power generation under extreme weather is still an important guarantee for power grid security.

In 2026, the coal market will move towards a more stable, efficient and sustainable development stage in the context of supply-demand balance, policy guidance and accelerated transformation. For coal enterprises, adapting to the new normal of the market, deepening the clean and efficient use of coal, and arranging new energy joint ventures have become key to seizing future opportunities; for policymakers, balancing the relationship between ensuring supply, price stability and industry transformation is the core task to promote the healthy development of the coal industry and help achieve the "double carbon" goals.

With the "15th Five-Year Plan" underway, China's coal industry will continue to play a role in supporting energy security in a standardized and stable market environment, while also focusing on the transformation to cleanliness and diversification, to write a new chapter in the process of the energy revolution.

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