In Q4 2025, China's thermal coal market experienced an overall upward trend followed by a decline, with prices peaking at the highest level of the year. Taking Q6000-calorie thermal coal from the Yulin region as an example, the mainstream pithead price stood at 595-610 yuan/ton as of December 23, up 15 yuan/ton from the end of Q3, representing a 2.55% increase. The average price for Q4 was 645.7 yuan/ton, up 92.4 yuan/ton or 16.70% from Q3. The peak price occurred in late November at 680-700 yuan/ton, also marking the highest point in 2025. The trough was reached in early October at 580-590 yuan/ton, with a price fluctuation range of 17.95%.

Overall, the fourth-quarter supply-demand dynamics shifted from tightness to relative ease. After sustained price increases through mid-November, coal prices entered a downward trend due to factors including slower-than-expected supply contraction, mounting pressure from elevated inventories, and diminished expectations for a cold winter. Specifically:

Year-on-year decline in coal production gradually narrowed, with year-end supply contraction falling short of expectations

According to National Bureau of Statistics data, from January to November, industrial raw coal output from enterprises above designated size reached 4.4 billion tons, marking a 1.4% year-on-year increase. Specifically in October, the beginning of the month coincided with a major domestic holiday, during which many coal mines adopted cautious production practices, with some temporarily suspending production and sales. Additionally, rainfall in some producing regions during the first half of the month disrupted production continuity. Combined with intensified safety and environmental inspections, along with ongoing verification of coal mine production status, these factors imposed significant constraints on output growth. As a result, raw coal production in October declined by 2.3% year-on-year. However, entering November, as temperatures dropped, China entered the critical winter peak demand period. Major producing regions and large coal enterprises actively ensured domestic coal supply, leading to improved production releases. Raw coal output showed a significant month-on-month increase, and the year-on-year decline narrowed. In December, most major coal mines continued their supply efforts. By the latter half of the month, some mines gradually suspended production and sales after completing their annual targets. Overall, the year-end contraction in coal mine output was less severe than anticipated.

Inventories at the three northern ports have continued to accumulate, with current stockpiles approaching historical highs.

Since the fourth quarter, coal inventories at the three northern ports (Qinhuangdao Port, Caofeidian Port, and Jingtang Port) have steadily accumulated, now approaching historical highs. The pace of inventory buildup accelerated notably since early November. The primary reason for sustained northern port stockpiling is that coastal power plants in East and South China prioritize purchasing more cost-effective imported coal, reducing demand for domestic coal and consequently lowering coal dispatch requirements from northern ports. Simultaneously, periodic port closures in northern regions have disrupted coal shipments. According to port authority data, as of December 23, coal inventories at the three northern ports totaled 29.75 million tons—1.31 million tons below the historical peak but 9.4 million tons above the year's lowest inventory level. Currently, coal inventories at northern ports remain at historically high levels, indicating a pronounced supply-demand imbalance. Port coal prices continue to face downward pressure, with the price center steadily declining. As of December 23, the delivered price for Q5500 kcal thermal coal at Qinhuangdao Port stood at 705 yuan/ton, down 125 yuan/ton from the year's peak but up 87 yuan/ton from the year's trough.

Import coal prices retain their competitive edge, with import volumes remaining at relatively high levels for the year.

Market support from the demand side initially strengthened before noticeably weakening

Market support from the demand side in the fourth quarter initially strengthened before noticeably weakening. Specifically: Before mid-November, coinciding with the domestic peak winter coal consumption season and inventory replenishment phase, the power sector's demand for inventory replenishment continued to release, with increased acceptance of higher prices. Non-power sectors primarily focused on meeting essential demand. However, due to overall strong market prices, traders, driven by a “buy on the rise, not on the dip” mentality, maintained strong confidence in the winter peak season market outlook. Speculative coal stockpiling demand was substantial, providing clear support to the market. Coal prices continued to rise, repeatedly setting new annual highs. However, entering late November, after coal prices hit new annual highs, downstream resistance to high prices intensified. Simultaneously, the anticipated “cold winter” failed to materialize, with temperatures in some regions higher than last year. Power plant load increases were sluggish, and plant inventories accumulated rapidly. Traders perceived the sustainability of high prices as weak, leading to growing demand for destocking to lock in profits. Support from the demand side weakened, Coal prices came under pressure and softened. Simultaneously, port and pithead coal prices moved down in tandem, with significant declines further intensifying market participants' wait-and-see sentiment, making market transactions even quieter.

Coal Prices May Hover Near Bottom in Q1 2026

Looking ahead to Q1 next year, on the supply side, coal mines will commence new annual production targets after the New Year, with output stabilizing and generally outperforming the latter half of December 2025. However, as the Lunar New Year approaches in the latter half of the twelfth lunar month, some mines will gradually suspend operations for holidays, causing a temporary contraction in market supply. Supply will resume as mines restart production around the Lantern Festival after the holiday. However, the sustained decline in coal prices will erode mine profits and intensify loss pressures. Consequently, production costs and other factors are expected to constrain coal prices at their bottom. Overall, the domestic thermal coal market in Q1 2026 is likely to experience a fluctuating downtrend followed by a period of bottoming out.

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