The coal market supply-demand situation in 2025 is expected to be relatively loose. In the first half of the year, high supply and weak demand were prominent, with inventories accumulating across all segments. Transshipment port inventories repeatedly hit record highs, fueling pessimistic market sentiment. The thermal coal price at Bohai Rim ports briefly reached its lowest level since April 2021. Entering the second half of the year, the market supply-demand dynamics gradually improved under the combined influence of anti-internal competition measures, overproduction inspections, safety and environmental audits, and rainy summer and autumn weather, leading to a price rebound.

In 2025, the price of 5500-calorie thermal coal in the Bohai Rim region fluctuated between 610-830 RMB/ton, with an average price of 703 RMB/ton. This represents a year-on-year decrease of 158 RMB/ton, or 18.4%.

Shanxi low-sulfur coking coal prices will range between 1,100 and CNY1,700 per ton, with an average price of CNY1,380 per ton. This represents a decrease of CMY515 per ton compared to last year's average, a drop of 27.2%.

Looking ahead to the 2026 coal market, we analyze both supply and demand aspects.

(1) Coal consumption will grow at a low rate, with estimated incremental demand around 20 million tons, primarily driven by the chemical industry.

Economic growth continues to underpin coal consumption fundamentals. As the opening year of the 15th Five-Year Plan, 2026 is expected to see China's GDP growth reach 5%, supported by major project implementation and resilient exports.

Thermal coal consumption will see marginal growth. With the continued expansion of the economy and rapid growth in AI-driven electricity demand, total electricity consumption is expected to maintain a moderate growth rate of around 5.5%. At this growth level, hydropower and renewable energy increases can largely meet demand. However, considering factors such as below-average water inflows and abnormal weather, thermal power generation and thermal coal consumption are still expected to achieve marginal growth.

Coal consumption in the building materials and steel sectors will continue to decline. With reduced housing construction and ongoing improvements in domestic infrastructure, demand for building materials is expected to maintain its downward trend. In the steel sector, tighter regulations on steel exports and the impact of international “anti-subsidy and anti-dumping” measures will reduce exports of low-value-added steel products, thereby curbing domestic steel production. Combined with increased scrap steel utilization, coal consumption in the steel industry will continue to decrease.

The chemical industry will continue to drive coal consumption growth. Coal-to-chemicals capacity will see significant expansion by 2026, fueling further increases in coal consumption within the chemical sector. Throughout the 15th Five-Year Plan period, modern coal-to-chemicals industries are projected to maintain rapid development driven by industrial upgrading, energy security considerations, and economic efficiency, consistently contributing to coal consumption growth.

(2) Imports will see a slight decline while domestic production grows at a low rate, resulting in an estimated total supply increase of 10 million tons.

Coal imports will see a slight decline. While the international coal market shows no significant capacity expansion by 2026, China remains a prime export destination due to its scale advantages. Notably, both Russia and Mongolia plan to increase exports to China. However, market expectations anticipate a notable drop in Indonesian coal imports due to Indonesia's reduction of production quotas (RKAB) and the restoration of export tariffs. Overall, under a neutral assessment, China's coal imports are projected to decline to 465 million tons in 2026, a decrease of 25 million tons compared to 2025.

Domestic coal production will grow at a low rate. By 2026, the balance between new capacity additions and reductions in production capacity due to supply guarantees and the phasing out of depleted capacity will be largely even. However, the utilization rates of the reduced and depleted capacity are inherently low, while most new capacity is located in high-quality production areas in Shanxi, Shaanxi, Inner Mongolia, and Xinjiang. Under stable market conditions, there is room for improving the utilization rates of existing coal mines, ensuring continued growth in coal production. Additionally, amid significantly heightened uncertainties in the international development environment, ensuring stable and reliable coal supply remains the top priority in energy work. Based on analysis of coal consumption demand and import volumes, national raw coal production in 2026 is projected to exceed 4.86 billion tons, representing an increase of approximately 35 million tons compared to 2025. Should imported coal volumes decline more significantly, domestic production could still be scaled up.

Overall, 2026 marks the opening year of the 15th Five-Year Plan period. China's coal consumption will continue to grow supported by economic fundamentals. However, under the combined impact of declining coal imports, domestic anti-overcapacity measures, and coal mine overcapacity inspections, the growth rate of coal supply may lag behind that of consumption. Therefore, based on supply-demand dynamics, the coal market is expected to enter a destocking phase. According to the forecast results from the Coal Market Intelligence, the probability of coal prices shifting upward in 2026 will exceed 70%.

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