Last week, the thermal coal market continued its pattern of defying the typical "off-season slump," exhibiting strong upward price momentum. Spot prices at northern ports continued their upward trend, while price movements in major production regions diverged; amidst a tight balance between supply and demand, coal prices remained prone to rising while resisting decline.
I. Spot Prices: Widespread Gains at Ports, Divergence in Production Regions
As of May 6, the mainstream quoted price for 5,500 kcal thermal coal at northern ports stood at 800–820 RMB/ton—a significant increase compared to late April. Prices for 5,000 kcal and 4,500 kcal grades were approximately 713 RMB/ton and 622 RMB/ton, respectively, with all coal grades recording consistent margins of increase.
Prices in major production regions showed divergence: In Datong, Shanxi, the mine-mouth price for 5,500 kcal coal was 635 RMB/ton, a month-on-month increase of 15 RMB/ton. Conversely, in Ordos, Inner Mongolia, the mine-mouth price for 5,500 kcal coal was 559 RMB/ton, and in Yulin, Shaanxi, the mine-mouth price for 5,800 kcal coal was 621 RMB/ton; these figures represented month-on-month declines of 18 RMB/ton and 28 RMB/ton, respectively.
II. Core Driving Factors
1. Supply Side Continues to Tighten: Safety inspections and environmental protection measures in major production regions have become normalized, restricting capacity utilization rates at coal mines. Some mines have reduced output or undergone maintenance, resulting in insufficient effective supply. Furthermore, imported coal prices are currently inverted—with CIF (cost, insurance, and freight) prices exceeding those of domestic coal—limiting the availability of low-cost supplementary supplies and further exacerbating the domestic supply shortage. 2. Demand Side: Inventory Replenishment Initiated: Following the May Day holiday, downstream industries have resumed operations. Coastal power plants, currently holding low inventory levels, released pent-up demand for replenishment that had accumulated prior to the holiday. This factor, coupled with expectations of a peak electricity consumption season during the summer, has prompted power plants to stock up in advance; consequently, a rebound in daily coal consumption is providing solid support for rigid demand. Demand from non-power sectors—such as the coal chemical industry—remains stable, with high operating rates sustaining year-on-year growth in coal consumption. 3. Support from Low Inventory Levels: Inventory levels at northern ports and coastal power plants have declined year-on-year, currently sitting at multi-year lows. Consequently, traders are reluctant to sell—preferring to hold onto stock to support prices—and market sentiment remains strongly bullish. III. Market Outlook
Short-term (Early to Mid-May): Coal prices are likely to fluctuate at elevated levels. Following the completion of maintenance work on the Daqin Railway, coal inflows to ports are expected to rebound, which may temporarily alleviate supply pressures; however, low inventory levels and ongoing restocking demand will continue to provide price support. In the latter half of the month, concentrated restocking efforts ahead of the peak summer consumption season—coupled with forecasts for high temperatures—are expected to drive coal prices higher. Nevertheless, market participants should remain vigilant regarding the risks of high prices dampening downstream purchasing activity, as well as potential policy-related regulatory interventions.
Long-term: The tight supply-demand balance is unlikely to shift significantly, suggesting that thermal coal prices will remain prone to rising while being resistant to falling. However, it is essential to maintain continuous monitoring of factors such as import policies, the intensity of safety inspections, and weather pattern changes.
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