This week, the domestic thermal coal market exhibited a pattern of stable prices at production sites, strong performance at ports, and a surge in overseas prices. Supply-demand imbalances intensified, driving up port spot prices, while international coal prices saw a sharp single-day spike, nearing the $150/tonne mark; overall, the market trended strongly upward.

I. Price Trends: Stability at Production Sites; Concurrent Strength at Ports and Overseas Markets

Domestic Production Sites: Firm Prices with Minor Fluctuations

As of June 8, the pit-mouth price for 5,500 kcal thermal coal in Shaanxi was approximately 623 RMB/tonne, and in Inner Mongolia, it was around 600 RMB/tonne—both unchanged from the previous day. Supplies in major producing regions remained tight, and traders showed a strong willingness to hold firm on prices.

Domestic Ports: Spot Prices Rise Week-on-Week

Spot quotes for 5,500 kcal thermal coal at Bohai Rim ports stood at approximately 865 RMB/tonne, up 12 RMB/tonne week-on-week; quotes for 5,000 kcal thermal coal were around 774 RMB/tonne, up 8 RMB/tonne week-on-week, marking a new high for the year.

International Market: Prices Surge, Nearing Key Threshold. The price for the ICE Newcastle thermal coal futures contract (for delivery in the following month) reached approximately $146.15/tonne, a 6.9% increase from the previous trading day; this marked a two-month high and brought the price close to the $150/tonne mark.

II. Key Drivers: Tightening Supply-Demand and Synchronized Domestic-International Trends

1. Supply Side:

June marks the national "Work Safety Month," and safety inspections in major producing regions have intensified. Following a coal mine accident in Shanxi, small and medium-sized mines across Shanxi, Shaanxi, and Inner Mongolia underwent widespread production halts for rectification; the pace of resuming production has been slow, leading to a noticeable short-term contraction in capacity. Meanwhile, controls on Indonesian export quotas and cost inversions for Australian coal arrivals have weakened the supplementary role of imported coal, highlighting a pattern of limited domestic supply growth and insufficient external replenishment. 2. Demand Side:

Temperatures in many southern regions have surpassed 35°C earlier than usual, driving up electricity loads and daily consumption at power plants, which has prompted an early start to restocking. Coupled with expectations of an El Niño event—raising the probability of extreme heat this summer—the inelastic demand for thermal power as a reliable baseline energy source is supporting an upward trend in coal prices.

3. Market Sentiment:

Tight supply-demand dynamics, combined with a sharp surge in international coal prices, have led traders to hold firm on prices and limit sales, thereby amplifying price increases. Additionally, maintenance on major domestic railway lines and disruptions to international shipping have reduced transport efficiency and raised costs, further fueling the rise in coal prices.

III. Market Outlook: High-level fluctuation with a bullish bias; focus on three key variables

In the short term, the thermal coal market is expected to maintain a trend of high-level fluctuation with a bullish bias; while the scope for price volatility remains limited, the upward trend persists. Supporting factors—including continued strict safety inspections, the onset of peak summer power demand, and the transmission of high international coal prices—are converging to create a market environment where coal prices are more likely to rise than fall.

Risk factors: A recovery in production capacity in major coal-producing regions, increased hydropower output during the flood season, and demand suppression caused by high coal prices could potentially slow the upward momentum.

Key observations: Moving forward, close attention should be paid to the pace of production resumption in major producing regions, changes in daily power plant consumption, and trends in international coal prices; these three variables will determine whether coal prices can continue to climb.

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