In recent weeks, the thermal coal market has been struggling with weaker-than-expected demand, while supply continues to rise rapidly.
Source: China Coal Market Network
In recent weeks, the thermal coal market has been struggling with weaker-than-expected demand, while supply continues to rise rapidly. As a result, inventories in the upstream and midstream sectors are building up, putting downward pressure on prices, which have been steadily falling. As of February 17, the "CCTD Bohai-Rim Thermal Coal Spot Reference Price" for 5500 K specifications dropped to 746 yuan per ton, a daily decrease of 4 yuan, marking the lowest level since May 2021.
In the electricity coal sector, power plant inventories remain high. Coupled with the pressure on sellers to fulfill long-term contracts, power companies have shown little interest in purchasing spot coal, leading to only modest structural demand. This has intensified price-cutting pressure. Additionally, the construction industry’s slow recovery and the limited increase in demand for building materials like cement and steel have kept coal procurement levels from non-electric sectors low.
Looking back, coal prices saw a significant drop during the 2024 winter peak, undermining market confidence. Since the holiday period, rapid supply recovery has continued to pressure prices downward, and heightened risk-aversion has further suppressed demand. The market broadly expects no major improvement in the thermal coal market this year, especially in the first half, when downward price pressures are expected to persist. As a result, bearish sentiment is expected to continue, limiting market purchasing activity.
The short-term outlook for the thermal coal market is likely to remain dominated by weak demand and expectations, increasing the likelihood that prices will continue to search for a bottom. However, with macroeconomic factors improving and downward price momentum weakening, stockpiling demand ahead of the non-electricity sector’s “golden March and silver April” period could drive a potential short-term rebound.