Thermal coal up 47% YTD, nears 1,000 yuan; analyst says breaking 1,000 not hard once restocking demand kicks in
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As of September, domestic thermal coal in China is priced at 987 yuan per ton, up 85 yuan from the start of the month, highlighting a seasonal off-peak price surge. The commodity briefly touched 1,002 yuan on September 9-10, and has risen nearly 47% from 682 yuan at the beginning of the year. Analysts from First Futures and Zhuochuang Information attribute the strength to tight supply-demand dynamics: mine output remains low due to strict safety inspections and slow复产 progress in Shanxi, while port inventories are declining and import growth has slowed sharply—August imports fell 1.5% year-on-year versus July's 20.3% growth—due to Indonesia's drought and quota delays. Higher pithead prices and pre-holiday restocking expectations have strengthened trader holding sentiment. Downstream thermal power plants are under cost pressure, with cautious purchasing and resistance to high prices. Looking ahead to October, analysts diverge: Zhuochuang expects high-range volatility with a possible initial rise then fall, as winter stockpiling supports but policy-driven supply improvements may cap gains; First Futures sees a stronger probability of price increases as production recovery remains incomplete and downstream restocking intensifies. Policy measures include the National Development and Reform Commission's September directives on Xinjiang coal transport and a joint ministry notice on safe and stable coal production.
Source report
As September begins, domestic thermal coal prices have reached 987 yuan/ton, up 85 yuan/ton from the start of the month, highlighting a notable off-season price surge. Notably, the commodity touched 1,002 yuan/ton on September 9 and 10. Compared to the beginning of the year price of 682 yuan/ton, the cumulative increase stands at nearly 47%.
Can Coal Prices Hold Above the 1,000 Yuan Mark?
Zeng Xiang, thermal coal analyst at First Futures, told China Times that the 5,500 kcal coal price is hovering near the 1,000 yuan threshold. "Currently, the off-season lacks demand. As long as restocking demand is released, it will not be difficult to stand above the 1,000 yuan mark again."
Low Production Levels Persist
Inventory data further confirms the tightening trend. Coal stockpiles at major ports around the Bohai Rim continue to decline, tightening the availability of market-circulating supply.
"In the near term, the domestic supply-demand balance remains tight, pushing the coal price center higher," added Ren Huiyun, coal analyst at Zhuochuang Information. Key factors include:
- Strict safety inspections in major production areas
- Slower-than-expected resumption of production at mines in Shanxi and other regions
- Limited room for output expansion in major mining areas
- Port coal inventories maintained at low-to-medium levels
- Persistent cost inversion in shipping
- Constraints on import growth due to drought in Indonesia and export quota approval delays
Insufficient Import Supply Adds Support
Weak import supply is a key supporting factor for domestic coal prices. Customs data shows that in August, China imported 42.09 million tons of coal, down 1.5% year-on-year, a sharp slowdown from July's 20.3% growth rate. Import market pressure stems from multiple factors:
- Slow progress in Indonesia's RKAB quota approval
- River drought affecting loading and transport
- Occasional price inversion between imported and domestic coal
Based on high-frequency data for September, import arrivals are likely to continue declining month-on-month, further weakening the supplementary role of imports in coastal markets.
Additionally, persistently high pithead coal prices have raised procurement costs for traders. Combined with expectations of pre-holiday centralized restocking and the upcoming autumn maintenance of the Daqin Railway, traders' willingness to hold prices firm is strong. These converging factors continue to push the thermal coal price center upward.
Pressure on Thermal Power Enterprises
Commenting on the current market landscape, Zeng Xiang noted that the coal market is in a period of weak supply and weak demand. Supply remains low due to slow production recovery, while demand is also subdued amid declining total power generation and the expansion of new energy.
"The rise in coal prices mainly increases costs for downstream users. Currently, downstream buyers are resistant to high prices, slowing procurement and waiting for the release of guaranteed supply capacity. Pre-holiday restocking demand is sluggish," Zeng said.
Ren Huiyun echoed this view: "Coastal downstream users have limited acceptance of high-priced market coal. Their purchasing attitude is cautious, with sporadic demand facing price negotiation pressure. Just-in-time restocking mainly relies on long-term contract fulfillment."
In the first half of 2026, the thermal power industry faced overall pressure, primarily due to declining electricity prices. Rising coal prices also significantly impacted industry profitability.
Financial data shows that in the first half of the year, major thermal power companies such as Huaneng International and Huadian International saw both revenue and net profit decline. Huadian International reported net profit attributable to shareholders of 3.105 billion yuan, down 20.47% year-on-year. Guodian Power also experienced similar weakness.
Divergent Trends Possible in October
Industry analysts believe that the October thermal coal market will require close attention to the effectiveness of supply guarantee policies.
On the policy front:
- In early September, the National Development and Reform Commission (NDRC) held a special meeting on coal transport from Xinjiang, emphasizing stable output, strengthened transport capacity, and increased outbound volumes.
- In mid-September, the NDRC, the National Energy Administration, and the National Mine Safety Administration jointly issued a notice on ensuring safe and stable coal production, covering measures such as resuming production at suspended mines, compliance-based capacity increases, releasing coal production reserves, and strengthening long-term contract signing and performance.
Under this policy mix, expectations for supply improvement are clearly rising.
On the demand side:
- Coal for power generation: October is an off-season for coal consumption, and power plant inventories are expected to rise passively. With long-term contract coverage, procurement of market coal is likely to remain limited.
- Non-power sectors: Although October is a peak season ("Silver October"), infrastructure and real estate fundamentals remain weak, limiting demand from cement and other industries.
Price Outlook
Ren Huiyun predicts that the market will experience high-level volatile trading, with a possible pattern of strength followed by weakness:
- In early October, the Daqin Railway's autumn maintenance will limit port-bound supply, while some downstream users begin winter stockpiling, providing upward support for prices.
- As winter stockpiling winds down and downstream resistance to high prices persists, and as supply guarantee measures boost domestic output, coal prices may lack momentum for further gains and could decline.
Zeng Xiang believes that October will see greater market uncertainty. "Production is still recovering, and although the pace will accelerate, overall output has not fully recovered. Based on current conditions, downstream restocking intensity will increase, and prices are more likely to remain strong."
(Source: China Times)
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