China’s thermal coal prices continue to fall, with the spot closing average price of 5500 kcal thermal coal (produced in Shanxi) at Qinhuangdao Port reported at 725 yuan per ton on February 20, down 22.79% year-on-year, hitting a new low since April 2021.
According to news from The Paper on February 21, China’s thermal coal prices have been on a downward trend since the second half of last year, dropping from over 900 yuan per ton at the beginning of last year to below 800 yuan per ton during the peak coal consumption season at the end of the year. As we entered 2025, coal prices continue to decline. On February 20, the spot closing average price of 5500 kcal thermal coal at Qinhuangdao Port (produced in Shanxi) was reported at 725 yuan per ton, down more than 40 yuan per ton since the beginning of the year.
Meanwhile, coal inventories at ports are also at high levels. As of February 13, coal inventories at ports around the Bohai Sea had climbed to 29.59 million tons, an increase of nearly 50% year-on-year. According to the China Electricity Council, coal inventories at coal-fired power plants were 7.1 million tons higher than the same period last year, with a 4.7-day increase in available inventory days compared to the previous year.
The reasons for the decline in thermal coal prices include low industrial electricity consumption and limited recent boosts in daily electricity consumption at power plants due to recent cold air patterns. Additionally, the increase in industrial electricity consumption has been slow to recover, with some power plants operating at only 60% of normal capacity. As of February 14, the cumulative electricity generation of coal-fired power plants in the power generation group included in the statistics decreased by 2.3% year-on-year for the month and 13.9% year-to-date. Coal consumption at coal-fired power plants decreased by 1% for the month and 11% year-to-date.
Furthermore, the fact that imported thermal coal prices are lower than domestic thermal coal prices in China has also contributed to the downward trend in thermal coal prices. As of February 11, the price difference between domestic and imported thermal coal in China exceeded 47 yuan per ton, creating an inversion in prices.
Thermal coal refers to coal used as a power source. In a narrow sense, it specifically refers to coal used for thermal power generation. Broadly speaking, any coal used for power generation, locomotive propulsion, boiler combustion, etc., falls under thermal coal. Generally, a decrease in thermal coal prices indicates weak industrial demand, reflecting poor overall economic demand.
Data released by the National Bureau of Statistics of the Communist Party of China on January 27 showed that in January 2025, the Purchasing Managers’ Index (PMI) for the manufacturing sector was 49.1%, below the 50 boom-bust line, down 1 percentage point from the previous month, indicating a slight decline in the manufacturing sector’s business situation.