China's domestic coal market extended its accelerated downward trend in the first week of July. Prices at major producing regions continued to decline, with widespread losses across Yulin, Ordos and northern Shanxi. At the ports, the price of 5,500 kcal/kg thermal coal fell by around RMB 30/t over the week. End-user procurement entered a temporary lull, with the number of vessels at anchor at northern ports dropping to one of the lowest levels for the same period in recent years. Inventories at Bohai Rim ports increased by nearly 1 million tonnes during the week, up about 3.5%, highlighting mounting stockpile pressure. Seaborne freight rates also weakened, with the Coastal Coal Freight Index falling 35.91 points week on week as a large amount of shipping capacity remained idle. International markets were similarly soft, with Indonesian 3,800 kcal/kg coal slipping to around USD 65/t FOB and Australian 5,500 kcal/kg coal falling below USD 95/t, while overseas suppliers continued to lower their offers.
Despite the sharp price correction, several key supportive factors remain in place, suggesting that domestic coal prices are likely to stabilize in the second half of July.
Supply constraints remain in place, while production recovery is slow.
Safety inspections and regulatory oversight continue across the major producing regions of Shanxi and western Inner Mongolia. Since recent mining accidents, coal output has yet to recover to previous highs, with weekly production continuing to decline. Rail transportation has also weakened. Average daily train loadings on the Zhangtang Railway dropped to just 24.7 trains per day, down 25.4% from the previous week, while the Daqin Railway has ended its previous operating level of around 1.3 million tonnes per day. The underlying tightness in mine supply therefore remains largely unchanged. Meanwhile, falling prices have further dampened traders' willingness to ship coal to the ports.
Cost support is gradually emerging as lower prices become increasingly attractive.
Spot coal prices have fallen by around RMB 70/t from recent highs. Combined with an approximately RMB 30/t decline in domestic freight rates, delivered procurement costs for power plants have fallen by about RMB 100/t. On the import side, the lowest bids for Indonesian 3,800 kcal/kg coal have already dropped below RMB 560/t CFR. As both domestic and international coal prices continue to soften, lower prices are becoming increasingly attractive to power generators, prompting some utilities to reassess their procurement timing.
Peak-season demand recovery remains highly likely.
Although inventories at coastal utilities remain at record-high levels, coal consumption across 17 inland provinces has risen noticeably. Persistent heatwaves in northwestern China, where daily maximum temperatures have reached 41–44°C in some areas—approaching or even breaking historical records—have pushed average daily inland coal consumption from around 3.05 million tonnes to approximately 3.37 million tonnes per week, while inventories remain lower than a year earlier. After the East China rainy season officially ends around July 8, high temperatures are expected to spread eastward, driving a substantial increase in air-conditioning demand. As a result, the seasonal rise in coal consumption appears increasingly certain.
The prolonged slowdown in procurement is unlikely to continue.
End-user purchasing has remained subdued for three to four consecutive weeks. During the traditional summer peak demand season, such restrained procurement is clearly inconsistent with normal market behavior. Power producers have shown little intention of aggressively reducing inventories. Once prices begin to stabilize, procurement that has been delayed or intentionally suppressed is likely to return, potentially triggering a concentrated wave of restocking in the second half of July. A short-term rebound driven by replenishment demand cannot be ruled out.
Overall, the recent sharp decline in coal prices has been driven primarily by short-term market sentiment and inventory pressure rather than by a fundamental deterioration in supply-demand dynamics. Supply-side constraints, including the slow recovery of production, remain in place. As high-temperature weather spreads across the country, seasonal coal consumption is expected to increase, while significantly lower procurement costs are gradually improving buying incentives. These supportive factors are continuing to build. Coal prices are therefore expected to approach a near-term bottom next week, with the pace of declines moderating before stabilizing later in July.
褰檽锟斤拷?