Can Thermal Coal Prices Strengthen in August as China's Summer Peak Starts?

Time:2026-07-31 16:31:03      Source:
China's thermal coal market ended July amid a tug-of-war between peak-season demand expectations and elevated inventories. Spot prices at northern ports fell early in the month before recovering, but still posted modest monthly declines. By the end of July, 5,500 kcal/kg coal was quoted at around RMB 825/t, while 5,000 kcal/kg coal stood at approximately RMB 735/t, both down RMB 10-15/t from the end of June. As August marks the second half of the summer peak demand season, market direction will continue to depend on the balance between supply and demand.
 
Supply Growth Remains Limited
Supply-side constraints remain firmly in place. Strict safety inspections in major producing regions continue to limit output growth, keeping mine-mouth prices resilient. At the same time, shipments from inland producing areas to northern ports remain deeply unprofitable, reducing traders' willingness to move cargoes to ports. As a result, coal arrivals at northern ports are unlikely to increase significantly, providing solid support to market prices.
 
Demand to Stay Strong Before Gradually Easing
Demand is expected to remain robust through the first half of August before stabilizing later in the month. Continued hot and humid weather across eastern and southern China will keep coastal power demand elevated, supporting high coal consumption at power plants and sustaining thermal coal demand. As temperatures begin to moderate in the second half of August, residential cooling demand is expected to ease gradually.
 
High Inventories Will Cap Price Gains
Elevated inventories remain the biggest obstacle to a stronger price rally. Coal stocks at both northern ports and coastal end-users are still above historical averages for this time of year. Although peak-season consumption should gradually reduce inventories, ample long-term contract supplies mean utilities are likely to purchase spot cargoes only to meet immediate needs rather than engage in aggressive restocking. The pace of inventory drawdowns will therefore be the key factor determining market strength.
 
Overall, China's thermal coal market is expected to remain range-bound in August. Supply constraints should provide solid downside support, while high inventories will limit upside potential. Prices are likely to receive stronger support during the first half of the month from robust summer electricity demand, with market attention focused on temperature trends and the pace of inventory destocking.

Index RMB/t DoD Basis Date
Datong 5500 ex-mine 07-01
Shuozhou 5200 FOR 07-01
Ordos 5500 ex-mine 07-01
Yulin 6200 ex-mine 07-01
Liulin Low-sulphur ex-mine 07-01
Gujiao Low-sulphur FOR 07-01
Xingtai Low-sulphur ex-Factory 07-01
Yangquan PCI FOR 07-01
Index RMB/t WoW WoW% Date
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