Market Update from CoalTrans China
Picture of thermal coal market emerged from the annual conference: prices stable, but price growth will require further production cuts
Analyzing the thermal coal markets has been increasingly about understanding coal demand in Asia Pac, which can be challenging as the information flow isn’t as good as in the Europe and US. While thecoaltrader principals love a good research trip to a Chinese port or chatting up Électricité de Vietnam in Hanoi, that’s not always in the cards, so it’s helpful when we get some good news flow from the Asian coal conferences as we did this week.
We’ve been looking at some news and presentations emerging from the recent CoalTrans conference in Beijing. The picture is of a market that was fundamentally weak in the first half of the year, with coal trade contracting by 37 million mt in the first 5 months of 2025, driven by lower imports by Asian consumers. Thermal coal demand in China has been dipping, leading to high stockpiles, as I’ve been discussing over the last couple of months, while India and South Korea’s thermal demand has been pretty tepid too.
In China, power demand had been rising strongly in 2024, up by 5.3% y/y, but that growth rate has slowed to just 1.9% in the first 5 months of 2025. And that’s not good for thermal coal burn. Chinese coal demand has been robust in recent years despite all the new renewables additions to the grid because rising electricity demand meant that China relied on all generation resources. With nuclear and renewables generation growing some 4% y/y in China in the first 5 months of 2025, power demand would have needed to grow by at least that much to keep existing generation (mainly coal) steady. Instead, thermal generation in China (which is nearly all coal) was reported to have declined 3.8% y/y over January-May. At the same time, thermal coal production in China has inched higher, up 1.5% over the year-to-date (YTD). That’s caused coastal coal stockpiles to rise and imports to shrink.
And the decline in Chinese thermal coal imports has gotten worse in May:
As you can see from China’s May import chart above, Indonesian coal imports are taking the brunt of the decline in Chinese thermal imports. This has become the pattern in recent years, with China backing off the lower-quality coal imports from Indonesia in down years, while keeping purchases of high-cv thermal coal much more steady. When the higher-grade Australian material is selling at a “discount,” China is likely to buy more as it emits less per unit of energy and is harder to replace with domestic coal. Forecasts out of CoalTrans show Indonesian thermal coal exports (to all countries) falling 30 million mt y/y in 2025, while Australian thermal exports are only expected to decline some 12 million mt y/y.