China Looks to Boost Domestic Coal Demand and Prices
China’s state planner, the NDRC, has directed coal power plants to increase domestic coal stockpiles by 10% amid falling coal prices and profitability concerns.
Despite the directive, high domestic production and weak demand have driven coal prices down by 20% in 2025, with imports dropping 16% in April.
Analysts expect oversupply to persist through year-end as domestic production outpaces consumption, undermining efforts to stabilize prices.
China has asked its coal-fired power plants to boost stockpiles with domestic supply as authorities aim to push up local demand and prices, anonymous sources familiar with the matter told Reuters on Wednesday.
Coal prices in China have been depressed this year, weighing on the profits and profitability of the coal producers. China’s coal prices have dipped by about 20% so far in 2025.
The National Development and Reform Commission (NDRC), the state planner of China, has asked coal power plants to boost stockpiles by 10%, according to Reuters’ sources.
However, traders doubt that the measure would boost China’s coal prices as stockpiles have been growing along the supply chain this year.
Meanwhile, China’s streak of weak monthly coal imports continues, dragging thermal coal prices in Asia to a four-year low early this month.
Record-high domestic coal production and weaker coal-fired power generation in China have resulted in declining demand for thermal coal imports into the world’s biggest coal market.
In view of the low domestic coal prices, weaker demand, and high coal inventories at ports, China’s import decline has not been a surprise, and analysts will not be surprised if the trend of lower coal imports continues for the next few months.
Despite the lower imports, coal prices in China have dipped amid lower thermal power generation and rising domestic production.
China produced 3.8% more coal this April than a year ago, at 389.31 million tons. This was down from a month earlier when production hit a record, but still strong enough to cement coal’s role in the country’s energy mix.
At the same time, Chinese coal imports in April fell by 16% amid weaker prices that stimulated consumption of domestic supply.
China’s coal association expects production to grow at a faster clip than consumption in 2025, suggesting that the oversupply could continue until the end of the year, commodity intelligence service Mysteel noted in a report earlier this week.
By Charles Kennedy for Oilprice.com
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