China’s Coal Demand and Production Will Continue to Grow in 2025

By Charles Kennedy - Jan 09, 2025

China's coal production is forecast to increase by 1.5% in 2025, marking the ninth consecutive year of growth.

Coal demand is also expected to rise, driven by the power sector and the chemicals industry.

Despite the growth of renewable energy, coal remains a dominant source of energy in China, accounting for about 60% of the country's power generation.



China’s coal demand and production are expected to continue rising this year and the cheap fuel is set to remain the backbone of the country’s energy system, according to China Coal Transportation and Distribution Association.

Chinese coal production is forecast to increase by about 1.5% this year from 2024, for the ninth straight annual rise, the association said at a briefing, as quoted by Bloomberg.

At the same time, coal demand is also set to rise, by around 1%, according to the main coal industry group in the world’s largest coal consumer. The power sector and higher demand from the chemicals industry will push up coal demand this year, the association said.

Coal prices are expected to remain cheaper amid higher domestic production and enough coal inventories.

Robust coal production in China is pushing supply higher than demand and this is likely to make coal even cheaper than it already is, Bloomberg reported last month, citing Chinese coal industry officials.

“An avalanche of inventory is crushing the market,” an analyst from the China Coal Transportation and Distribution Association, told media in December.

“Power plants are dumping stockpiles. There’s just too much supply,” Han Lei also said.

Despite growing renewable energy capacity installations, thermal power generation in China, which comes mostly from coal-fired power plants, rose by 1.9% between January and November from the same period a year earlier, Chinese statistics data showed last month.

The trend points to an increase in coal and overall thermal power generation even as China’s renewables installations have boomed in recent years.

Although the share of coal in China’s electricity generation has been declining in recent years with the renewables boom, Chinese coal power generation and demand remains strong.

Coal still accounts for about 60% of China’s power generation, despite a surge in hydropower earlier this year after abundant rainfall, which reduced the share of coal in the country’s energy mix during the summer.

By Charles Kennedy for Oilprice.com