China Coking Coal Prices Surge After Deadly Shanxi Mine Blast
By Irina Slav - May 25, 2026
The price of coking coal in China jumped by 8% after a deadly mine accident in Shanxi province that prompted safety checks that will affect production over the near term. The most actively traded coking coal contract on the Dalian Commodity Exchange hit the equivalent of $186.76 per ton following the accident.
Reuters reports that eighty-two people were killed after a gas explosion in a mine in one of China’s largest coal-producing regions, which makes it the most serious mine accident in the country since 2009 at least.
The government immediately launched an investigation into the causes of the accident, which would inevitably affect production, leading to a jump in prices. The accident itself will also affect coking coal production, with CNN citing Chinese media as reporting that the blast caused walls in the mine to collapse and the site of the accident to fill with water.
There is also a risk of secondary disasters at the mine, with the chief of emergency services of the city where the mine is located, Changzhi, saying that “During the rescue work…toxic and harmful gas has exceeded the limit for a long time.”
Coking coal is used in steelmaking and other heavy industries, with China a major consumer of both local and imported coal. The state has imposed limits on the commodity’s prices, and today, those limits were hit because of the mine accident.
Separately, several other coal mines in Shanxi suspended operations for several days as the authorities conduct safety checks, Reuters also reported, citing consultancy Mysteel. The suspensions would reduce coking coal output by 288,000 tons daily, the report noted, adding that iron ore and steel prices also gained following the explosion in Changzhi.
The Chinese government has been conducting safety checks on coal mines all over the country in a bid to reduce the risk of accidents, but also to put a lid on production growth.
By Irina Slav for Oilprice.com
Coal Is Fueling China’s Next Energy Power Play
- China is rapidly expanding coal-to-chemicals and coal-to-gas production as high oil and gas prices make coal a cheaper and more strategic domestic feedstock.
- India now wants to replicate China’s model, investing billions to turn coal into fertilizers, plastics, and chemicals to reduce energy import dependence.
- The trend highlights how energy security and affordability are overtaking emissions concerns, with coal demand surging despite global net-zero ambitions.
Coal is inarguably one of the big winners from the energy flow disruption in the Middle East. Consumption is up strongly as gas becomes hard to come by and expensive to buy. Power supply security has overtaken any emission concerns. Yet it is not only in power generation that coal has regained popularity. Coal is also increasingly being used as feedstock for chemicals, notably fertilizers.
Recently released data from China showed that coal production in the world’s top consumer had dipped in the first four months of the year. Imports were also down, and power generation from coal declined, extending a trend that began in 2025. The figures would suggest China is reducing its use of coal, but in fact, coal consumption is still going strong in the Asian powerhouse—the commodity is simply being used for more than power generation and metals smelting. China is using coal to make everything from gas to petrochemicals—and now India is planning to do the same.
Earlier this week, Reuters reported that PetroChina was developing a project for the extraction of gas from coal rock, eyeing output of 30 billion cu m by 2035. The extraction technology is very similar to that used in shale formations, the report noted, adding that China is the only country where hydraulic fracturing is being used for so-called rock gas extraction.
In separate news, China’s coal-to-chemicals industry got a major boost from the Middle East war. The sector’s stocks jumped by 30% between the end of February and mid-March, Reuters reported at the time, with investors rewarding the energy industry’s ability to use coal for the production of fertilizers and other petrochemicals without actually using petroleum.
With oil prices surging on the closure of the Strait of Hormuz, coal has become a valuable substitute, not least because even with a price rise—and coal prices have risen—it remains cheaper than the liquid alternative. Indeed, Reuters reported in mid-March that Chinese coal prices had in fact fallen since the start of the war. It is little wonder that India wants to replicate China’s success in coal-to-chemicals.
Dependent on imports for over 80% of its oil consumption, India has found itself in a rather vulnerable position amid the biggest energy crisis in history. Yet India has abundant coal reserves it can use for more than power generation—and that is exactly what it is doing, Bloomberg’s Javier Blas reported this week.
Many net-zero campaigners from political circles like to point out that homegrown energy is a guarantee for energy security. In that, they are correct, even though when they say homegrown energy, they mean energy harvested with equipment imported from, among others, China. And China uses coal to make that equipment. The fact remains, however, that using your own resources to produce energy, fertilizers, and other chemicals is certainly a better choice than importing in and depending on a market over which you have no control with regard to either prices or supply.
China’s coal-to-chemicals industry is a unique one, Bloomberg’s Blas noted in his report, and that means it would be challenging for India to replicate China’s success. One reason for this is that Indian coal is different, the energy columnist reported, and will be harder to convert into chemicals.
The other reason is that China has spent some 20 years improving the extraction technology. India plans to invest $4 billion to jumpstart a coal-to-chemicals industry, but that may not be enough, Blas says, as companies engaged in that activity would need more support to make their products competitive once the war in the Middle East ends and natural gas prices retreat to pre-war levels—whenever that may happen.
Still, the Modi government eyes 75 million tons of coal getting turned into fertilizers and other chemicals, as well as plastics, in 2030, to enhance reliance on locally sourced goods and reduce its passive import bill. It will provide funding for processing facilities and guarantee the local supply of the feedstock—and boost the world’s demand for coal even further than the war already has, further eroding net-zero plans.
Bloomberg’s Blas reported that China’s coal-to-chemicals industry consumes 380 million tons of coal annually. If it were a country, he noted, that industry would be the world’s third-largest coal consumer. And now India wants to build its own gargantuan coal-consuming industry.
Last year, China produced 4.2 billion cubic meters of rock gas. This is just the beginning if production growth plans materialize. The coal-to-chemicals industry is growing and, evidently, inspiring other countries to go local as well, with no concern for the implications of such trends for emission reduction. The coal-to-chemicals industry developments in Asia show quite clearly that the top priorities in energy will always remain reliability and affordability, with emissions a distant third in times of tight supply and high prices.
By Irina Slav for Oilprice.com
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