(Oct 12): China’s thermal coal prices climbed to a three-year high as sluggish domestic production growth and disruptions in top exporter Indonesia coincide with an energy rally driven by the US-Iran war.
The benchmark power-station coal price hit 1,004 yuan (RM612.54) a tonne on Monday, according to the China Coal Transportation and Distribution Association, the first time it’s been at four figures in two years. Prices have risen by a quarter since mid-July
Coal remains China’s main electricity feedstock, accounting for around half of the country’s power mix, even after a rapid buildout of renewable energy over the past few years. Domestic output of the fossil fuel is down more than 3% in the year through August from the same period in 2025 due to a ramp up of safety measures following a deadly mine collapse in Shanxi province in May.
The market had been counting on Shanxi to restore about 31 million tonnes of annualised production by year-end, but approval of restart applications has lagged behind expectations, according to a local coal news provider. Authorities are likely to maintain a cautious stance ahead of a major Communist Party meeting later this month, limiting the scope for any immediate relaxation of safety controls.
Meanwhile, three weeks of maintenance on China’s main coal rail corridor through Oct 26 is set to keep prices high.
On top of the domestic problems, shipments from Indonesia, China’s major overseas supplier of thermal coal, have fallen sharply this year as Jakarta moved to curb output to revive prices and boost state revenues. More recently, a drought linked to the El Niño weather pattern has lowered water levels in rivers in key coal regions of the country have, forcing barge operators to reduce loads.
China’s consumption of coal typically rises over the winter months, which should keep upward pressure on prices. Alternative power-generation fuel liquefied natural gas has also surged this year as the Middle East war trapped Qatari production behind the Strait of Hormuz.
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