In the coal market, the usual peak stocking period before the winter comes, known as “Golden September and Silver October”, has been lackluster in recent days. Prices of raw coal in major coal-producing regions such as Inner Mongolia and Shaanxi have seen a daily drop of up to 30 Chinese yuan per ton. Coal traders have expressed concerns over the excessive supply of coal and the continuously declining prices. The weak demand from downstream industries such as power plants, cement, and chemical industries has been identified as the main reason behind the consecutive price drops.
According to statistics from “Coal Express” on September 30, coal prices started a pattern of consecutive declines in the last week of September. Prices in coal-producing areas like Shaanxi and Inner Mongolia saw daily drops of 20 to 30 Chinese yuan per ton, with some coal mines reducing prices by as much as 25 yuan per ton in a single day.
A price adjustment notice from Yitai Tarrao Coal Mine in Inner Mongolia indicated that after 6 pm on September 30, the price of raw coal was lowered by 15 yuan per ton, and the price of washed coal was lowered by 20 yuan per ton.
A Southern trader distributing coal around Shanxi and Inner Mongolia told Coal Express, “The coal mines here produce a huge amount every day. There is just too much supply, and the prices seem to have no bottom.”
Furthermore, data from “Coal Weekly” showed that on September 26, several coal mines in the main coal-producing area of Yulin, Shaanxi, saw a drop in coal auction prices. The average price of raw coal at Hanglaibay Coal Mine decreased by 30 yuan per ton, while the average price of lump coal dropped by 25 yuan per ton. Weiqiang Coal Mine in Hengshan reduced prices of all coal types by 25 yuan per ton on the 26th and by 15 to 20 yuan per ton on the 27th.
In terms of coal procurement for power generation, starting from September 29, several power plants under the Weiqiao Group in Shandong, including Zouping 1st Power Plant, Qi Power Plant, Hujia Power Plant, Yangxin Qiyun, Beihai 1st Power Plant, and 2nd Power Plant, have all lowered their coal purchase prices by 5 yuan per ton. Compared to mid-month, many power plants have generally reduced their procurement prices by 10 to 20 yuan per ton.
On September 25, Zhang Yuzhuo, director of the State-owned Assets Supervision and Administration Commission of the State Council of the People’s Republic of China, chaired a symposium on the economic operation of state-owned enterprises, emphasizing on stabilizing electricity prices, coal prices, and preventing “internecine” vicious competition. However, in the face of the worsening economic environment, not only have coal prices been continuously plummeting, but electricity prices in many provinces have also sharply declined.
A recent research report from Dongzheng Futures pointed out that since the first half of 2025, the demand for electricity has turned negative, and coal prices have been declining rapidly. The quoted price of 5500k coal has dropped by 150 yuan to 620 yuan per ton in the first half of the year, and the downward trend has been smooth.
A coal trader told “Coal Weekly,” “The current coal market is like a large burial ground, and we, the middlemen, are the ones buried there.” The phenomenon of “cost inversion” has become the main reason for the predicament faced by middleman traders.
In May of this year, “Coal Express” warned that the elimination rate of coal traders in 2025 has reached as high as 50%, while in 2024, it was already at 30%.
“Cost inversion” refers to the situation where the cost price of coal traders, which includes the purchase price of coal mines, transportation fees, port charges, and a series of other expenses, is lower than the current market transaction price at coal ports. As a result, traders not only fail to make a profit but also incur losses.
In the face of this challenging situation of “cost inversion,” traders find themselves in a dilemma. Selling coal would mean losing money, while choosing not to sell results in a build-up of inventory at ports, incurring high warehousing costs daily, trapping funds, and struggling to handle bank loan interest.
Coal is an important energy source for power plants, cement, and chemical industries, but China’s manufacturing sector has been shrinking continuously this year. Data released by the National Bureau of Statistics of China on Tuesday (September 30) showed that the Purchasing Managers’ Index (PMI) for the manufacturing sector in September was 49.8%, 0.4 percentage points higher than in August, marking the sixth consecutive month below the 50% boom-bust line, indicating a contraction.
Analyses by “Coal Weekly” on Wednesday (October 1) attributed the sharp decrease in cement market demand to factors such as the prolonged downturn in the real estate market and the slowing progress of infrastructure construction. Many cement plants have been forced to reduce production or even shut down, leading to a sharp decline in coal demand.
According to a report by Caixin on September 28, several industry insiders stated that, influenced by the real estate market, the cement industry has intensified the staggered suspensions of kilns this year, resulting in a new low in capacity utilization rates. Currently, the overall capacity utilization rate is around 50%.
The chemical industry is also facing severe challenges. The slowdown in global economic growth and weak market demand have led to continuous price declines of chemical products. Chemical companies have been implementing production reduction measures to lower production costs and reduce inventory buildup.
An article from the China Petroleum and Chemical Industry Association on July 30 reported that out of 157 major chemical products monitored in China, approximately 46% were profitable in the first half of the year. Among them, less than one-third had a gross profit margin of more than 5%, while 44% had a gross margin within ±5%.
Additionally, the increasing proportion of Long-term Agreement Coal (LAC) has engendered a noticeable pressure on the market coal. In the context of weak downstream demand, power plants relying on LAC can fully meet their production needs, significantly reducing their demand for market coal.
Long-term Agreement Coal refers to long-term sales contracts signed autonomously by the buyer and seller of coal (such as coal producers and power companies), specifying terms such as coal quantity, price, and delivery time. The contract period usually extends for a year or more.
Analyses from Dongzheng Futures pointed out that the previous pressure on coal prices from the negative growth of thermoelectric power is still ongoing, and under the suppression of new energy installation and a lack of boost in thermoelectric daily consumption, coal prices above 700 yuan per ton would slightly pressure power plants’ costs, making significant breakthroughs unlikely.
Despite various factors such as winter stock replenishment, it is anticipated that the price of thermal coal will remain in the range of 650 to 720 yuan per ton. The short-term reversal of negative growth in electricity consumption is expected to be challenging.