1. Market dynamics

Price trend: Northern port thermal coal quotation: On February 11, 2025, the price of 5,500 kcal thermal coal is 760 RMB/ton. The quoted price for 5,000 kcal of thermal coal is 665 RMB/ton. The quoted price for 4,500 kcal of thermal coal is 580 RMB/ton.

Long term agreement price: The long-term agreement price for thermal coal in February 2025 is approximately 691 RMB/ton, a decrease of 2 RMB/ton month on month and 17 RMB/ton year-on-year.

2. Market supply and demand

Supply side: The overall supply of coal remains stable, with limited incremental space in the main production areas, and there is also little room for a significant increase in imported coal volume. Some coal mines may experience a contraction in supply and inventory due to safety inspections, annual holidays, and other factors.

On the demand side, the growth in demand for thermal power generation is limited, with a year-on-year increase of only 9%, and the high-frequency data for December also shows an unfavorable performance. The coal inventory of downstream coal consuming enterprises remains high, making it more difficult to operate in the trade process and compressing their profit margins.

3. Market outlook

Short term: Market activity is low, and spot prices have entered a cyclical downward trend against long-term contract prices. But as the price gradually approaches the long-term agreement price center, the supporting role of long-term agreement prices will gradually become apparent. If the electricity demand of residents increases due to weather changes, or if there are variables in the import of coal in the new year, there may be some bottom support in the domestic coal market.

Long term: With the improvement of macroeconomic conditions and the boost in electricity demand, the supply-demand pattern is expected to reverse. If the real estate market stabilizes and fiscal spending increases, the demand for energy in real estate infrastructure and manufacturing is expected to increase, which will support coal prices.

4. Conclusion and Suggestions

The continued weak trend of thermal coal prices is a result of the current market supply and demand relationship. It is recommended to closely monitor market dynamics and policy changes, especially the supporting role of long-term contract prices and the recovery of downstream demand.

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