MNI: China Coal Prices To Fall Further In 2025 - Analysts
MNI (BEIJING) - China’s domestic coal prices are likely to fall further from 2024 levels as supply outpaces demand, and government policies aim to stabilise, rather than stimulate, housing and infrastructure, local analysts told MNI.
Coking coal will experience greater downward volatility this year and likely trough at about CNY900-1,000 per tonne, said Wang Siya, senior analyst at Lange Steel Network. May coking coal futures on the Dalian Commodity Exchange closed at CNY1127 per tonne on Wednesday.
“Periodic policy boosts are more likely to lift sentiment briefly and lead to increased price fluctuations, rather than transferring into a longer-lasting demand rebound,” Wang said.
Crude iron production is expected to decline by more than 10 million tonnes in 2025 from 2024’s estimated 850 million tonnes amid lower demand from major steel consuming countries and Beijing’s ongoing campaign to cut steelmaking overcapacity, which would lead to an about 5-million-tonne decrease in coke demand, she added.
Meanwhile, imported coking coal volumes will continue to increase driven by relatively low prices, which will add further downward pressure on the domestic market, Wang continued.
Coking coal from Mongolia, China’s largest supplier, will likely maintain modest growth, while imports from Russia will benefit from the recent removal of tariffs, she said, adding that the more expensive, higher quality Australian imports will see limited growth over 2025 due to their profitability.
Domestic coking coal production will continue to increase by 8-10 million tonnes in 2025 to circa 560 million tonnes should the price hold above the cost line of about CNY1,000 per tonne, and despite inventory sitting at a relatively high level of 7.8 million tonnes at the end of 2024, Wang argued.
China Customs data shows the country imported 543 million tonnes of coal in 2024, a rise of 14.4%, while its domestic production is set to tip 4.8 billion tonnes in 2025, according to the National Energy Administration.
A futures analyst agreed that coking coal futures prices could fall below January lows due to the supply-demand mismatch. May coking coal futures have fallen to as low as CNY1083.5 per tonne so far this month.
“There may be limited additional construction work as authorities focus on stabilising the housing market,” he explained. (See MNI: China To Raise Local Bonds To Aid House Destocking)
While the escalation of the Sino-U.S. trade dispute presented further downside risk to steel and manufacturing, most exports were to Belt and Road countries, which should help ease the impact, he added.
THERMAL COAL
Thermal coal spot prices could decline further into the reasonable long-term contract price range within the year, the analyst continued.
The National Development and Reform Commission sets a "reasonable" price range of CNY570-770 per tonne for 5,500 kcal thermal coal handled at the Qinhuangdao Port, for medium and long-term contracts.
Prices may rebound by the end of Q1 or early Q2 when power plants replenish inventory to prepare for summer, after which prices will likely fall back to a low range as high import volumes and domestic output add to inventory, he argued.
Power demand growth, which will likely hold above 6% y/y, will offer some price support in 2025, while coal consumption for building materials and metallurgy remains flat, he added.
Total demand for thermal coal is expected to increase by 57.14 million tonnes in 2025, a rise of 1.4% y/y, according to analysts from Huatai Securities.