China’s trade truce and five-year plan help coal price recover

Bloomberg News | November 5, 2025 | 5:30 pm Energy Markets China Coal

Cargo terminal for discharging coal cargos by shore cranes during foggy weather. Port Bayuquan, China. Stock image.

China’s thermal coal price has climbed to its highest level this year, as a combination of short and long-term factors lift confidence in the outlook for demand.

The usual impact of utilities restocking for winter has been amplified by protracted mine inspections to ensure safety and check excessive output. Buyers are also taking heart from the trade truce agreed with the US and its positive bearing on the economy, as well as Beijing’s softer stance on capping consumption of the dirtiest fossil fuel.

The benchmark price at Qinhuangdou has risen to 788 yuan ($111) a ton, according to the China Coal Transportation and Distribution Association, an increase of more than 10% over the last month or so. Similar dynamics are affecting steelmaking coal, with futures in Dalian close to their highs for the year.

The government’s plan for the upcoming five years has blurred the language setting out when coal use needs to decline, suggesting the peak will be more drawn out than previously thought. The China National Coal Association said last week it expects demand to grow steadily next year before plateauing by 2030.

Cheap Chinese coal is making it difficult to reduce consumption

Still, thermal prices are about 7% below where they were last year, testament to the massive pressure caused by accelerated output growth after the shortages of earlier this decade. Renewables, meanwhile, are carving out an ever-larger share of power generation. That means a surplus of coal is likely to persist next year.

Bloomberg Intelligence thinks the benchmark could sink to an average of 660 yuan a ton in 2026, with upside capped at 850 yuan, according to a note this week.

In the meantime, the weather, as ever, remains a wild card, although the latest official forecast could take some of the sting out of winter heating demand. The National Climate Center expects temperatures in most regions close to or above normal over December to February. Less rain than usual is expected, though, which could diminish competition for coal from hydropower.