Zhongjin: Tightening coal supply, coal prices still have upward momentum

Zhongjin released a research report stating that the coal production in the 1st-3rd quarter of 2025 was 3.57 billion tons, an increase of 2.0% year-on-year. The production in September was 412 million tons, a decrease of 1.8% year-on-year, continuing to decline but the rate of decline has narrowed, with a monthly average daily production of 137.2 million tons, an increase of 8.9% month-on-month. The coal imports in the 1st-3rd quarter of 2025 were 346 million tons, a decrease of 11.1% year-on-year. Since October, the average price of 5500 kcal power coal in Qinhuangdao was 721 yuan/ton, up by 3.7% from September, a decrease of 16% compared to October of the previous year, with a price quote of 745 yuan/ton as of October 17th. Looking ahead, coal prices still have upward momentum, mainly due to the possible trend of tight supply and demand balance. However, considering the expectation of reduced steel production domestically, the rebound momentum of coking coal prices in the short term may be relatively weaker than that of power coal, facing some constraints from the demand side. Key points from Zhongjin research are as follows: Continued decline in domestic production The coal production in the 1st-3rd quarter of 2025 was 3.57 billion tons, an increase of 2.0% year-on-year. The production in September was 412 million tons, a decrease of 1.8% year-on-year, continuing to decline but the rate of decline has narrowed, with a monthly average daily production of 137.2 million tons, an increase of 8.9% month-on-month; the coal imports in the 1st-3rd quarter of 2025 were 346 million tons, a decrease of 11.1% year-on-year. In September, imports were 46 million tons, a year-on-year/month-on-month change of -3.3%/+7.6%, with a marginal recovery in imports under the backdrop of rising domestic coal prices. Weak demand for thermal power The national electricity generation in the 1st-3rd quarter of 2025 increased by 1.6% year-on-year to 725.57 billion kilowatt hours, with an increase of 0.1ppt from the previous period (8M25). Among them, thermal power generation decreased by 1.2% year-on-year to 469.69 billion kilowatt hours, with a further expansion of the year-on-year decrease by 0.4ppt from the previous period (8M25); in terms of monthly data, under weak total electricity generation, the increased hydroelectric output squeezed thermal power generation. In September, electricity generation increased by 1.5% year-on-year to 826.2 billion kilowatt hours, while thermal power generation decreased by 5.4% year-on-year to 517.5 billion kilowatt hours, and hydroelectric/nuclear/wind/CECEP Solar Energy electricity generation increased by 31.9%/1.6%/-7.6%/21.1% year-on-year respectively. Power coal: Rising demand in the peak season, supply contraction supporting prices Since October, the average price of 5500 kcal power coal in Qinhuangdao was 721 yuan/ton, up by 3.7% from September, a decrease of 16% compared to the average price from October of the previous year, with a price quote of 745 yuan/ton as of October 17th. Looking ahead, coal prices still have upward momentum, mainly due to the possible trend of tight supply and demand balance. In terms of demand, the daily consumption of thermal coal is gradually entering an upward trajectory, with an increase in demand for replenishing stockpiles; supply-wise, under the enhanced supervision, expectations of tightened domestic production are warming up. Coal imports may remain at a high level, but further significant increases from the current level may be limited by the price differentials between domestic and foreign markets. Coking coal: Rebound may be relatively weaker than power coal In September, pig iron/crude steel production was 660.5/734.9 million tons, a decrease of 2.4%/-4.6% year-on-year. Steel exports still show resilience, with a 3.6% year-on-year increase in exports to 10.47 million tons in September. Since October, the average price of primary coking coal in Jingtan Port was 1,675 yuan/ton, up by 4.4% from September, a decrease of 12% compared to the October average price of the previous year. Under the overall expectation of supply contraction, coking coal prices are also expected to rebound to some extent. However, considering the expectation of reduced steel production domestically, the rebound momentum of coking coal prices in the short term may be relatively weaker than that of power coal, facing some constraints from the demand side. Risk factors Supply release exceeding expectations; improvement in demand not meeting expectations; escalation of geopolitical risks.