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Rising inventories, China's energy sector increases coal procurement
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Release time：2025-05-30
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China produces more coal than it can consume, resulting in a 42% YoY increase in mine stockpiles.
According to Reuters, citing sources, China's coal industry is currently facing oversupply, with significant production expansion leading to increased inventories. Despite having the world's largest thermal power plants, China's coal output continues to exceed its consumption, resulting in a 42% year-on-year increase in mine inventories and a 25% year-on-year increase in port inventories in the Bohai Bay northern region. This expansion was in response to energy shortages and power outages that occurred in 2021.
According to three sources, the government reportedly encouraged power plants to purchase coal from these northern ports to help reduce high inventory levels and support miners. These directives were issued by the National Development and Reform Commission after continuous calls from industry groups and enterprises to cut coal imports and production. The report states that despite record coal imports of 542.7 million tons in 2024, coal imports in April decreased by 16% compared to the previous year. China's coal production continued to rebound, growing by 6.6% to 1.58 billion tons from January to April. This growth continued despite official data showing a 48.9% year-on-year decline in industry profits during the same period.
Furthermore, the price of medium-grade coal is on a downward trend, reaching 620 yuan (US$86) per ton, its lowest level since March 2021. This decline has led some buyers to attempt renegotiating long-term contracts to secure more favorable spot sales. Additionally, China has temporarily lifted its ban on exporting rare earth elements and other dual-use items to 28 US companies. This suspension will last for 90 days and is part of China's broader trade de-escalation measures with the United States, potentially signaling an easing of economic tensions between the two countries.
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