China coal imports fall as domestic supply rises, market enters ‘loose balance’ phase

By Dominikus

China’s coal imports are declining as strong domestic production, slowing demand growth and high inventory levels reduce reliance on seaborne supply, analysts said, with the market entering what they describe as a “loose balance” phase.

China’s total coal imports fell 9.6% year-on-year to about 490 million tonnes in 2025, with thermal coal imports dropping more sharply by 11.5%, according to data presented by Niu Hui, a thermal coal analyst at Fenwei Digital Information Technology, at an industry conference on March 18.

The decline comes as domestic output continues to expand. China’s raw coal production reached around 4.83 billion tonnes in 2025 and is expected to increase further to approximately 4.85 billion tonnes in 2026, supported by capacity growth in major producing regions.

Thermal coal supply stood at about 3.90 billion tonnes in 2025 and is projected to rise slightly this year, indicating stable domestic availability.

At the same time, demand growth has slowed. Thermal coal consumption declined by 0.4% in 2025 and is expected to grow by only 0.1% in 2026, with increases in the chemicals and heating sectors offset by reduced use in power generation.

“Domestic supply remains relatively loose, but structural gaps persist. Imported coal acts as a supplement and regulator,” Niu said.

High inventory levels across mines, ports and power plants have further reduced import demand. Stockpiles remained at mid-to-high levels throughout 2025 and are expected to stay elevated in 2026, supported by expanded production and storage capacity.

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The combination of strong supply, weak demand and elevated inventories has led to a more balanced but less tight market environment. “Overall supply and demand conditions remain relatively loose, with inventories playing a key role in stabilizing the market,” Niu said.

Pricing dynamics have also shifted. Imported coal prices rose in early 2026 due to freight costs, currency movements and geopolitical factors, while domestic prices remained relatively stable, narrowing the price gap and reducing the competitiveness of imports.

“Import coal became increasingly uncompetitive in 2026… leading to a sharp month-on-month decline in imports,” Niu said.

China’s coal imports remain concentrated among key suppliers, including Indonesia, Russia, Australia and Mongolia, with Indonesian coal continuing to dominate the thermal segment due to its suitability for blending.

However, weaker import demand and increased price sensitivity among Chinese buyers are expected to affect exporters. Indonesian producers may face pressure on volumes and margins and could increasingly look to alternative markets such as India and Southeast Asia.

Looking ahead, analysts expect China’s coal market conditions to remain stable but subdued, shaped by strong domestic supply, moderate demand growth and persistently high inventories.

Editing by Alexander Ginting