China’s Coal Output Drops 6.8% Amid Escalating Winter Supply Concerns

China’s coal production fell by 6.8% year-over-year in September to 385 million tons, official statistics reveal. Despite the annual decline, output rose compared to August levels. The drop follows months of deliberate production curbs aimed at managing high inventory levels and lower earlier demand, highlighted by a 1.4% drop in September’s thermal power generation. However, with the onset of winter, both mining activity and power generation are projected to rebound to meet rising heating requirements.

Import volumes also slowed, with September imports declining 5.7% year-over-year to 43.37 million tons, though this figure still represented a month-over-month increase from August.

Domestic spot thermal coal prices have surged by 24% since mid-July due to supply constraints and strong seasonal demand. The market tightening was initially triggered in late spring following a major mining accident in May—the country’s deadliest in 16 years—which led regulators to order safety inspections and temporarily halt operations across several mines in the key producing province of Shanxi. Coal remains vital to China’s energy grid, generating nearly 50% of the nation’s electricity.

On a global scale, coal consumption continues to increase despite net-zero emissions targets and expanding liquefied natural gas (LNG) infrastructure. High LNG prices, driven by a persistent geopolitical war premium, have forced many markets to favor coal. According to the International Energy Agency, global coal demand is on track to reach an all-time high this year, driven largely by expected heavy buying during the fourth-quarter heating season.