China’s Coal Prices Surge as Extreme Heat Drives Power Demand
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**China’s Coal Prices Surge as Scorching Heat Drives Power Demand**
High summer temperatures across China have triggered a sharp increase in electricity demand, driving up both coal consumption and market prices.
According to the China Coal Transportation and Distribution Association, benchmark spot coal prices at the port of Qinhuangdao have fully recovered from a slump earlier this month. Analysts expect prices to climb further in the coming weeks as intense heat persists.
“Thermal coal prices are more likely to rise than fall,” said Li Xuegang, a senior analyst at the association. He noted that the peak season for coal-fired power generation is still underway, the full effects of El Niño have yet to materialize, and the combined pressure of tightening supply and rising demand will continue to support the market.
In addition to weather-driven demand, domestic supply concerns are putting upward pressure on thermal coal prices. Analysts at Mysteel reported that sentiment strengthened after four major mines in Yulin—a primary coal-producing hub in Shaanxi province—were ordered to temporarily suspend operations. This supply disruption follows a broader step-up in safety inspections across Shanxi province, which were implemented after a major mining disaster in May.
The current heat wave is affecting central, eastern, and northeastern China, including major metropolitan areas like Beijing and Shenyang. The extreme weather has also reduced hydropower and wind power generation, forcing the country to rely more heavily on coal to keep grid systems stable.
Despite transitioning toward green energy goals, Beijing continues to treat coal as the “bottom-line guarantee” for its electrical grid, choosing not to restrict coal power expansion in its current five-year energy plan.
