- Production Cuts
- China is curbing coal output after a supply surge in the first half of calendar year 2025 pushed domestic thermal coal prices in some regions down nearly 30% y/y by mid-year.
- Output over the first seven months of the year reached 2.78 billion metric tons, up 3.8% y/y.
- But output in July fell to the lowest level in over a year to 380.99 million metric tons of coal in July, down 3.8% on the year.
- Government Action
- Chinese authorities tightened inspections in July to ensure mines adhered to approved production limits.
- Restrictions are part of an “anti-involution” campaign, aimed at reducing unsustainable competition and preventing overcapacity in the coal sector.
- Impact on Mines
- In Shanxi, the country’s top coal-producing province, 54 out of 153 coking coal mines surveyed by Mysteel have suspended or reduced production, representing 61.1 million metric tons per year of capacity.
- Market and Safety Concerns
- China analysts warn that when prices fall below production costs, investment in safety and upgrades declines, raising safety risks.
- Recent measures also reflect heightened safety concerns ahead of a September 3 military parade, with some mines temporarily shut down to ensure that no bad news from the coal fields could sour public opinion around the parade.
- Industry Context
- The National Development and Reform Commission and energy regulators have not publicly commented. TCT will be watching NDRC news closely.
- Market observers believe the cap is intended to stabilize coal prices while maintaining adequate supply to meet power demand.
-JA
