China’s thermal coal prices have surged to a three-year high, with little immediate relief in sight. The benchmark power-station coal price reached 1,004 yuan per ton on Monday, marking the first time it has hit four digits in two years. Prices have climbed by a quarter since mid-July, driven by sluggish domestic production and disruptions in Indonesia, China’s top coal exporter.
The rise in coal prices comes as China’s domestic output of the fossil fuel has dropped more than 3% in the year through August compared to the same period in 2025. This decline is attributed to tightened safety measures following a deadly mine collapse in Shanxi province in May. While the market had anticipated a restoration of about 31 million tons of annualized production by year-end, approvals for restart applications have lagged behind expectations. Authorities are expected to maintain cautious safety controls ahead of a major Communist Party meeting later this month.
Adding to the supply constraints, three weeks of maintenance on China’s main coal rail corridor through October 26 is set to keep prices elevated. Meanwhile, shipments from Indonesia have plummeted this year due to Jakarta’s efforts to curb output and boost state revenues. A drought linked to the El Niño weather pattern has further reduced coal transport capacity in key Indonesian regions.
China’s coal consumption typically rises during the winter months, which is likely to sustain upward pressure on prices. Additionally, liquefied natural gas, an alternative power-generation fuel, has also surged this year as the Middle East war has disrupted Qatari production behind the Strait of Hormuz.