China’s Coal Crisis Deepens: Soaring Inventories and Crashing Prices Amid Falling Demand

China’s state planners face a mounting dilemma as coal inventories surge while demand sinks—triggering price crashes and threatening thermal power stability across the world’s largest energy market.

Supply-demand imbalances reveal an economy tangled in central planning inefficiencies reminiscent of late-stage USSR dynamics. Beijing has ordered power plants to boost domestic coal stockpiles by 10%, while urging northern ports to clear high coal inventories, hoping to stabilize prices and support struggling miners.

Yet despite increased production, prices have plunged 20% year-to-date, and buyers are seeking to exit long-term contracts for spot sales. Imports dropped 16% in April, signaling weak demand ahead.

Amid this turbulence, China’s coal output rose 6.6% in early 2025, but industry profits plummeted nearly 50%, underscoring structural pressures. Analysts warn the path forward requires recalibrated energy policy as Beijing balances economic growth with environmental goals.