China's thermal coal imports declined in 2025, driven by abundant domestic supply, eroding thermal power demand due to rising renewable energy, and fading price advantages of imported coal in the first half year, according to Liu Shaoyi, director of International Business at Xiamen Xiangyu Mining during a meeting held on December 25.

Speaking at the Coal Market Outlook 2026 & Sxcoal Annual Conference hosted by Fenwei Digital Information Technology in Nanning, Guangxi, Liu stated that the country's coal imports gradually peaked this year and experienced structural optimization amid a broadly oversupplied domestic market.

The first half of 2025, he said, saw domestic thermal coal prices fall more sharply than international benchmarks, eroding the profitability of imported cargoes. Coupled with tariffs imposed on U.S. coal and Indonesia's strict enforcement of HBAs pricing, these significantly curtailed import volumes in China.

Only after coal prices rebounded in July did import margins improve. In August, Indonesia scrapped a requirement to use government-set benchmark prices as the floor price in minerals and coal sales. This partially helped lead to a month-on-month rebound in China's imports.

Even so, overseas coal supply recovery remained constrained due to environmental and cost pressures. A modest rebound in global demand further limited the scale of China's import gains.

The focus of China's import mix has shifted from quantity to quality, Liu noted. There has remained steady demand for high-CV, low-sulfur coal, particularly high-CV materials for blending purposes from Australia and Russia. Conversely, imports of Indonesian lignite have registered the sharpest declines.

Globally, the thermal coal market for 2025, once hovering at high levels driven by geopolitical tensions and energy crises, has shifted to be fundamentals-oriented with a looser supply and demand situation, according to Liu. Seaborne thermal coal demand peaked in 2024 and is expected to enter a structurally declining trajectory starting in 2025.

On the supply side, Indonesia has already lowered its 2026 production target, and evolving policy may disrupt its coal trade. Rising production costs could dampen export enthusiasm among Indonesian players.

Weather disruptions and overseas sluggish demand have weakened both supply and demand in Australia during the first half year, while some recovery is anticipated in the latter half. In Russia, small and mid-sized coal mines have still been deeply unprofitable. Without improvement, further production cuts appear likely across coal enterprises.

As for demand, India's import appetite has been squeezed by year-on-year growth in domestic output and continued expansion of renewables. Nevertheless, emerging economies in Southeast and South Asia have become the new engines of coal demand growth. As global energy markets soften and prices fall, Southeast Asia may seize the opportunity to absorb more of the global demand increase.

Looking forward to 2026, Liu anticipated Chinese thermal coal prices to trend modestly higher amid constrained supply and resilient demand.

Since peaking in 2021, the coal market has been buffeted by a domestic priority of increasing production and ensuring supplies, an overseas energy crisis, the rapid rise of renewables, shifts in electricity demand patterns, and stricter crackdowns against overproduction. By mid-2025, coal prices had hit bottom, supported by resilient production costs, while the upside remains capped by maturing coal demand amid the energy transition. China's thermal coal prices are likely to move within a range over the mid- to long-term, Liu said.

The ongoing energy transition has clarified that coal is being repositioned toward cleaner, lower-carbon applications in line with China's dual-carbon goals. To align coal supply with changing demand while upholding energy security, supply-side regulation remains essential. Stabilizing production, alongside safety and environmental inspections, will become the norm.

Domestic coal demand remains resilient, given that power demand growth could exceed expectations, backed by new consumption trends or extreme weather. Thermal power is still indispensable for grid reliability and load balancing. Meanwhile, coal's role as a raw material in the chemical industry continues to expand.

While demand is likely to peak between 2025 and 2027, coal consumption may plateau later, instead of a sharp decline. Liu projected China's coal market fundamentals to gradually shift from oversupply to a more balanced footing in 2026, with limited supply upside and demand yet to peak.