A widespread heatwave across southern China is driving record power demand and sharply higher coal consumption at coastal utilities.

The region has been gripped by extreme heat since May 24, with apparent temperatures exceeding 40 degrees Celsius in many areas, triggering a surge in air conditioning use and grid loads.

China Southern Power Grid reported its power load hit a new all-time high at 8:20 p.m. on May 25, nearly a month earlier than the typical seasonal peak seen from 2020 to 2025. The grid set another record at 8:26 p.m. on May 26, reaching 268 GW, up 9 GW from the previous day.

The early onset of intense heat in south China has activated full-region cooling demand, combined with steady industrial output and strong consumer activity, pushing power loads past historical highs ahead of schedule, the grid operator said.

In response, China Southern Power Grid has fully activated its summer peak supply guarantee mode, with coal-fired power playing a key supporting role.

Data from Sxcoal shows daily coal consumption at power plants of six major coastal power groups has risen sharply since May 23, reaching 811,000 tonnes by May 26, a record high for the period.

Despite stable long-term contract coal supplies, inventories at these plants have been accumulating but coal stockpile days have fallen to around 15 days, slightly above safe levels.

Coal stocks at the six coastal utilities have been trending up since May, with daily increases accelerating after May 23. Inventories reached 13.4 million tonnes by May 26, up 635,000 tonnes from the start of the month but still the lowest for the period in four years and down 761,000 tonnes year on year.

With inventories at low seasonal levels and daily consumption surging, coal stockpile days at the utilities fell to 16.5 days by May 26, down 0.7 days from early May and 1.8 days lower year on year.

While overall inventories remain within safe levels, some coastal provinces have seen stockpile coverage drop below 14 days, likely contributing to the high number of vessels waiting at northern ports.

The decline in days of use has kept demand for long-term contract coal stable, with utilities continuously scheduling vessels for northern port shipments. Combined with market participants prioritizing vessels for trading and some port congestion, the number of vessels waiting at northern China ports has hit a multi-year high for the period.

In the spot market, rising coal consumption and recent coal mine accidents have strengthened expectations of tighter supply, prompting some end-user demand. However, buyers remain price-sensitive, with limited transactions at high levels.

If the heat persists, steady power plant procurement could support further price gains. But weather forecasts suggest the heatwave will ease by the weekend as rain belts shift south, with maximum temperatures in parts of Jiangnan dropping below 30 degrees Celsius.

Meanwhile, summer peak supply preparations are already in place, with coal inventories at northern and Yangtze River ports at medium-to-high levels. While short-term sentiment is bullish, sustained large price increases are unlikely once the impact of recent mine accidents fades and supply remains stable.