Summer coal prices near the peak rise nearly 5%: production volume shrinks, electricity consumption hits record high, and the center of energy spot prices continues to rise

As August begins, the "summer trend" in the thermal coal market continues to ferment. On August 5th, all three tiers of CCI thermal coal price indices rose: 5500 kcal reported 839 yuan/ton, up 5 yuan from the previous day; 5000 kcal reported 750 yuan/ton, up 5 yuan; and 4500 kcal reported 661 yuan/ton, up 6 yuan. Looking at a longer timeframe, from 800 yuan/ton on July 10th to 839 yuan/ton on August 5th, the 5500 kcal benchmark increased by 39 yuan/ton, a rise approaching 5%, and the daily price adjustment rhythm showed an upward trend rather than a decline. Amid multiple resonances—contracting supply from production bases, record-breaking electricity load, and tightening international coal sources—the strong pattern of coal prices being "easy to rise and hard to fall" persists, and the center of the spot energy price continues to shift upward. Supply Contraction: Both production and inventory decreased, and strict safety supervision cannot relax. The tightening on the supply side is the first support for the current rise in coal prices. Latest research data shows that as of the week of August 6th, the total output from 160 thermal coal mines tracked by intermediary agencies was 15.189 million tons, a 0.98% decrease compared to the previous week; the inventory of the same sample mines dropped to 3.785 million tons, a further 1.17% decrease compared to the previous week. The simultaneous decline in production and inventory means that there is no stockpiling at the production base—coal is moved as soon as it is produced, and there is no accumulation at the mines, which clearly reflects the trading chain's bullish sentiment for the future market. Production is difficult to release quickly, which is closely related to the stringent safety supervision. The Politburo meeting of the CPC Central Committee held on July 30th clearly stated the need to "solidly build safety barriers," requiring in-depth investigation and rectification of various risk hazards and resolute curbing of major accidents. Under this tone, safety supervision at production bases remains tight, and some mining areas are affected by rainfall and production restrictions, making a significant increase in output unlikely in the short term. This means that, assuming there is no catastrophic drop in demand, the situation of insufficient supply elasticity for thermal coal is unlikely to reverse in the short term. Record-Breaking Demand: Guangdong and Jiangsu's electricity consumption breaks historical extremes, and power plant daily consumption remains high. On the demand side, sustained high temperatures have pushed electricity consumption to historical extremes, providing the most solid fundamental support for coal prices. In July, Guangdong's total social electricity consumption reached 100.798 billion kilowatt-hours, making it the first province in the country to exceed 100 billion kilowatt-hours in a single month, with industrial electricity and new high-end manufacturing momentum being the main drivers. In Jiangsu, the grid's maximum load rose to 160.9 million kilowatts on July 31st, an increase of 4.32 million kilowatts compared to the previous year's peak, making it the first provincial grid within the State Grid system to exceed 160 million kilowatts. The record-breaking electricity consumption in these two major economic provinces directly reflects the rigid dependence of coal and power generation on ensuring electricity supply during the "peak summer" period. Data from power plants also confirms the resilience of demand. On August 5th, the combined inventory of the six major coastal power groups was 14.208 million tons, with a daily consumption of 0.9404 million tons, maintaining a reserve of 15 days. Although the daily consumption slightly decreased by 0.061 million tons from the previous day, it remains above the high level of 0.94 million tons; the inventory slid from 14.33 million tons at the beginning of the month to 14.20 million tons, with a reserve of 15 days—not tight, but not abundant, and power plants always face pressure to replenish stock. Furthermore, according to Mysteel's statistics on 493 sample power plants, during the week of July 27th to 31st, the average daily coal consumption was 4.374 million tons, an increase of 0.09 million tons compared to the previous week, and the inventory reserve dropped to 22.4 days. Regional differentiation is evident: East China saw increased thermal power output and accelerated coal consumption due to high-temperature disturbances, while South China diverted thermal power consumption due to rainfall and typhoon disturbances and seasonal increases in hydropower.

International Coal Supply Tightening: A Resonance Among India, Russia, and Indonesia

Marginal shifts in the international market have provided a secondary support for coal prices, making this round of market trends transcend a simple domestic supply-demand narrative in China, possessing a linkage characteristic of the Asian energy market.

On the demand side, India's coal-fired power generation reached 114.7 TWh in July, a year-on-year increase of 13%, setting a new high for the period. Due to the uneven and weak monsoon, hydropower output in India decreased, while the demand for cooling power surged, forcing thermal power plants to increase coal consumption. This signifies an acceleration in international coal consumption, directly diverting seaborne coal resources destined for the Asian market.

On the supply side, constraints are equally significant. According to a report by the Russian newspaper Businessmen in early August, as of the end of July, the number of vessels available for Russian coal exports has significantly decreased. The number of available bulk carriers in the Black Sea region dropped by 21% within a month, leading to rising shipping risks that directly push up freight rates. In the Far East, freight rates have risen by 5% to 10% due to reduced vessel capacity and growing demand from South Korea. The landed cost of Russian coal has increased, providing an indirect support to the port price of imported coal. Meanwhile, the Indonesian market sentiment is still dominated by the progress of RKAB production quota approvals. The mainstream FOB quote for Q3800 Panamax vessels has risen to 66–68 USD/ton, with strong price support from the mining side. Although final RKAB approval is expected in August, even if quotas are raised, the actual export increase in the second half of the year is likely to be limited due to the priority of domestic supply assurance by DMO and constraints from infrastructure and the rainy season, making it difficult to quickly form a large volume of spot supply entering the seaborne market in the short term.

Furthermore, Typhoon "White Dolphin" approaching the East Sea, the National Oceanographic Center issued an orange wave warning on August 6th, indicating that the eastern East Sea will experience rough seas to high waves of 6 to 10 meters. The coal receiving and shipping scheduling of coastal power plants are temporarily affected, further exacerbating regional supply-demand mismatch risks.

Import Costs and End-User Bargaining: Bidding Prices Rise, Essential Demand Does Not Chase Highs

In the price transmission chain, the bargaining in the imported coal segment is particularly tight. Influenced by the improvement in the domestic market and the strong sentiment of rising foreign mineral prices, the costs for import traders are high. The bidding range for Q3800 power plants in South China has risen to 566–583 RMB/ton, with the lowest price increasing by 15 RMB/ton week-on-week. However, end-user power plants generally maintain a procurement mindset of "essential demand without chasing high prices"—long-term contract coal remains the main source of consumption, and the plant's inventory base is not low, with available days from passive inventory draw-down still within a safe range, and there has been no large-scale concentrated purchasing. There is a clear price gap between buyers and sellers, with actual transactions mainly relying on the essential demand of near-month vessels, while spot trading in the far month market is cautious.

Outlook: Coal Prices at the Bottom Rise in Q3, Enhanced Inter-Commodity Linkage of Energy Spot Prices

Considering both the supply and demand sides, the logic behind the current rise in coal prices is clear and mutually reinforcing: Domestically, tight safety inspections combined with rainfall constraints limit production release, while the high load during the peak summer period ensures demand rigidity. Power plant inventory drawdown has not yet reached the panic restocking stage, and prices are in a "moderate upward trend"; Internationally, record demand from India, supply contraction from Russia, and price support from Indonesian miners collectively drive up the landed cost of imported coal, raising the "floor" for domestic coal prices.

Looking ahead to August and the third quarter, the bottom of coal prices is likely to continue rising. On the demand side, high temperatures are expected to continue until the end of August, keeping daily power consumption at a medium-to-high level; on the supply side, the pressure from safety inspections has not changed, and the increase in imported coal is limited, resulting in insufficient supply elasticity. Key risks to monitor include:

• Seasonal decline in power load and power plant daily consumption after the temperature drop at the end of August;
• Actual quotas and export release pace following the final approval of Indonesian RKAB;
• The actual progress of the restoration of Strait of Hormuz passage and its impact on shipping costs, LNG prices, and overall energy expectations;
• The phased impact of extreme weather such as typhoons on coastal coal unloading and shipping scheduling.

For investors monitoring energy spot prices, this round of market movements is noteworthy not only for the rise or fall of a single coal type but also for the price linkage between coal, electricity, gas, and oil—fuel substitution and cost transmission are amplifying supply and demand gaps in individual commodities, with price fluctuations spreading throughout the entire chain through channels such as the power spot market and import price comparisons. Against the backdrop of intensifying energy price volatility, cross-commodity price tracking, basis management, and hedging may become core topics in commodity energy trading in the second half of the year.