China’s strong coal production is outpacing demand, which is expected to push prices even lower, according to Bloomberg, citing officials from China’s coal industry.
“The market is being overwhelmed by excess inventory,” said Han Lei, an analyst from the China Coal Transportation and Distribution Association. “Power plants are unloading their stockpiles because there’s simply too much supply.”
Coal prices in China, the world’s largest consumer, have dropped to their lowest levels in 18 months. Analysts suggest it could take some time for prices to recover, possibly only after the Lunar New Year. In November, China reached an all-time high in coal production, while imports also remained high ahead of the peak winter demand season.
This news follows a recent report from the International Energy Agency (IEA), which revised its previous coal demand forecasts. According to the IEA, global coal demand hit a new record this year, rising by 1% to 8.77 billion tons. The electricity generation sector was a major driver of this increase, with coal-fired power output expected to set another record in 2024, reaching 10,700 TWh.
The increase in coal demand comes despite a significant rise in alternative power sources in recent years, which the IEA has praised. These renewable energy sources were expected to surpass coal as the leading source of power globally.
Looking ahead, China is forecast to remain the world’s largest coal consumer, accounting for 30% more demand than the rest of the world combined. India is also expected to be a major driver of coal demand, despite its growing investment in wind and solar energy. Together with other economies prioritizing energy security over emissions reduction, these nations are expected to contribute to another year of record coal demand.
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