Coal prices finally plunged after enjoying a strong nine-day rally. The decline was primarily triggered by weakening demand from China and a sharp drop in global oil prices.

According to Refinitiv data, coal prices closed at US$ 109.9 per ton on Tuesday (June 24, 2025), falling by 2.7%. This downturn ended a strong and extended nine-day rally in coal prices, which had previously surged by 6.7%.

China has scaled back its coal imports while boosting exports due to an abundant domestic supply. Bloomberg reported that China’s coal exports rose by 13% during the first five months of this year.

Between January and May 2025, China exported 2.5 million tons of coal, with Japan, Indonesia, and South Korea being the main destinations. Meanwhile, coal production reached 5 billion tons during the same period, and imports fell by 8% compared to the previous year.

Record-high domestic coal output and declining coal-fired power generation in China have contributed to reduced demand for imported thermal coal in the world’s largest coal market.

This trend began to emerge earlier this year after China's coal imports reached 500 million tons in 2024. Simultaneously, the country’s central planning agency instructed power plants to increase their coal inventories by as much as 10%.

Given the low domestic coal prices, weak demand, and high inventory levels at ports, China’s declining coal imports come as no surprise. Analysts had already projected that this downtrend in imports would likely persist in the coming months.

The China Coal Association expects production growth to outpace consumption in 2025, indicating that oversupply may persist through the end of the year, even during the expected summer demand peak.

The growing capacity of wind and solar power generation in China has also drawn attention, as analysts believe it is beginning to reduce the country’s dependence on coal-based electricity.

Nevertheless, coal-fired power plants still set a new record last year, generating 6.34 trillion kilowatt-hours of electricity, according to data from China’s National Bureau of Statistics released earlier this year. At the same time, wind and solar installations also reached new highs.

Despite this, last year’s growth in thermal power generation was the weakest in nearly a decade, excluding the pandemic years (2020–2022), when China was under strict lockdowns.

The sharp decline in oil prices also added downward pressure on coal, as coal often serves as a substitute for oil, leading their prices to be interconnected.

Oil prices fell steeply for the second consecutive day following a ceasefire agreement. U.S. crude oil closed down 6%, while Brent, the international benchmark, dropped by 6.1%.

A day earlier, U.S. crude oil prices had already plunged more than 7%. Meanwhile, equities gained further momentum as oil prices hit a new intraday low during the trading session.

The ceasefire helped ease fears about potential disruptions to oil supply and the possible closure of the Strait of Hormuz—a key route through which over one-fifth of the world’s oil flows daily. Meanwhile, the International Energy Agency (IEA) reassured the market that it holds 1.2 billion barrels of emergency reserves that could be tapped if needed. Furthermore, several OPEC+ producers have already begun to raise output and have additional spare capacity ready for deployment.