Coal prices continue their upward trend, bolstered by new policies introduced by U.S. President Donald Trump. However, recent developments in China could exert downward pressure on prices.

According to Refinitiv, coal prices closed at US$114 per ton on Wednesday (July 2, 2025), up 0.53%. This marks the highest price level since February 5, 2025.

This latest gain extends coal’s rally. Over the past four days, prices have soared by 7.4%.
 

The coal power map shifts: U.S. support strengthens, China threatens pressure on prices

The U.S. energy landscape is undergoing major changes, driven by policy shifts that are reviving the coal sector while exposing the vulnerabilities of renewable energy.

This transformation is evident in the newly passed Tax Bill approved by the U.S. Senate. The Trump-backed bill provides direct subsidies to the coal industry and cuts incentives for clean energy. The Senate version strengthens coal even further than the House’s proposal by introducing special tax incentives for coal producers.

The policy is intended to boost domestic coal output and preserve mining jobs.

At the same time, subsidies for renewables like wind and solar are set to be fully removed by 2027—excluding ongoing projects. This creates renewed competitiveness for coal, as its main rivals lose fiscal support.

The legislation is expected to spur higher global coal demand.

Recent legislative and executive actions—including lifting the moratorium on federal coal leasing and introducing tax benefits for metallurgical coal—have created a strong short-term boost for coal miners.

Meanwhile, the gradual removal of clean energy tax incentives and electric vehicle (EV) subsidies poses significant risks to renewable energy companies and EV manufacturers.

For investors, this policy divergence presents a rare chance to tactically reallocate capital toward coal-related assets while taking short positions on sectors threatened by subsidy withdrawal.

However, negative news has emerged from China and India.

In India, growth in rail freight slowed during April–May 2025 due to weakening demand for coal and cement. Coal transport volume grew by just 1%, reaching 209 million tons.

Coking coal prices drop in China

In June, Chinese coking coal prices declined compared to May, due to low demand and high inventory levels.

This trend occurred despite production cuts driven by safety and environmental inspections affecting mines in northern regions.

Toward the end of the month, prices began to stabilize, and market sentiment improved—mainly due to falling supply from Shanxi province and rising pig iron production by steelmakers. Still, a sustained price recovery appears unlikely in the short term.

Overall, coking coal inventories in China rose for two consecutive months.

However, between June 23 and 27, stockpiles saw a sharp drop due to reduced production and increased sales from mines. A survey of 523 mines revealed total reserves of 11.47 million tons as of June 24, down 4.5% from the prior week.

According to Kallanish, spot prices for coking coal in China (EXW, Anze) stood at US$163.16 per ton as of June 27.

Fitch Ratings, in its latest forecast, predicts that coking coal prices will remain stable at around US$180 per ton through 2026 to 2028.

This outlook reflects weak demand from China’s steel industry, which is expected to be only partially offset by new demand from blast furnace operations in India and Southeast Asia.

Meanwhile, Australia’s Department of Industry, Science, and Resources projects that Australian coking coal prices will hover around US$200 per ton in 2026 and 2027—down from an average of US$235 per ton in 2024.

For the fiscal year 2024/2025 (ending in June), Australian coking coal exports are projected to fall to 147 million tons due to production disruptions. However, exports are expected to rebound to 160 million tons in 2025/2026 and reach 169 million tons by 2026/2027.