Thermal Coal Rises to 6-Month High

Thermal coal futures out of the Newcastle Port rose to $114 per tonne in late July, the highest in six months, as China aimed to combat oversupply in multiple industries. Beijing noted it will shutter mines that produce coal above their quotas in their latest effort to curb the oversupply of power feedstock. This was after reports indicated the Chinese government mandated plants to increase coal stockpiles by 10%, aiming to take advantage of lower prices and preventing more aggressive pressures in its producer deflationary momentum. Still, coal output in China rose by 3.6% from the previous year in June, aligned with the earlier signal that it plans to boost output by 1.5% to 4.82 billion tons this year after the record amount of output in 2024. On the demand front, Chinese fossil-fuel power output dropped by 4.7% annually in the first quarter amid lower power demand and strong supply from renewable energy sources. Still, added infrastructure spending put a floor on power demand.