Thermal coal futures climbed to approximately $134 per ton in late July, reaching their highest level in over a month. The price increase was driven by strengthening coal demand in China, where a relatively mild start to the summer gave way to significantly hotter weather across major consuming regions, sharply increasing air conditioning use and electricity consumption.

Central and eastern China have been gripped by widespread hot and humid conditions as two high-pressure systems combined to create a heat dome over the region. The resulting surge in cooling demand has provided fresh upward momentum for thermal coal prices, which had been subdued earlier in the season.

Despite the increase in demand, China's coal inventories remain elevated at major storage hubs, providing a partial buffer against price spikes. Stockpiles at key power plants and ports had been built up ahead of the summer peak demand season, reflecting the country's ongoing emphasis on energy security.

Meanwhile, domestic coal production in China continues to face constraints following a fatal mining accident in Shanxi province in late May, which prompted authorities to launch extensive safety inspections across mining operations. Shanxi is one of China's largest coal-producing regions, and heightened regulatory scrutiny has limited output growth even as seasonal demand rises.

On the supply side, concerns in Indonesia — one of the world's largest thermal coal exporters — have also lent support to prices. Dry weather has disrupted coal barging operations along the Barito River in Kalimantan, a critical transport artery for the country's coal exports. According to reports, some miners have declared force majeure on shipments affected by the low water levels, further tightening available supply in the seaborne market.

China is the world's largest consumer and producer of coal, and fluctuations in its demand patterns have a significant influence on global thermal coal benchmarks. Indonesia ranks among the top exporters of thermal coal globally, serving key markets across Asia. The current dynamic underscores how weather patterns, mining safety regulations, and logistical disruptions in these two countries can combine to move prices even when inventories remain comparatively high. Market participants continue to monitor the duration of the Chinese heat wave and the pace at which elevated stockpiles are drawn down, as well as whether Indonesian river conditions improve enough to normalize shipment flows.

Source: Trading Economics via Hellenic Shipping News.