China's Soaring Coal Demand Fuels Global Price Surge

Core Insights - Chinese and international benchmark coal prices have surged to multi-month highs due to increased thermal coal power generation in China and reduced domestic production [1][2] - The surge in prices is attributed to a combination of high demand for thermal coal for power generation and government measures to curb oversupply [2][4] Production and Demand - China's coal production decreased by 2.3% in October year-on-year, although year-to-date production remains 1.5% higher than the previous year due to record output in the first half of 2023 [3] - Thermal power generation in China saw a significant increase of 7.3% in October, marking the highest electricity output for any October since at least 1998 [4] Weather Impact - Unusual weather patterns, including a heat wave in southern China and colder temperatures in the north, have contributed to increased electricity demand, particularly for thermal power [5] - The rise in air conditioner usage for heating in northern China has further driven up coal demand as district heating systems are not yet operational [5] Future Outlook - Coal demand is expected to remain high during the winter months as China continues to depend on thermal power to meet its energy needs [6]