China's coal-fired power plants saw coal burn continue to fall while inventories shifted to build-up in the week of September 10-17, according to the latest weekly report released by the China Electricity Council (CEC).

Daily average power generation at monitored coal-fired power plants stood at 8.3 TWh, down 0.9% from the previous week and down 10.4% from a year earlier, according to CEC fuel statistics.

As high temperatures continued to subside, residential cooling demand weakened further, pushing coal-fired power generation and coal consumption slightly lower, with regional divergence becoming more pronounced.

By region, power generation at power plants in northeastern, northwestern, central and northern China fell 17.3%, 6.6%, 4.9% and 0.2% respectively, while power output at those in southern and eastern China rose 4.6% and 6%.

Daily average coal consumption at these plants was 4.3 million tonnes, down 1.9% week on week and 7.9% from a year earlier. northeastern, northwestern, central and northern China fell 16.2%, 6.6%, 6.4% and 0.9% respectively, while eastern and southern China rose 5.2% and 5.9%. Daily average coal arrivals were 4.35 million tonnes, up 0.8% from the previous week but down 9.9% year on year.

Coal inventories at power plants shifted from drawdown to build-up. As of September 17, coal stocks at monitored power plants stood at 103.62 million tonnes, down 12.64% from the year-ago level, but up 0.29% from September 10. This could cover 21.7 days of use, 1.5 days below the year-earlier level. Inventories at seaborne-shipped power plants continued to edge lower, but overall stock levels remained within a reasonable range.

As of September 17, month-to-date power generation at monitored coal-fired power plants fell 12.9% year on year, while year-to-date generation was down 1.8%. Month-to-date coal consumption at coal-fired power plants fell 9.6% year on year, with year-to-date consumption down 0.6%.

Supply was broadly stable across major mining hubs during the week, with prices remaining largely steady and showing mixed trends. At ports, prices loosened and inventories shifted from drawdown to build-up. In the import market, imported coal prices retreated, with end users mainly making need-based purchases.

On the supply side, output recovery in major producing regions remained slow, constrained by approved capacity limits. Most mines resumed operations without restoring full output. As national and provincial measures to stabilize production and supply take effect, some production increases are expected to materialize in October, improving the medium- to long-term supply outlook.

Entering late September, some mines in major producing regions have scheduled production halts or cuts after completing output targets, and supply is expected to edge lower.

In the import market, overseas prices remained elevated, providing strong support to landed costs, with limited room for import growth and a weak supplementary role for the domestic market.

On the demand side, the off-season effect for coal use has become evident, with power plant daily consumption continuing to decline amid seasonal temperature drops and faster growth in clean energy generation.

Inventories at inland power plants are at low levels, with steady interest in on demand purchases, mainly under long-term contracts. The Daqin railway's autumn maintenance is scheduled to start on October 7, prompting some shipments to move earlier, with port-bound resources rising steadily.

Some seaborne-shipped power plants seized the current window of low shipping costs, adjusting procurement pace to lock in transport costs, driving marginal improvement in port demand. Combined with winter peak-season stockpiling and pre-holiday restocking demand, thermal coal demand has some support.

In the non-power sector, pre-holiday restocking demand was robust, but with the supply outlook improving, speculative demand from traders has cooled, and the pace of demand release has moderated.

The CEC analysis noted that the coal market is expected to see short-term supply pressure, an improving medium- to long-term outlook, supported demand with a moderate release pace, and rangebound prices. With mixed bullish and bearish factors, short-term supply contraction and the approaching Daqin railway autumn maintenance provide a price floor.

However, worsening losses at end users limit acceptance of high-priced coal, while policy expectations for supply guarantees and profit-taking weigh on upside room. Coal prices are expected to remain rangebound at high levels in the near term, with limited gains or losses.

The CEC recommended: First, strictly implement the notice on ensuring safe and stable coal production and supply to reinforce long-term contract fulfillment responsibilities, strengthen production-transport coordination, and consolidate the foundation for thermal coal supply.

Second, closely monitor winter peak-season and pre-holiday restocking paces, conducting replenishment in batches based on current inventory levels to avoid concentrated high-price purchases and reasonably control procurement costs.

Finally, focus on the effectiveness of production stabilization policies and the pace of capacity release, track changes in market supply and demand and alternative energy output, and prepare contingency plans for dynamic procurement strategy adjustments.