China's thermal coal market is expected to hold steady in December 2025, as supply constraints persist while improved demand during the winter heating season boosts market confidence, said Chen Yajun, an analyst from Wintime Energy Group Co., Ltd.

Thermal coal prices in the month are projected to stabilize or rebound amid fluctuations, with multiple uncertainties limiting upward room, according to Chen.

Toward the year-end, overproduction and environmental inspections will remain unbated, capping thermal coal output. However, ensuring energy supply in the peak winter season is expected to remain the key policy priority, lending some support to the production.

Supply in major producing areas, including Shanxi, Shaanxi, Inner Mongolia and Xinjiang, is projected to be relatively stable, likely with minor contractions in the second half of December due to facility maintenance after finishing annual production targets.

The supply-demand dynamics at transfer ports may ease in December. Spot supply may tighten due to robust long-term coal shipments, while restocking from power plants may gradually release as winter heating demand further grows. Portside thermal coal inventories are expected to level off following an early-month accumulation.

End-user demand will be stronger in December, though lacing further momentum. Coal burns at power plants may see an uptick during the winter heating season, yet likely still stay below the year-ago level. Coastal plants primarily procure coal through long-term contracts, and non-power sectors see sluggish demand in the shoulder season, providing insufficient support to the demand.

In December, import coal arrivals are less likely to see significant changes, as softening domestic market weakens the price advantage of imported coal. But the volume is expected to remain high, continuing to supplement the domestic market.

Extreme cold weather may occur in December, driving temperatures to fluctuate significantly. Attention should be paid to the potential impact of heavy snowfall and strong winds in northern regions on coal transportation, as well as the short-term boost to end-user demand from low temperatures.

Thermal coal prices are expected to recover and stabilize in the coming month, finding some support from tight supply and improved demand, Chen summarized. However, uncertainties may still persist, including unpredictable weather, potential increase in imported coal arrivals, safety-related production cuts, among others, continuing to put pressure on the market.