China's coal price surge may lose steam without policy support

China's coal price surge is likely to be short-lived without government policies supporting demand. The National Energy Administration's crackdown on excess supply has led to a 15% increase in coking coal futures in Dalian. However, analysts believe that top decision-makers need to offer macroeconomic support to maintain price momentum. The thermal coal market is less volatile, with spot prices up 4% this month, but still 25% lower than last year.

A rally in Chinese coal prices following government moves to tackle excess supply has shown signs of momentum, but analysts caution that the surge could be short-lived without supportive policies. The National Energy Administration's (NEA) recent crackdown on coal mines producing above permitted levels has led to a 15% increase in coking coal futures in Dalian. However, industry experts suggest that the rally may not sustain itself without additional macroeconomic support from top decision-makers [1].

The NEA's month-long inspections, including in major coal hubs like Shanxi and Inner Mongolia, have contributed to the price surge. While shares of listed miners initially rallied, they have since steadied, indicating a cautious market response. The thermal coal market, which is crucial for power generation and energy security, has shown less volatility compared to coking coal. Spot thermal coal prices have increased by 4% this month, but remain 25% lower than the same period last year [1].

Analysts like Han Lei from the China Coal Transportation and Distribution Association emphasize the need for more than just industrial efforts to maintain the price momentum. He argues that top decision-makers must offer macroeconomic support to sustain the current price levels [1]. This suggests that the current price surge is more a result of supply-side measures than a fundamental shift in demand.

Meanwhile, Malaysia is boosting its coal-fired power output and imports to meet rising demand, taking advantage of low coal prices. The country's coal-fired power output has increased significantly, with a 16.8% rise in the first half of July alone. This trend is driven by surging demand from data centers, which are expected to rise to 52% of peninsular demand by 2030 [3]. Malaysia's reliance on coal in the short and medium-term is likely to continue due to lower fuel costs, with a planned increase in gas-fired and renewable capacities to reduce coal use in the longer term [3].

In contrast, Nvidia's recent success in resuming H20 GPU sales to China has driven its stock price higher. The company has secured export licenses to sell its H20 GPUs, which are in high demand in the Chinese market. This development is part of a broader thawing of relations between the U.S. and China, with both sides approving exports of crucial technologies [2]. Despite supply challenges in China, Nvidia's sales prospects remain strong, driven by robust demand from major Chinese players.

In conclusion, while the recent surge in Chinese coal prices is a result of supply-side measures, analysts believe that sustained price momentum will require supportive policies. Meanwhile, Malaysia's increased reliance on coal and Nvidia's success in the Chinese market highlight the complex dynamics shaping the global energy and semiconductor industries.

References:
[1] https://www.bloomberg.com/news/articles/2025-07-24/china-s-coal-price-surge-may-lose-steam-without-policy-support
[2] https://www.ainvest.com/news/nvidia-faces-supply-constraints-china-high-demand-h20-gpus-2507/
[3] https://www.marketscreener.com/news/malaysia-boosts-coal-power-output-imports-to-meet-rising-demand-ce7c5cdedd8af721