In China, coal prices are expected to continue declining due to excessive stockpiles, which are close to all-time highs at major transportation hubs, surpassing the levels seen a year ago. This trend may lead to further price erosion, following a decrease of over 20% in the past year. Analysts, like Xu Dongkun from the China Coal Transportation and Distribution Association, foresee the possibility of prices hitting new lows in the upcoming months.

The significant inventory levels are a result of strong buying activities during the fall by China and other Asian importers, coupled with lower consumption, contributing to high stockpiles in the region as spring begins. Consequently, miners are compelled to reduce prices to attract buyers. Power generation from fossil fuel plants indicated a decline in January and February, a rare occurrence during the winter period in the last 35 years.

According to Morgan Stanley analysts, spot prices are yet to reach their lowest point. Falling below 400 yuan per ton could lead to losses for most Chinese miners, which is approximately 40% lower than the current levels. China Shenhua Energy Co., the largest coal producer in China, reported a decrease in profit and disclosed cost-cutting measures in its coal division, including the suspension of spot foreign coal purchases due to the high inventory levels. Smaller mining companies in the Shanxi province are facing more severe impacts, such as reducing salaries, downsizing, or even shutting down operations due to the challenging market conditions.