US-China Trade Thaw Drives Coal Prices Higher
Coal prices have surged to their highest position in 10 days. A trade agreement between the United States and China, coupled with the heating up of oil prices, has acted as the primary catalyst.
According to Refinitiv, coal prices closed at US$ 147.35 per tonne in Monday’s trading (28/09/2026), representing a 1.27% increase. This strengthening extends a positive trend, with a 2’6% gain over two consecutive days. The closing price is also the highest since 14 September 2026.
One of the supporting factors is the resurgence of oil prices, with Brent crude touching the US$ 105 level on Monday. As coal and oil are substitute commodities, their prices tend to influence one another.
China is set to import 10 million tonnes of coal from the United States annually throughout 2027 and 2028 as part of a bilateral trade agreement. According to a White House fact sheet, China’s total coal imports from the US are expected to reach 20 million tonnes over those two years, accounting for approximately 2% of China’s total annual coal imports.
The Chinese Ministry of Commerce stated that US coal imports could supplement domestic supply while providing revenue and employment for the US coal industry. The agreement is one of the outcomes of the meeting between US President Donald Trump and Chinese President Xi Jinping in Washington last week.
In addition to coal, both nations have agreed to propose tariff reductions on trade products worth US$30 billion each, though the exact scale and implementation timeline have yet to be announced. Both countries have also extended the trade truce until 10 January 2027 to allow for further negotiations. However, oil and liquefied natural gas (LNG) were not included in the list of commodities covered by the import agreement.
This news has bolstered positive sentiment from China. Previously, it was reported that electricity prices in Guangdong, China, surged during the third week of September 2026. Prolonged heatwaves and rising gas costs pushed spot electricity prices higher, while the need for coal to maintain power supply became a primary concern. Temperatures in several regions of Guangdong remained around 35 degrees Celsius, keeping electricity consumption for air conditioning high. In such conditions, coal remains a vital energy source for ensuring power supply reliability during extreme weather.
Meanwhile, in India, recent rainfall in several regions has caused peak electricity demand to decline from the high levels recorded throughout most of September. This has slightly eased pressure on the national power grid. Peak demand fell to 218.8 gigawatts (GW) on Sunday, down from 222.6 GW on Friday and 224.7 GW on Saturday. However, by Monday, peak demand rose again to 236.34 GW, though still below the peak levels of 240-269 GW seen between 1-23 September.
India’s electricity consumption grew by more than 14% throughout September, driven by cooling and irrigation needs amidst below-normal monsoon rainfall. Coal stocks at power plants have seen a sharp decline as rain in coal-producing regions disrupted fuel transportation. Coal stocks at plants using domestic production were recorded at 19.2 million tonnes on Sunday, while stocks at plants using imported coal reached 2.55 million tonnes, estimated to be sufficient for only eight to nine days. Out of 190 coal-based power plants, approximately 80 units are facing critical fuel inventory levels, with stocks falling below 25% of the normative level required to ensure uninterrupted electricity production.