June 17, 2026 - UBS has linked a sharp rise in Chinese coal prices to a fatal mine disaster and the safety crackdown that followed.

Prices of metallurgical coal, the coking coal used to make steel, are up about 33% since March, while thermal coal, burned for power, has risen around 15%.

The trigger was a gas explosion at the Liushenyu mine in Qinyuan, in the northern province of Shanxi, on May 22, which killed 82 workers.

The mine itself is small, but UBS said the policy response had been significant.

All 25 mines in Qinyuan were suspended, and a wider three-month safety campaign across Shanxi halted a further 137.

By June 15, 148 mines had been suspended since late May, of which 97 had restarted and 51 remained closed, according to UBS.

Even those reopening are running 20% to 30% below earlier levels, the bank said, as many had previously operated beyond capacity.

UBS estimates the disruption will cut China's coking coal output by about 3% this year, or roughly 15 million tonnes.

That would echo the impact of a similar accident in late 2023.

Tight supply has collided with seasonal demand, feeding through to a seventh round of price rises from coke producers this week.

Domestic coking coal prices have climbed from around 1,500 yuan a tonne in March to about 2,000 yuan now.

The bank expects further gains to be harder to come by, with steel profitability depressed and domestic supply set to recover.

Strong imports are also cushioning the market, with met-coal purchases up 18% so far this year.

Much of that has come overland from Mongolia, where shipments have jumped 61%, though its border ports are now running at capacity.

Seaborne suppliers in Russia and Australia have so far responded only modestly, UBS said.

Thermal coal has been more balanced, with Beijing prioritizing supply to guarantee energy security through the peak summer.

Producers have been told to maximize output, leaving the market fundamentally oversupplied even as prices firm.

UBS said higher gas prices tied to the Middle East conflict, Indonesian supply worries and forecasts of a hot summer had supported thermal prices.

It expects them to hold up in the near term before easing once summer restocking fades.

UBS is watching the pace of restarts into July and August as a guide to when supply will normalize.