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August 16, 2026 - China’s appetite for imported thermal coal is expected to remain relatively restrained during the second half of 2026 as strong domestic production and expanding renewable generation meet a growing share of the country’s electricity needs. Seaborne thermal coal deliveries to China totaled approximately 109 million tonnes between January and May, a decline of about 13.5% from the same period last year. More recent preliminary shipping data for June and July suggest the decline has begun to narrow, bringing the estimated year-over-year decrease for the first seven months to roughly 4.8%.
Despite lower imports, China has not experienced a dramatic retreat from coal-fired electricity. Instead, the country's changing power mix and enormous domestic coal industry are reducing its dependence on overseas supplies.
Renewables Take a Larger Share of China’s Power Mix
Coal accounted for approximately 49.7% of Chinese electricity generation during the first half of 2026, marking the first time its share has fallen below half during a first-half period in the available official data. Renewable sources, meanwhile, supplied about 41.2%.
The declining percentage does not necessarily translate into an equivalent reduction in the amount of coal being consumed.
China's overall electricity requirements continue to increase. In May, power consumption was approximately 56 terawatt-hours higher than a year earlier. Renewable energy, hydroelectricity, nuclear power and other non-fossil sources supplied most of that additional requirement, contributing roughly 45.2 TWh.
That still left nearly 10.9 TWh of additional demand that was largely supplied by thermal power plants.
As a result, coal can continue to play an important role even as its percentage of China's overall generation mix declines.
Weather conditions will be particularly important during the remainder of the year. Extremely hot temperatures could increase air-conditioning demand, while poor rainfall could reduce hydroelectric generation. Either development could increase coal-fired output. Strong rainfall and milder temperatures would likely have the opposite effect.
China’s Mines Remain the Main Source of Supply
The sheer scale of China's domestic coal industry remains one of the biggest factors limiting import demand.
Domestic raw coal production has been running at approximately 12.7 million tonnes per day, compared with seaborne thermal coal arrivals of roughly 920,000 tonnes per day.
Imports therefore represent only a relatively small portion of the coal available to the Chinese market. One estimate placed imported coal at approximately 7.5% of thermal coal supply in June, with the share recently fluctuating between roughly 4.7% and 9.2%.
Those figures are not directly comparable on a quality-for-quality basis because China's production statistics measure raw coal before processing, while shipping figures generally represent delivered thermal coal.
Nevertheless, they demonstrate China's limited structural dependence on foreign supply.
Imports are particularly valuable to utilities along the coast, where overseas coal can provide additional flexibility. Buyers may increase purchases when domestic prices rise, electricity consumption accelerates or mine production is disrupted. Conversely, strong domestic output and comfortable inventories can quickly reduce the incentive to import.
Indonesian Coal Remains Readily Available
Indonesia continues to be China's most important overseas supplier of thermal coal, especially for lower-calorific-value material consumed by coastal power producers.
Indonesia initially established a 2026 production quota of around 600 million tonnes, significantly below the approximately 817.5 million tonnes reportedly produced in 2025.
Actual production, however, suggests the restriction may be less severe than the headline quota implies.
Indonesian mines produced approximately 367.1 million tonnes during the first half of 2026, already equivalent to about 61% of the original annual allocation. Authorities also permitted producers to seek revisions to their production plans.
Large Indonesian miners have generally maintained output, with smaller producers absorbing more of the reductions.
For Chinese buyers, this reduces the likelihood of a serious shortage from their closest major overseas supplier and means additional cargoes should remain available if coastal electricity demand suddenly strengthens.
Imports Recover From Early-Year Weakness
China imported approximately 328.6 million tonnes of seaborne thermal coal in 2025, down about 12.4% from 375 million tonnes in 2024.
That weakness continued into the beginning of 2026.
January through May arrivals fell to approximately 109 million tonnes from 126 million tonnes during the comparable period of 2025.
The picture improved considerably entering the summer. Preliminary shipping records indicate arrivals of roughly 27.6 million tonnes in June and 26.3 million tonnes in July.
Including those estimates would put average imports for the first seven months at approximately 23.3 million tonnes per month.
However, the June and July numbers remain subject to revision as additional vessel and cargo information is incorporated.
Current expectations point to imports settling closer to 21 million to 23 million tonnes per month during the second half of 2026. That would represent relatively stable buying rather than a return to the exceptionally strong import levels seen during 2024.
Temporary surges remain possible, particularly during heat waves, periods of weak hydroelectric generation or disruptions at domestic mines.
Panamax Ships Remain Central to China’s Coal Trade
China's import trends also have significant implications for dry bulk shipping.
Panamax vessels transported approximately 216 million tonnes of thermal coal to China in 2025, representing about 65.7% of total seaborne volumes.
Supramax vessels handled another 70.6 million tonnes, or roughly 21.5%, with Capesize and Handysize ships accounting for most of the remaining cargo.
Panamax ships are therefore particularly sensitive to changes in Chinese thermal coal purchasing.
Preliminary January-through-July 2026 figures indicate Panamax thermal coal volumes of approximately 114.8 million tonnes, about 3.9% higher than the comparable period last year.
More importantly for ship demand, estimated Panamax tonne-miles increased roughly 9.8% to 317.7 billion.
The increase reflects longer voyages rather than simply larger cargo volumes. Average sailing distance rose approximately 5.7% to 2,768 nautical miles.
That distinction matters because a cargo traveling farther keeps a vessel occupied for longer, creating more shipping demand even when the physical amount of coal changes relatively little.
Where China Buys Its Coal Matters for Shipping
Indonesia's proximity to China makes it an attractive source for utilities, but shorter voyages generate less shipping work.
In 2025, Indonesia represented approximately 69.3% of China's Panamax thermal coal volume, yet those cargoes accounted for only about 51.8% of Panamax tonne-miles. The average voyage was roughly 1,895 nautical miles.
Australian shipments tell a different story.
Australia supplied only around 17.8% of Panamax volumes, but generated approximately 32.2% of tonne-miles, reflecting an average voyage of about 4,593 nautical miles.
Consequently, even a modest shift in Chinese sourcing from Indonesia toward Australia could materially strengthen vessel demand. Moving about 5 million tonnes of purchases from Indonesian to Australian suppliers could generate approximately 13.5 billion additional tonne-miles.
Outlook: Coal Imports Likely to Remain Steady Rather Than Surge
China's electricity requirements remain large enough to keep thermal coal relevant, particularly when weather conditions push power consumption higher. But the country increasingly has other ways to satisfy that demand.
Rapid renewable expansion is reducing coal's share of electricity generation, while China's enormous domestic mining industry continues to provide the overwhelming majority of its coal supply.
That combination makes a major sustained rebound in overseas purchasing less likely under normal conditions.
For the remainder of 2026, the most probable scenario is therefore one of stable but contained thermal coal imports, with monthly arrivals generally around 21 million to 23 million tonnes.
For dry bulk shipping markets, total Chinese import volumes will remain important, but the origin of those cargoes could matter nearly as much. A greater share sourced from distant suppliers such as Australia could support Panamax demand even without a significant increase in China's overall coal imports.
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