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China’s rising %Coal inventories are likely to cause a continued decline in prices throughout the winter months, say commodities analysts.

Currently, China’s booming coal production is running far ahead of demand in the nation of 1.4 billion people. That has led to a glut of coal in the country, which is pressuring prices.

Coal prices in China have declined 9% since the end of September and are currently at an 18-month low of 790 yuan ($108 U.S.) per ton.

While demand for the fossil fuel would typically rise at the onset of winter, large stockpiles of coal and stagnant economic growth are weighing on prices.

Analysts see coal prices falling further to around 730 yuan a ton by the country’s Lunar New Year holiday that begins in late January.

The problem is that there has been no letup in China’s coal production despite weakening demand. Last month, China’s coal production hit a record high.

China has ramped up its coal production since 2022, when Russia’s invasion of Ukraine pushed up energy prices and led to electricity shortages across Mainland China.

China, which is Asia’s largest economy, accounts for more than half of global coal consumption.

The country’s stockpiles of coal grew 12% in the two months through October, according to the latest government data.

Despite the current oversupply, China’s National Energy Administration is maintaining a target to mine a record 4.8 billion tons of coal in 2025.

China’s government in Beijing forecasts that the nation’s coal demand will rise 2.3% next year.

The result is that markets have a pessimistic view of coal prices for the foreseeable future, say analysts, with China likely to flood the market with excess supply in the coming year.