FX.co ★ Coal Eases from 6-Month High

Newcastle coal futures dipped to $113 per tonne, decreasing from a near six-month peak of $115.5 reached on August 28th. This drop came as markets evaluated the extent of supply restrictions that Beijing may impose. Recent figures indicated a 3.6% month-on-month increase in coal production for June by the world's leading producer and consumer of coal. This aligns with earlier forecasts that production would rise by 1.5%, reaching 4.82 billion tons this year, following the record output anticipated in 2024. These developments preceded commitments by Beijing to curb overcapacity in key mineral sectors to address deflationary pressures. The China Coal Transportation and Distribution Association has noted that policymakers must implement further economic measures to sustain the price recovery. Regarding demand, Chinese fossil-fuel power generation fell by 4.7% during the first quarter on a year-over-year basis, primarily due to reduced power demand and increased supply from renewable energy sources.