China's Coal Generation Dropped 5% YOY In Q1 As Electricity Demand Increased

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China’s Coal Generation Dropped 5% YOY In Q1 As Electricity Demand Increased

‌3 hours ago Michael Barnard

China’s coal-fired electricity generation took an unexpectedly sharp turn downward in the first quarter of 2025, signaling a potentially profound shift in the world’s largest coal-consuming economy. This wasn’t merely a seasonal dip or economic distress signal; rather, it represented a clear and structural turning point. Coal generation fell by approximately 4.7% year over year, significantly outpacing the overall grid electricity supply decline of just 1.3%. However, electricity demand, a better measure, went up by 1%. What gives?

Notably, that modest decline in grid electricity supply wasn’t evenly distributed across the entire quarter—it was confined to two of the three months, where heating requirements were softened by warmer than average months in January and February. This detail matters, indicating that the reduction in coal-generated electricity wasn’t primarily driven by a widespread drop in economic activity or power use, but rather by underlying transformations in China’s energy supply.

Looking closer, the slight rise in coal usage within China’s steel sector reinforces this interpretation. Coal consumed for steelmaking edged upward by around 2%, driven by stable, slightly growing crude steel production. Stable steel production is often a reliable barometer of industrial economic activity, suggesting that China’s broader economic fundamentals remained solid, even as coal-fired electricity generation declined.

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