China’s coal slump is likely to persist for several months, weighing on a global market that has seen mining giant Glencore forced to consider output cuts after prices dropped to near their lowest this decade.

The Asian nation is coal’s biggest producer and consumer, and has worked hard to stockpile enough of the fuel to prevent the economy-crippling blackouts of recent years. But record domestic production and imports have coincided with a slowing economy, creating a glut and pushing local prices for heating coal to near a four-year low.

“Thermal coal could test new lows in the short term,” Li Xuegang, an analyst at the China Coal Transportation and Distribution Association, said at a briefing on Wednesday. The drop in prices is likely to chill the country’s interest in imports, with demand only expected to recover in the second half of the year if the government ramps up economic stimulus, he said.

That’s also about the time when cooling demand for coal from air conditioning reaches its peak.

But in the meantime, regional export prices have followed the same downward trajectory, with Australian Newcastle coal futures falling to their lowest since 2021 this week. Some relief may be around the corner if the likes of Glencore are forced to curtail supply.

Conditions in China remain bleak, however. CCTD’s analysts expect spot prices to drop below the long-term contract levels that usually anchor the market. Low-quality lignite, which is typically blended with higher grades to raise its calorific value, will take the biggest hit, they said. Indonesia is a big supplier.

The highest grades used to fire blast furnaces are also feeling the pinch due to China’s protracted property crisis. Steel mills are asking for more discounts on their coking coal purchases, said Li Xiaolong, another CCTD analyst.

The Trump administration’s embrace of tariffs, and Beijing’s policy response at next month’s National People’s Congress to the threat they pose, are the next potential turning points for China’s economy and its demand for coal.

On the supply side, pressures could mount as the key mining hub of Shanxi gears up to resume output curtailed by safety inspections last year. China’s top coking coal supplier Mongolia also aims to lift sales to China by almost a fifth this year, although that could come at the expense of Australia, according to Bloomberg Intelligence.