China’s thermal coal price plunged to the lowest in a year, weighed down by high inventories amid weak demand and Beijing’s focus on energy security.

The Chinese benchmark power-station coal price fell to a one-year low of 1 000 yuan ($147) per ton this week, dropping below government-set caps, consultant Fengkuang Coal Logistics said in a note. The current rate is about 40% lower than a record high four months ago, according to data compiled by the China Coal Resource.

The drop below key levels, which has deepened after the Lunar New Year holidays, reflects bearish sentiment as China’s economic recovery hasn’t been as strong as expected after the country’s exit from Covid Zero. Industrial activity has picked up, but not fast enough to absorb rising stockpiles.

Inventories have topped out at some of China’s busiest ports as the government expands coal production to prevent a repeat of energy shortages. Some port operators have asked sellers to offer more discounted sales, speeding up the price declines, said local trading platform ocoal.com. Traders are looking at 900 yuan as the new supportive point in the oversupplied market, it said.

China, the world biggest energy consumer, has been pushing local coal production to a record even as massive investment in renewables means clean power will dominate generation capacity. Beijing said earlier this month that it planned to subsidize more coal mines built near giant renewable bases, to serve as backup facilities in the energy transition as intermittent solar and wind power ramps up.

The outlook for thermal coal prices will likely depend on the pace of economic recovery. While many analysts remain bearish, there are signs industrial production is strengthening. The China Electricity Council said in a Monday report that coal power generation rose 28% for the week ended February 9 from a year earlier. Compared with a week earlier, power plants on average are consuming 18% more coal daily.