China’s coking coal squeeze is set to persist into next year, supporting strong import demand even as efforts to revive domestic output start to cool prices.

The supply shock triggered by the fatal Shanxi mine accident in May is expected to linger into 2027, with domestic production recovering only gradually as safety restrictions remain in place. Rising shipments from Mongolia, Australia and Russia are helping offset the shortfall, but are unlikely to fully bridge the gap, according to analysts at Bloomberg Intelligence.

Chinese coking coal imports eased 4% from July’s peak to 13.1-million tons in August, but were still 29% higher than a year earlier and not far off the record set in December 2025, according to customs data.

The National Development and Reform Commission has called for an accelerated resumption of mines suspended after the Shanxi accident, including allowing lower-risk operations to restart, as authorities seek to secure coal supplies.

“Shanxi’s coking coal supply is poised for a steady fourth-quarter recovery following a regulatory shift, but full normalization will likely be delayed until the first half of 2027,” BI analysts including Ortis Fan said in a note this week.

The prospect of improving output, combined with weak margins at the steel mills that use coking coal, have helped pull prices lower.

“In September, barely 7% of steel mills were operating in the black and their capacity to absorb persistently high coking coal prices has reached a breaking point,” said Simon Wu, a senior consultant at Wood Mackenzie.

Still, mine restarts have so far been gradual. A Sept. 16 survey by Mysteel found 75 coking coal mines remained shuttered across Shanxi province, representing nearly 73-million tons of annual capacity.

Shanxi is China’s largest production hub for all forms of coal, and spot prices for the fuel used by power plants that makes up the bulk of supply are near three-year highs. Coking coal futures in Dalian, which closed at 1 729 yuan ($258) a ton on August 31 — the highest in over two years — have since fallen 12% to 1 523.50 yuan.

Singapore futures of iron-ore, the main ingredient in steel, last traded slightly higher at $96.55 a ton.