Thermal coal prices continued their upward trend in the first week of February to reach RMB780/t. In response, the NDRC capped QHD FOB 5500 at RMB750/t from 5 February. This move dampened spot thermal coal market activity so many traders left early for the Chinese New Year holiday to avoid losses. Industrial activity resuming after the holiday will result in strong demand from the beginning of March. However, we do not believe thermal coal prices will duplicate the high post-holiday jump seen last March because there is more supply capacity this year and the new price cap looms. Like thermal coal, the metallurgical coal market has remained in tight supply during the winter. We believe the situation will not improve in the spring as this will be when mills ramp up output. Although some regions have extended industrial restrictions beyond the middle of March, they will have little impact.