There was limited downwards movement in the Chinese thermal coal market in January – despite the lack of fundamentals required to support prices at these levels. Thermal coal demand was surprisingly weak as a result of mild weather and smaller-than-expected production cuts during the holiday period had led to an oversupplied market. We have lowered our spot price forecast for end February to RMB560/t, down RMB37/t from the RMB597/t at end January for FOB QHD 5,500. Chinese premium hard coking coal prices have stabilised over the past three months, signalling the price has peaked. However, the overall fundamentals for the next two months remain weak for metallurgical coal because of falling steel production. In addition, the significantly lower seaborne metallurgical prices will pressure domestic metallurgical coal prices as well. We forecast the FOR Liulin #4 hard coking coal price at end February to be RMB1,500-1,550/t, down RMB50-100/t, as demand slows and supply increases.