China’s booming coal production is running well ahead of demand at the onset of winter, leading to swelling inventories and plunging prices that analysts forecast will fall further.

A gauge of power-station coal prices in China has dropped around 9% since the end of September to an 18-month low of 790 yuan ($108) a ton. While demand for the fossil fuel would typically rise as the approach of winter boosted power demand, brimming stockpiles and flagging economic growth are weighing on prices.

“An avalanche of inventory is crushing the market,” Han Lei, an analyst at the China Coal Transportation and Distribution Association, said at a briefing on Wednesday. “Power plants are dumping stockpiles. There’s just too much supply.”

Han said prices would likely fall to around 730 yuan a ton ahead of the Lunar New Year holidays starting in late January before recovering, but they could take longer to reach a turning point if stockpiles stay high.

China’s coal inventories have been boosted by surging domestic production, which hit a record high last month, and rising imports as authorities prioritize energy security over cutting emissions. Efforts to mine more coal locally dates to 2022, when Russia’s invasion of Ukraine pushed up energy prices and led to electricity shortages in China.

Asia’s largest economy accounts for more than half of global coal consumption, and its continued reliance on the fossil fuel is making the fight to rein in global warming a lot tougher. Worldwide coal demand will hit fresh record highs every year through at least 2027, the International Energy Agency said in a report this week, overturning a previous estimate that it peaked last year.

The country’s stockpiles of coal grew 12% in the two months through October, according to the latest available data. Authorities don’t seem too troubled about the oversupply, with the National Energy Administration setting a target to mine a record 4.8 billion tons of coal in 2025, which would be just ahead of the forecast for this year.

China International Capital Corp. predicted this month that the nation’s coal demand will rise 2.3% next year. Coupled with a 1.2% increase in output, that should bring the market back into balance, although average prices would likely be lower than this year, it said.

Market sentiment is “quite pessimistic” and buyers are staying away from the spot market as they wait for prices to find a floor, Fengkuang Coal Logistics said in a note on Wednesday. The number of ships anchored at coal ports around the Bohai Sea is only around half of the level at the same point last year, highlighting the weak demand, it said.

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