China s rains arrive at critical moment for coal and dam sectors

BEIJING – The heavy rain rolling though south-western and central China are filling up the rivers and reservoirs that feed the country’s mighty dams, posing another threat to the coal market that competes with hydropower in electricity generation.

The storms are expected to last till at least early next week, the latest downpour of a rainy season that peaks between June and August. The major hydropower regions of Yunnan and parts of Sichuan and Guizhou are set for as much as 250mm of precipitation during the period, some 20 per cent to 70 per cent more than average, according to the China Meteorological Administration.

That is good news for dam operators as large tracts of these provinces, except Yunnan, have largely seen below-average rainfall so far in June, the weather agency said. But it is less welcome for the coal industry, which is grappling with chronically weak prices.

The rain is arriving at a critical time. Nationwide hydropower generation dropped 14 per cent in May compared with in 2024. That is the month when output usually turns higher after the dry season, giving the first clear indication of how much hydro can be relied on to meet spiking power demand during the sweltering heat of the summer.

A big rebound from dams like Three Gorges on the Yangtze River, the world’s largest power plant, could further suppress coal-power generation, which fell 3.1 per cent over the first five months of 2025.

Hydro and coal are the two main baseload power sources that the country depends on to deliver electricity, whatever the conditions. But the coal market is on its knees – a function of both a glut of the fuel and China’s slowing economy – with benchmark prices crashing 30 per cent in the last 12 months to their lowest