The five biggest state-owned power generators, including Huaneng (0902), Datang (0991), and Huadian (1071), had been in negotiations with coal suppliers in the southern city of Fuzhou for a week, according to Xinhua. The annual talks ended on Saturday.

The so-called Big Five power generators consume over 50 percent of China's coal.

The impasse left the coal giants and smaller domestic coal consumers with less than 50 percent of coal sale contracts, according to Xinhua.

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"Under circumstances that it is possible that spot prices can be lower than contract prices, this old annual contract negotiation model seemed obsolete," said Macquarie Securities' commodity analyst Henry Liu.

Liu said power producers want to wait and see if production will recover after the Lunar New Year before taking further steps.

Coal producers also want to look a bit further down the road to see whether coal prices will pick up.

Liu said coal producers may resume talks with power firms when both sides have a clearer picture of the market.

What should be watched, Liu added, is whether the government will interfere or not with the outcome.

Even so, he said the result of the negotiations will not have an immediate impact on coal prices as the law of supply and demand remains the determining factor.

Coal prices in China can pick up if the economy recovers quickly in the coming year, Liu said, as power production will increase along with an economic rebound.

Regional and global coal prices will follow suit.

China relies on coal for almost 80 percent of its power generation.

Production fell 11 percent in November.

Power producers are said to be looking for the price of thermal coal to go down 50 yuan (HK$56.64) per tonne from the benchmark of 490-500 yuan per tonne this year.