CICC: Promoting clean and efficient use of coal, coal supply is expected to be optimized

The Zhitong Finance App learned that CICC released a research report saying that the policy is driving the coal industry from low-end to high-end, and coal products to rise from primary fuels to high-value products. Compared with the 2022 version of the horizontal index, the 2025 edition places higher requirements on indicators such as standard coal consumption for coal-fired power generation, and for the first time included heating coal consumption in the field of coal-fired power generation, as well as coal-to-natural gas and coal-to-oil, etc. within the scope of the index. The bank believes that this has further strengthened restrictions and guidance on indicators related to coal use in key industries, and will help promote China's green and low-carbon transformation and achieve the “double carbon” goal.

CICC's main views are as follows:

incident

On December 17, the National Development and Reform Commission and others issued a policy notice on “Benchmarking Levels and Benchmark Levels for Key Areas of Clean and Efficient Use of Coal (2025 Edition)” (hereinafter referred to as “Level 2025 Edition”). The bank believes that the increase in requirements for clean and efficient use of coal is expected to further optimize the coal supply structure.

The domestic coal supply structure is expected to be gradually optimized

The policy notice mentions that enterprises should be guided to carry out clean and efficient use of coal in an orderly manner without affecting the supply of electricity or heat. The bank believes that this shows that supply still needs to be based on ensuring energy security and stability. In the medium to long term, coal is expected to shift from “volume increase” to “excellent quality”, in line with the development trend of coal products, and help avoid inefficient competition.

The coal import structure is expected to be optimized

From January to October, China's generalized thermal coal imports were -11% YoY to 294 million tons, of which lignite imports were -4% YoY to 144 million tons. The decline in lignite was limited. In the same period, lignite imports accounted for 49% of total thermal coal imports, up 4.4ppt year on year, and remained high (the share of lignite imports in 2019-2024 was 46%, 43%, 44%, 57%, 44%, and 45%, respectively). Looking ahead, as policies strengthen the clean and efficient use of coal, the bank determined that imported coal is expected to gradually shift to products with relatively high calorific value and relatively good quality.

There may be restrictions on coal imports from Indonesia

The bank believes that imports of Indonesian thermal coal, which has low overall calorific value and is mainly lignite, may gradually be restrained, and the popularity of high-calorific value thermal coal from Australia, Russia and other places is expected to increase. However, the increase in Australian thermal coal is limited. Russia's high-quality thermal coal is concentrated in the Kuzbass region in central Russia, and exports are limited by railway capacity. Therefore, as demand increases marginally, the bank anticipates a possibility that supply and demand in the high-calorific value marine motor coal market will be marginally tightened.

risk

The implementation of the policy fell short of expectations; supply increased beyond expectations.