Guohai Securities: Combining coal price improvements & high-dividend coal sector offense and defense

The Zhitong Finance App learned that Guohai Securities released a research report saying that from a general perspective, the supply-side restraint logic in the coal mining industry has not changed, the demand side may fluctuate in stages, and prices have also shown certain fluctuations and dynamic rebalancing. Looking ahead to 2026, “carbon fires are warm, the balance is tilting slightly”. The relationship between supply and demand in the industry is expected to improve. It is expected that the coal price center may rise. It is expected that the coal price center in Beigang will be around 750 yuan, and the average price of main coking coal in Beigang will be around 1,550 yuan. The profitability of the industry is expected to be restored to a certain extent. At the same time, in the context of the era of low interest rates, the high dividend value of the coal sector is an important allocation point for institutions. Leading coal companies present five characteristics, including “high profit, high cash flow, high asset quality, high dividends, and high barriers.” It is recommended to grasp the value attributes of the coal sector at a low level and maintain the “recommended” rating for the coal mining industry.

Guohai Securities's main views are as follows:

1. Reviewing thermal coal: the V-shaped trend of coal prices during the year, check for overproduction and the recovery of coal prices in the second half of the year

In 2025, the average price of thermal coal in the port was 697 yuan/ton (as of 2025/12/31, -158 yuan/ton), and the average annual price for Changxie was 680 yuan/ton (year-on-year -22 yuan/ton). Coal supply and demand were relaxed in the first half of the year, and companies intensified the conflict by exchanging volume. At one point, the price of coal fell to close to 600 yuan/ton. In July, overproduction began to break the negative cycle of volume exchange. In July-November, the country's raw coal production fell to between -0.5% and -3.8% year-on-year. At the same time, demand for thermal power rebounded and metallurgical chemical demand was more resilient. Coal stocks were significantly removed. As supply and demand fundamentals improved, coal prices began to rise steadily, hitting a new high of 834 yuan/ton during the year in November. Coal prices declined somewhat in December due to warm weather, traders leaving warehouses, etc.

2. Reviewing coking coal: reverse internal volume improves expectations, coal prices rise rapidly under low production and low inventory

In 2025, the average price of main coking coal in the port was 1,513 yuan/ton (as of 2025/12/31, year-on-year - 509 yuan/ton). Coking coal also showed a V-shaped trend during the year, with high production and high inventories in the first half of the year, and coal prices continued to fall. Beginning in the third quarter, as safety and environmental protection inspections began, supply contraction expectations strengthened, and demand side iron and water production was better (+3% year-on-year in January-November 2025), and passively opened to replenish stocks as coal prices rose in a state of low downstream inventories, mine inventories rapidly removed, and coal prices rebounded rapidly. Entering the fourth quarter, although production remained low, Mongolian coal imports increased significantly due to profit recovery. Under the intertwined situation, coal prices fluctuated a lot, and policy expectations and downstream inventory behavior dominated changes in coal prices

3. 2026 outlook: tight balance between supply and demand estimates, port thermal coal/main coking coal prices may rise to 750/1,550 yuan/ton

On the supply side, on the supply side, the bank is considering checking the normalization of production and safety supervision to limit the operating rate of existing production capacity, the release of some new mine production, and a moderate decline in production in the eastern region. Neutral production is expected to be +0.5% compared to the same period in 2026; the recovery in domestic trade coal prices has consolidated the advantages of imported coal, but Indonesia's imports are still under downward pressure. Neutral imports are expected to be -5% YoY in 2026. Overall, the supply of thermal coal is expected to remain flat year on year in 2026. On the demand side, the bank assumes that thermal power and metallurgy will remain flat year on year in 2026, chemical industry will be +7% year over year, and building materials will be -4% year over year, and the overall demand growth rate is expected to be +0.6%. Therefore, the bank neutrally estimates the difference between coal supply and demand in 2026 - 2.08 million tons, which is tightened compared to 2025. Supply and demand repair and superposition policies are underpinned. The price center for thermal coal is expected to be 750 yuan/ton in 2026. In terms of coking coal, it is expected that it will be difficult to increase production under the restrictions of overproduction (it is expected to be flat year on year). Imported Mongolian coal is expected to increase, and overall imports are expected to be +2% year-on-year. On the demand side, real estate is being dragged down, but the infrastructure manufacturing industry and steel exports are underpinned, and overall terminal demand is resilient. However, considering the large concessions in coking in the first half of 2025, it may be difficult to repeat it. The bank conservatively estimates demand of -0.5% compared to the same period in 2026. Overall, the gap between supply and demand is expected to be 1.12 million tons in 2026. The conflict is not significant. It is expected that under the policy, the pessimistic situation in the first half of 2025 will be difficult to repeat, and coking coal prices are expected to rise at the bottom and rise at the center.

Risk warning: 1) Risk of economic growth falling short of expectations; 2) risk of policy regulation exceeding expectations; 3) risk of continuous replacement of renewable energy; 4) risk of impact of coal imports; 5) Focus on the risk that the company's performance may fall short of expectations; 6) estimates or errors, subject to reality; 7) impact of safety accidents in coal companies.