Shanxi Securities: Reversing internal circulation and reversal of the coal market, it is expected that thermal coal prices will maintain a tight balance in 26 years

The Zhitong Finance App learned that Shanxi Securities released a research report saying that the anti-domestic trend in the coal industry has not changed, and the fourth quarter results are still expected to improve. If prices operate at a high level for a long time, there is still room for repair in the 26-year performance. Falling stock prices strengthen the value of dividends, which can be allocated on dips. Looking ahead to 2026 coal prices, the thermal coal center is forecast to be around 720 yuan/ton; the coking coal price center is roughly distributed between 1,440-1,584 yuan/ton.

The main views of Shanxi Securities are as follows:

Reversal reversal of coal market expectations

Since 2025, coal stocks have been affected by falling coal prices. After Document No. 108 went to the market, pessimistic expectations for coal stocks were immediately mitigated significantly. In terms of core macroeconomic goals, the main purpose is to reverse the trend of deflation, and the transmission chain is “deflation → anti-internal volume → increase in profit → inflation”. As far as coal is concerned, we look at supply control in the short term, and demand recovery in the medium to long term. Anti-domestic rolls require upstream and downstream to maintain reasonable profits. The “policy top” and “policy bottom” promote the gradual formation of a reasonable coal price center. The 2016 supply-side reform and the 2024 Shanxi Chasan Chao are comparable events of the anti-domestic campaign. The underlying driver affects the effectiveness of regulation, supply-side reforms are debt-driven, and the Shanxi Chasan Chao is driven by production safety. It is expected that the reduction in supply from the anti-internal volume is higher than that of the three major inspections in Shanxi, but lower than supply-side reforms.

Concept of changes in electricity and coal demand during the “platform period”

The “15th Five-Year Plan” coal consumption is expected to peak, but it still plays a role as a back-up guarantee. The installed capacity of new energy sources is expected to increase significantly during the platform period. China's new energy development will also face many challenges. Will demand for electricity and coal during the platform period be squeezed by new energy sources? According to estimates, without considering large fluctuations in hydropower, until the increase in electricity generation from new energy sources is greater than the increase in electricity consumption in the whole society, it is expected that it will be difficult for new energy sources to substantially squeeze coal power. If the growth rate of new energy generation reaches 20%, electricity demand will need to be maintained at a certain level in 2026 to ensure that thermal power stock demand is not squeezed by new energy sources.

2026 coal price outlook

In terms of thermal coal, a tight balance is expected to be maintained in 2026, and the central forecast is around 720 yuan/ton. In terms of price, considering the trend of changes in electricity and coal prices from 2023-2025, and there is no significant reversal in the supply and demand trend in 2026, it is expected that the thermal coal market pressure will remain in the first half of 2026, but it will slow down compared to the same period in 2025, and the elasticity of electricity and coal demand is likely to begin in the second half of 2026. In terms of coking coal, it is expected that 2026 will show a weak balance and moderate elasticity. The coking coal price center is roughly distributed between 1,440-1,584 yuan/ton. The coking coal price center is estimated based on the 2.0-2.2 price comparison relationship of the thermal coal price center.

Risk warning: Anti-domestic policies have had mild effects, demand has declined sharply, and imported coal has increased dramatically.