Guotai Haitong Securities has released a research report stating that the bottom for the coal sector was firmly established in 2025. Looking ahead to 2026, supply is expected to tighten due to disruptions both domestically and internationally, leading to a significant rise in the coal price center and a clear improvement in fundamental conditions. The firm recommends close attention to this trend.

Adopting a strategically bullish stance on global coal resources, the report suggests that geopolitical conflicts in 2026 merely accelerated the arrival of a tight global supply-demand balance. Over the medium to long term, with demand continuing to rise while trade volumes shrink, the "marginal pricing" mechanism in the global coal market is becoming clearer, which is expected to steadily lift the coal price center.

Where to Focus Next: Key Price Drivers Shift from Overseas to Domestic

Reviewing the first half of 2025, supply-side disruptions were persistent across global markets. Initially, production restrictions in Indonesia created ripples, followed by the US-Iran conflict which drove global energy prices sharply higher. Elevated overseas coal prices led to a decline in imports, subsequently pushing domestic prices upward. On May 22nd, a major coal mine safety accident in Shanxi triggered a substantial tightening of safety inspections across production regions, causing a marked contraction in domestic supply and a rapid surge in coal prices.

Looking toward the second half of the year, the firm believes the pivotal factor influencing coal prices will shift back to the domestic market. The continuation of high-pressure nationwide safety inspections, with intensity and duration far exceeding market expectations, is leading to a notable decline in coal output, particularly in Shanxi Province. The introduction of the 15th Five-Year Plan for the coal industry points toward reduced long-term supply elasticity, which is conducive to maintaining the coal price center at a reasonably elevated range.

On the import side, Indonesia has raised its production targets, and the easing of US-Iran tensions is gradually absorbing overseas disruptions. As domestic output declines noticeably, import demand is set to rise substantially, with import volumes expected to increase in the second half of the year to supplement the domestic shortfall.

Demand Shows Remarkable Resilience, Supporting a Relatively Tight Supply-Demand Balance

From a demand perspective, overall consumption in the year's early months has remained flat compared to the same period in previous years, slightly underperforming market expectations driven by hopes for high temperatures from El Ni帽o. This has, in turn, capped the upper limits of coal price gains.

Looking forward to the second half of the year, the firm posits that under conditions of low supply, merely maintaining average demand levels from prior years would suffice to sustain coal prices at relatively high levels. Moreover, any uptick in demand could trigger significant upward price momentum, making prices more prone to rising than falling.

Over the medium to long term, new productive forces such as AI, electric vehicles, and high-end manufacturing are becoming the core drivers of electricity consumption growth, ensuring robust power demand. Meanwhile, as new energy power generation enters a phase of "high-quality development," its squeeze on thermal power is expected to gradually diminish. This suggests the coal supply-demand balance is likely to remain relatively tight for an extended period.

Global Energy Perspective: A Structural Revaluation in Motion

The firm reiterates its bullish outlook on the "global energy supercycle" spanning the next 5-10 years. Propelled by AI-driven demand and rising residential electricity consumption due to global warming, the world's power demand is undergoing accelerating growth alongside significant structural shifts in consumption patterns.

Guotai Haitong highlights the critical role of baseload power sources—including natural gas, coal, and nuclear energy—in enhancing grid stability and better aligning with emerging electricity demand profiles, thereby unlocking sustained upward growth potential. Coal-fired power is transitioning from being viewed as an asset slated for retirement under decarbonization frameworks to once again becoming an indispensable pillar of reliable capacity and fuel security within global power systems. This transformation is expected to trigger a systematic revaluation of asset duration, utilization rates, and valuation metrics.

In conclusion, the firm maintains its strategic bullishness on global coal resources. The geopolitical conflicts of 2026 merely hastened the advent of a tight global supply-demand equilibrium. In the long run, with demand steadily climbing and trade volumes contracting, the "marginal pricing" dynamic in the global coal market becomes ever more pronounced, paving the way for a sustained elevation of the coal price center.

Key Risks: macroeconomic growth falling short of expectations, import volumes exceeding forecasts, and supply being released more quickly than anticipated.