GF Securities: The coal industry is expected to usher in a new cycle, and valuation flexibility is expected to show

The Zhitong Finance App learned that GF Securities released a research report saying that the 145 coal price center has risen sharply, and the 155 coal industry is expected to usher in a new cycle, and the value is highlighted. Overall, industry sentiment is improving, and the 15th Five-Year Plan is expected to stabilize, moderate, and improve. The bank believes that the coal price center is expected to rise to around 750 yuan/ton in '26, and the dividend rate of leading companies is mostly at the level of 4-6%, which is an obvious advantage. Valuation flexibility is expected to show, especially after pessimistic expectations for coal prices are reversed.

The main views of GF Securities are as follows:

Cycle review: The coal price center moved sharply in the 14th Five-Year Plan, and the 15th Five-Year Plan is expected to usher in a new cycle

In the past five years, demand growth and the coal price center have increased in every cycle of the coal industry. Looking at 2025, the industry continued to decline in the first half of the year, and supply and demand shifted from easing to a slightly tight balance in the second half of the year. The average annual price of thermal coal/coking coal in ports was -18%/-25% year on year, while the second half of the year was +6%/+19%, respectively. In terms of supply and demand: (1) thermal power generation -0.7% year-on-year (overall improvement in the second half of the year); (2) chemical demand/steel production was +11%/+4% respectively, reflecting a certain degree of resilience; (3) coal production in the previous 11 months, a sharp drop compared to 5.4% in the first half of the year, while the cumulative decline in imports was 12% yoy. Overall, industry sentiment is improving, and the 15th Five-Year Plan is expected to stabilize, moderate, and improve.

Supply restructuring: from guaranteed supply growth to peak decline

The cumulative increase in coal production in 20-24 was 23% to 4.78 billion tons. The production growth rate declined significantly in 25 years. From January to November, production in Xinjiang increased by only 2.6%, and the growth rate of Jinshan, Shaanxi, and Mongolia also fell to 1.2%. Entering the 15th Five-Year Plan, coal production may have gone from an increase in guaranteed supply in the past five years to a phase of decline. The production growth rate is expected to be at the level of 0.5%-1.0% from '26 to '28 (phased negative growth may be affected by regulatory policies).

Demand restructuring: the demand structure is upward in the electricity era, and growth is resilient or continuous

Coal consumption for electricity in 25 years has become an important factor dragging down demand for coal. However, the growth rate of electricity consumption began to pick up sharply in the second half of the year (+5.2% in the previous 11 months), and at the same time, the growth rate of new installed/utilization hours/power generation of Scenery declined. Looking ahead to the next five years, the bank believes that benefiting from rapid growth in emerging manufacturing and digital computing power, and further improvements in the electrification of the three industries and residents, electricity demand is expected to maintain a 5% increase, while new energy installations may slow down compared to the past three years. There is still room for growth in thermal power generation. At the same time, the growth rate of chemical demand is expected to narrow by about 5%, while the decline in steel and building materials is expected to narrow. In particular, 2026 is the first year of the 15th Five-Year Plan. Macroeconomic policies may be strengthened, coal demand is resilient, and the growth rate may exceed 1%.

Looking at the coal industry from the perspective of global supply and demand, commodities, and industrial chains

Global: Production in major coal-producing countries is expected to decline in 26-30, while demand in Southeast Asia will maintain a 3-5% increase (the IEA expects the compound growth rate of global production and consumption to be -1.1%/-0.6% in 25-30), with an overall tight balance between supply and demand; commodities: Compared with other commodities, coal's performance is weak, especially the ratio of copper to coal and gold to coal, which is at a historically high level; industrial chain: the share of coal in industrial profits has dropped significantly (5% in the previous November), and the share of steel and building materials has declined significantly, while the share of electricity has reached a high level of 10%.

Risk Alerts

Downstream demand has declined, production and imports have exceeded expectations, and costs have risen sharply.