Coal stocks strengthened during afternoon trading. At the time of writing, CHINA QINFA (00866) rose 11.68% to HK$4.11; KINETIC DEV (01277) increased by 8.18% to HK$1.72; YANKUANG ENERGY (01171) was up 4.25% at HK$11.52; CHINA SHENHUA (01088) gained 3.62% to HK$43.54; and CHINA COAL (01898) climbed 3.27% to HK$11.38.

A research report noted that since 2023, coal prices have shown a quarterly stepwise downward trend in their central level. The third quarter of 2025 is one of the few earnings seasons, aside from the fourth quarter of 2023, to see a sequential rebound in the average coal price (based on the Qinhuangdao port 5,500 kcal thermal coal FOB price). Against the backdrop of a rising coal price center, the sector is expected to achieve a continued sequential earnings recovery in the fourth quarter of 2025, with the coal sector anticipated to experience a spring rally in the first quarter of 2026.

On the supply and demand front, early in January 2026, some provinces began promoting the exit of some coal supply-guaranteeing production capacity. Estimates suggest the current annual coal market surplus is approximately 100 million tonnes. If the planned exit of this supply-guaranteeing capacity materializes, it is expected to significantly improve the coal supply-demand balance, drive a notable reduction in coal inventories, and make coal price elasticity promising within 2026.

Another securities firm pointed out that looking ahead to the "16th Five-Year Plan" period, the global coking coal market is expected to see weak supply and strong demand, leading to a reversal in the supply-demand dynamic. With production declining and demand increasing, prices are expected to rise. Coupled with decreasing costs, significant earnings improvement is anticipated. Coking coal production capacity is relatively rigid; if prices increase, supply is unlikely to expand easily, suggesting considerable price elasticity. Year-to-date, the coking coal price is 269 yuan per tonne higher than the average price in the first quarter of 2025. As coking coal companies' costs gradually decline to low levels, a significant earnings improvement is expected in the first quarter. The net profit per unit of product for high-quality primary coking coal companies remains far lower than that of thermal coal companies, failing to reflect the scarcity value of coking coal resources.