Port coal prices stabilized and rebounded this week, halting the continuous decline observed since March 4. Against the backdrop of inverted import coal prices and escalating geopolitical conflicts, the room for further correction in port coal prices appears limited. Despite the arrival of the off-peak season for power coal consumption and the continuous accumulation of inventory at northern ports since March, railway maintenance scheduled for April is expected to slow the inventory build-up pace. Coupled with the cost inversion of imported coal and resilient demand from the coal chemical sector, upward momentum for coal prices persists.
Looking ahead, Cinda Securities Research suggests that coal prices may exhibit strength even during the traditionally weak season, laying the groundwork for a significant rise in the average coal price center by 2026. According to Zhitong Caijing APP, Guolian Minsheng Securities released a report stating that sustained contraction in domestic supply has led to rapid and continuous destocking at ports after the New Year and a subsequent increase in coal prices. Overseas factors and rising demand from the coal chemical sector provide additional support, further pushing up the central coal price level. The institution believes the coal industry is likely to return to a basic supply-demand balance seen in 2023-2024, with prices fluctuating seasonally within the range of 800-1,000 yuan per ton.
CITIC Securities noted in a report that the Middle East geopolitical conflict has persisted for over three weeks, with international oil and gas prices showing considerable sustainability in their increases. Currently, although thermal coal demand faces short-term seasonal weakness, demand for coal used in chemical production may continue to grow, driving coal prices to stop falling and rebound. Coking coal prices are also expected to stabilize and rise amid improved short-term demand. Supported by overseas factors, the institution remains optimistic about the potential for further increases and the sustainability of domestic coal prices, maintaining a positive outlook on sector performance. Companies with coal chemical operations and those with relatively advantageous valuations are recommended, while firms with overseas coal resource layouts are also worth monitoring.
Related Hong Kong-listed stocks in the coal industry chain include: MONGOL MINING (00975), China Coal Energy (01898), Yancoal Australia (03668), Yankuang Energy (01171), China Qinfa (00866), China Shenhua Energy (01088), among others. In the coal chemical sector: China Risun Group (01907).