Post-holiday coal prices have risen beyond expectations in October. The contraction expectation driven by anti-internal competition in coal supply continues, with marginal factors including rainfall in production areas and maintenance of the Daqin Railway. Coal imports may decline month-on-month due to political factors in Mongolia. The market is concerned about further supply contraction in Q4. The main variable behind the unexpected price surge lies on the demand side. On one hand, downstream power plants have increased procurement enthusiasm, leading to a decline in the cargo-to-ship ratio as vessel anchorage numbers at Qin Port rise, resulting in continuous port inventory drawdowns. On the other hand, downstream electricity consumption has surged rapidly, accelerating price increases.
Guosheng Securities released a research report stating that, according to EIA forecasts, U.S. coal consumption in 2025 is expected to reach 439 million tons, up 6.7% year-on-year. Additionally, U.S. power plant coal storage capacity is further declining, with coal inventories at U.S. coal-fired power plants projected to drop to 107 million short tons by the end of 2025. Low inventories, explosive demand growth, and persistent supply rigidity due to declining production are expected to drive a historic reversal opportunity in the U.S. coal market and prices.
As U.S. domestic coal consumption grows explosively, U.S. coal exports are expected to slow, potentially pushing global seaborne thermal coal trade into a tight balance. The report recommends focusing on domestic coal companies with regional and cost advantages.
Zhongtai Securities released a report stating that trading dynamics and fundamentals are aligning, potentially ushering in a new cycle for coal, with bullish prospects for coal sector investment opportunities in 2026. For investment strategies, three key themes are suggested: 1. Given the continuous inflow of medium- to long-term capital, coal's "high dividend, low valuation" investment value becomes more prominent—actively allocate to targets with strong dividend attributes. 2. Based on corporate capacity growth logic and significant profit elasticity, focus on beneficiaries of both α and β resonance. 3. With coal prices bottoming out and profitability improving, prioritize coking coal plays poised for a turnaround.
Related Hong Kong-listed coal industry stocks include: CHINA SHENHUA (01088), YANKUANG ENERGY (01171), China Coal Energy (01898), Yancoal Australia (03668), and China Qinfa (00866).