Zheshang: Coal demand remains resilient, with prices rising in the center.

Zheshang released a research report stating that, looking back at 2025, coal supply was high at first and then decreased, while imported coal decreased year-on-year, but demand still showed resilience. With the support of overproduction, coal prices experienced a V-shaped reversal. Looking ahead to 2026, the domestic economy is expected to remain stable with anticipated demand growth, supply balanced between production restrictions and supply guarantees, and the central price of coal rising. Supply and demand determine inventory, inventory determines price, and the bank believes that inventory in 2026 will be between 2024-2025, with an average price of 800-850 yuan/ton for thermal coal; considering weak demand for coking coal downstream and potential supply increases, the ratio of coking coal to thermal coal prices is expected to be around 2, corresponding to an average price of 1500-1700 yuan/ton for coking coal. If inventory reduction exceeds expectations, coal prices are expected to rise further. The industry maintains a "positive" rating. Zheshang's main points are as follows: Review of 2025 Supply: Output was high at first and then decreased, with growth gradually turning negative Output was high at first and then decreased. From January to October 2025, the cumulative national raw coal output was 3.973 billion tons, an increase of 1.5% year-on-year. Production was high at first and then decreased, with year-on-year growth in the first half of the year, but a negative growth rate from July to October. Imports decreased year-on-year. From January to October 2025, the cumulative import of coal and brown coal in China was 388 million tons, a decrease of 11% year-on-year. Import growth was observed at the beginning of the year, but monthly growth turned negative starting from March, with negative growth in imports from March to October. Xinjiang coal exports remained stable. As of November 28, 2025, the Urumqi Railway Bureau had completed 85.1801 million tons of Xinjiang coal exports, an increase of 6.4% year-on-year. Demand: Consumption was initially suppressed and then rebounded, showing overall resilience Consumption was initially suppressed and then rebounded. From January to October 2025, the total consumption of commercial coal in China was about 4.24 billion tons, an increase of 0.1% year-on-year, mainly due to the high growth rate of coal used in the chemical industry and the strong resilience of coal used in the steel industry. Differentiated coal consumption by industry. In terms of industry breakdown, coal used in the chemical industry was 360 million tons (up 10.9% year-on-year), coal used in the steel industry was 590 million tons (up 0.2% year-on-year), coal used in the construction materials industry was 400 million tons (down 4.9% year-on-year), and coal used in the power industry was 2.35 billion tons (down 1.1% year-on-year). Price: Coal prices experienced a V-shaped reversal, with long-term contracts remaining stable Coal prices experienced a V-shaped reversal. The initial prices of thermal coal, coking coal, and anthracite in 2025 were 767, 1520, and 980 yuan/ton respectively, and their lowest prices during the year fell to 609, 1230, and 820 yuan/ton respectively. As of November 28, they rebounded to 816, 1670, and 930 yuan/ton respectively. Long-term contract prices in Beigang: The long-term contract price for 5500 kcal power coal at Qinhuangdao decreased from 693 yuan/ton at the beginning of the year to a low of 666 yuan/ton in July, and then increased to 684 yuan/ton in November. Outlook for 2026 Policies: Production restrictions while ensuring supply, dynamic balance of supply and demand Policies to combat overproduction were introduced mid-year to promote stable and orderly supply, while winter energy supply requirements aimed at stabilizing energy production and supply. Policies strike a balance between combating overproduction and ensuring supply. Capacity replacement policies may limit the scale of capacity through capacity indicators. The "14th Five-Year Plan" proposes to accelerate the construction of a new energy system, with coal playing a role in ensuring stability. Peak power generation by coal-fired power plants will increase coal consumption. Market: Supply and demand determine inventory, inventory determines price Inventory position is commonly used to judge trends in natural gas prices in the United States. China's coal market shares similarities with the US natural gas market, and referencing the relationship between coal inventory and its 5-year average can guide price trend forecasts. Forecast: Expected demand growth, central price rising It is forecasted that coal consumption in 2026 will be 4.95 billion tons (up 1% year-on-year). Looking at the industry breakdown, the expected increase in coal consumption will mainly come from the power and chemical industries, with demand for coal in the chemical industry expected to remain high, a slight increase in coal consumption for power generation, and a slight decrease in demand for building materials and steel industries. It is expected that production will increase slightly to 4.87 billion tons in 2026 (up 0.6% year-on-year). Assuming that the increase in demand will be greater than the increase in supply, the central price of coal is expected to rise. Risk warning: Slowdown in overseas economies; large release of production capacity; substitution by new energy sources; impact of safety accidents; changes in supply policies.