Zhongjin: It is expected that the price of coal will follow a trend of initially low, then high in 2026, with the average price for the whole year remaining relatively stable compared to the previous year.

CICC released a research report stating that the bank expects coal prices in 2026 to show a trend of initial lows followed by highs, with the overall midpoint likely to be roughly the same as in 2025. Demand may be a major drag, but supply constraints are relatively strong. In the first half of the year, due to policy transmission delays and seasonal factors, demand may be subdued, putting some pressure on coal prices; in the second half of the year, demand is expected to marginally improve, driving coal prices up. Key points from CICC are as follows: Coal production capacity is not oversupplied. The bank believes that the coal industry's production capacity is not oversupplied, with this year's unexpectedly downward trend in coal prices stemming from overcapacity production. Continuous high-intensity, production exceeding approved capacity poses challenges in terms of safety and environmental protection. The bank judges that if supply and demand are excessively loose, there may still be some room for policy enhancement to tighten supply under reasonable and legal pretexts. Additionally, with limited new capacity and gradual retirement of old and depleted capacity, the bank believes that the overall risk of excess capacity growth is low. Demand for thermal coal remains at a peak level. The bank expects that during the "15th Five-Year Plan" period, green energy may begin to squeeze the demand for existing coal-fired power, but total electricity demand is likely to maintain stable growth (annual compound growth rate of electricity consumption in the whole society may remain above 4.5% from 2024 to 2030). Therefore, the demand for coal-fired power is expected to remain at a peak level, with limited risk of significant decline. Increased supply of Mongolian coal, relaxed supply and demand for coking coal. The bank believes that domestic supply of coking coal in 2026 has limited upside elasticity, but there is potential for an increase in imported Mongolian coal, leading to overall supply growth in coking coal. On the demand side, there is uncertainty in the actual implementation of steel production cuts due to policy negotiations. Generally, the bank judges that the supply and demand for coking coal in 2026 is relatively relaxed, with restrictions on price elasticity due to the increase in Mongolian coal. However, as a key source of imported incremental supply, Mongolian coal is difficult to replace high-quality domestic primary coking coal, so the relatively tight supply situation for primary coking coal is expected to continue. Risk warnings Excessive production recovery exceeding expectations, and demand may slide more than expected.