Guotai Haitong: Coal prices enter a rapid upward channel, the coal industry will usher in a new round of cyclical growth in 2026.

Guotai Haitong released a research report stating that since July 2025, the "excessive production inspection" anti-internal cycle has driven the contraction of domestic production, and the supply and demand gradually show a tight balance trend. The supply and demand pattern has already reversed compared to the first half of the year, and coal prices have entered a rapidly rising channel. On the demand side, emerging industries such as AI, new energy, urban and rural areas have gradually become the main contributors to new electricity consumption, and electricity demand is becoming less sensitive to the economy, expected to continue to maintain a good growth trend of over 5%. The bottom of the current coal sector cycle has been confirmed in the second quarter of 2025, with the supply and demand pattern showing a reversal turning point, looking forward to a new cycle of upward movement in 2026, and reiterating a strategic bullish view on the energy sector for the next 5-10 years. Key points from Guotai Haitong: Reviewing the coal market in 2025, the first half and second half of the year showed drastic differences. Guotai Haitong believes that the core of the first half of 2025 was due to the demand shortfall caused by weather factors, combined with a large amount of imported coal in the fourth quarter of 2024 and the release of production in major domestic coal producing regions, leading to high inventories. In the first half of 2025, the fundamentals of the coal market plummeted, with prices continuously breaking through key support levels of 800, 770, 700, 650 yuan/ton, and the market expected coal prices to gradually fall to the "freezing point" of industry-wide losses in 2015. Since June, with the peak demand for electricity in the summer season, the total electricity consumption in 2025 has resumed 5% growth, proving the market's pessimistic expectations of demand wrong. At the same time, since July, the anti-internal cycle production inspection has driven domestic production to shrink, the supply and demand gradually show a tight balance trend, the supply and demand pattern has already reversed compared to the first half of the year, and coal prices have entered a rapid rising channel. Outlook for 2026, ushering in the start of a new cycle of upward movement For the new upward cycle in the coal industry that is expected to start in 2026, Guotai Haitong holds a relatively optimistic attitude, with the core of guiding the sector being demand and supply being "a positive addition." From the demand side, emerging industries such as AI, new energy, urban and rural areas have gradually become the main contributors to new electricity consumption, and electricity demand is becoming less sensitive to the economy, expected to continue to maintain a good growth trend of over 5%. Meanwhile, Document No. 136 of 2025 has led to a significant decrease in new installed capacity of photovoltaics starting from June 2025, combined with the shift in core policy orientation in the wind power and nuclear power industries from universal subsidies to targeted support after National Day, the economic decline may lead to growth pressure on new installed capacity, and new energy is expected to officially enter a new development phase of "slowing down and improving quality." With stable growth in overall electricity consumption, the decline in new installed capacity for new energy is putting pressure on the replacement of thermal power, and the primary demand for coal, thermal power demand, is expected to resume growth. On the supply side, since July, the National Energy Administration has focused on the issue of "excessive production" of coal, which is expected to continue to restrain the rebound of coal prices and restore the upward elasticity of national production, while high overseas energy demand growth and Indonesia's production limit policy may lead to no increase or even a decrease in imports, with overall supply possibly remaining stable in 2026 compared to 2025. The overall supply and demand pattern continues to improve, and it is expected that the coal price in the second half of 2026 will return to above 800 yuan/ton. A global perspective on energy: Demand surge, supply structurally mismatched, the turning point of the long coal cycle may begin to rise Taking a bullish view on global energy, driven by the rapid expansion of deep electrification in the industrial sector, data centers driven by artificial intelligence, and the three major areas of demand under extreme weather impacts due to global warming, the global electricity demand is growing faster than expected. However, especially in developed countries such as Europe and the United States, where renewable energy is dominant and the aging power grid system cannot provide stable power supply for AI, combined with extreme weather pushing peak demand, coal needs to continue to play the role of an "energy ballast." From a global perspective, coal-clearing in European and American countries may have passed the peak pressure, and in the United States, for the first time in the past decade, there has been a large increase in consumption. Investment advice The bottom of the current coal sector cycle has been confirmed in the second quarter of 2025, with the supply and demand pattern showing a reversal turning point, looking forward to a new cycle of upward movement in 2026, and reiterating a strategic bullish view on the energy sector for the next 5-10 years. It is recommended to focus on Yancoal Australia (03668) in the global market; for A-shares, it is recommended to focus on leading companies with growth potential for the next 5 years, such as Yankuang Energy Group (600188.SH), China Shenhua Energy (601088.SH), China Coal Energy (601898.SH), Shaanxi Coal Industry (601225.SH), Jinneng Holding Shanxi Coal Industry (601001.SH), and Shanxi Hua Yang Group New Energy (600348.SH). Risk warning Macroeconomic growth falling short of expectations, imports exceeding expectations, and supply exceeding expectations being released.