UBS: It is unlikely that Chinese coal prices will continue to surge. China Shenhua Energy (01088) is given a "neutral" rating, while Yankuang Energy Group (01171) is given a "sell" rating.

UBS released a research report stating that the price of thermal coal in China for the full year of 2026 is expected to be between 750 and 800 RMB per ton. The opportunity for price increases is concentrated in the summer replenishment window in May and June, during which procurement may be affected by high international energy prices and fluctuations in Indonesian supply. In a tight supply situation, prices may briefly test 900 RMB per ton, but the possibility of sustained soaring is not high considering China's ability to quickly respond and coordinate supply policies. The bank expects the price of QHD5500 coal for the years 2026 to 2028 to be 750 RMB, 720 RMB, and 670 RMB per ton respectively, to reflect the tightening global energy market and the slight impact of Indonesia's quota reductions. They have set a target price of 48.6 RMB for China Shenhua Energy (601088.SH) A-shares and 48 Hong Kong dollars for China Shenhua Energy (01088) H-shares, with a "neutral" rating. In addition, they have set a target price of 11.4 Hong Kong dollars for Yankuang Energy Group (01171) and 22.8 RMB for Shaanxi Coal Industry (601225.SH), maintaining a "sell" rating as the current stock prices already reflect fundamentals.