CITIC Securities has released a research report stating that although short-term supply guarantee policies are gradually being advanced, which may suppress sector sentiment, it will take time to reverse the tight supply situation in the industry. If winter restocking demand is effectively released, coal prices are still expected to exceed expectations. Meanwhile, coal prices rose significantly quarter-on-quarter in Q3, and sector earnings are expected to improve notably, providing support for valuations. Under this assessment, the firm continues to favor the sector rally driven by supply contraction and remains optimistic about the performance of low-valuation companies with improving earnings. The main views of CITIC Securities are as follows.
In 2026 Q3, coal prices rose significantly both year-on-year and quarter-on-quarter. Due to intensified safety supervision following mining accidents, domestic coal output fell sharply year-on-year in Q3, with supply contraction being evident. Average prices across various coal types generally increased in 2026 Q3. Among them, the average quarter-on-quarter increase in market thermal coal prices was approximately 14%, with a year-on-year increase of approximately 34%. The average quarter-on-quarter increase in pithead thermal coal prices was higher than at ports, at 21% and 8% respectively. Meanwhile, port annual long-term contract coal prices rose only 1.8% quarter-on-quarter. Anthracite average prices rose approximately 36% quarter-on-quarter and approximately 59% year-on-year. Metallurgical coal prices rose approximately 23% quarter-on-quarter and nearly 46% year-on-year.
Net profits of sample listed companies rose 27% quarter-on-quarter in 2026 Q3, with a year-on-year increase of 42% for the first three quarters of 2026. Data from the National Bureau of Statistics shows that in the first eight months of 2026, coal mining and washing enterprises above designated size nationwide achieved cumulative total profits of 294.4 billion yuan, up 51.6% year-on-year. It is expected that the coal sample listed companies mainly tracked will see a 42% year-on-year increase in net profits for the first three quarters of 2026, with a quarter-on-quarter increase of approximately 27% in Q3 2026 alone. By sub-sector, it is expected that the combined net profits of thermal coal, metallurgical coal, and anthracite sub-sectors in 2026 Q3 will increase by approximately 21%, 54%, and 40% quarter-on-quarter, respectively.
2026 Q4 fundamental outlook: Although supply guarantee policies are accumulating, it will take time to reverse the tight supply pattern. After the Shanxi mining accident in late May this year, safety supervision became stricter, and coal output declined significantly, with raw coal output in September continuing to fall by nearly 7% year-on-year. Although supply guarantee policies are currently being叠加, it is expected that national raw coal output in Q4 will still decline by around 3% year-on-year. On the demand side, demand from major downstream industries also weakened year-on-year in Q3, but it is expected to gradually stabilize year-on-year in Q4. From a quarter-on-quarter perspective, thermal coal demand has also increased significantly due to the peak season. It will take time to ease the tight supply situation in the industry, and average coal prices in Q4 are expected to continue rising quarter-on-quarter.
Risk factors: easing of geopolitical conflicts and overseas coal production cuts falling short of expectations, leading to a systemic decline in international coal prices; macroeconomic fluctuations affecting coal demand and prices;叠加 supply guarantee policies and some relaxation of safety supervision leading to increased supply; accelerated adjustment of the energy structure and intensified energy conservation and carbon reduction efforts increasing pressure on coal consumption; weather-related disruptions or impacts on coal price expectations, among others.
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