Founder Securities released a research report stating that geopolitical events often lead to rising energy prices, with the coal-to-oil ratio showing an upward trend. This is primarily because most countries maintain well-established crude oil reserves, while coal's primary function for electricity generation creates more inelastic demand. Consequently, the supply-demand inelasticity for coal is greater compared to crude oil. If the current US-Iran conflict eases and the Strait blockade is short-lived, the upside for coal prices may be relatively limited. However, if the blockade persists for an extended period or becomes normalized, the overall price center for coal is expected to shift upwards, potentially solidifying its role as a stabilizing energy source. As the energy crisis continues to evolve, substitution demand for coal is growing, improving the coal supply-demand dynamic. Companies with high sensitivity to coal price changes are likely to benefit first. Key viewpoints from Founder Securities are as follows: Historical reviews indicate that the Iran-Iraq War, the 2011 Arab Spring, and the 2022 Russia-Ukraine conflict all triggered varying degrees of energy price increases. For instance, the outbreak of the Iran-Iraq War in 1980 led to sharp rises in oil and gas prices, with oil prices surging over 200% and international coal prices increasing by 61%. During the 2011 Arab Spring, energy prices soared, with ARA coal prices briefly exceeding $131 per ton. More recently, the 2022 Russia-Ukraine conflict—where Russia was a major supplier of coal and gas to Europe—drove up natural gas and thermal coal prices due to European power generation needs, with thermal coal prices once surpassing $400 per ton. The transmission from oil and gas prices to coal primarily occurs through two channels: coal chemical production and power generation. Currently, the ratio of Australian coal prices to Brent crude oil is approximately 1.66, situated around the 56th percentile historically. Geopolitical tensions typically cause energy prices to rise, and the coal-to-oil ratio tends to increase, mainly because nations generally have robust crude oil stockpiles, whereas coal's essential role in power generation creates more rigid demand, making coal supply and demand less elastic than oil. Taking coal chemicals as an example: Using olefins as a reference, with Brent crude at $60 per barrel, the corresponding olefin cost is about 6,800-6,900 yuan per ton, close to the cost of 5,500K coal at 778 yuan per ton. Currently, crude oil prices are approaching $90 per barrel, while coal prices remain relatively low. Regarding power generation demand: Currently, LNG carriers are blocked in the Strait. Qatar accounts for approximately 20% of global LNG exports. If LNG vessels cannot pass through, it could lead to a global LNG shortage. The coal price surge during the 2022 Russia-Ukraine conflict was driven by power generation needs. Although the initial price increase was due to Europe's ban on Russian coal, and coal prices remained stable at the onset of the current conflict because Iran has limited coal, prolonged tensions could lead to shortages in oil, gas, and coal, causing rapid price increases. If the US-Iran conflict de-escalates and the Strait blockade is brief, the potential for coal price appreciation is relatively constrained. Should the blockade be prolonged or become routine, the benchmark for coal prices would rise overall, strengthening its position as a cornerstone of energy security. Investment recommendations: Investment logic one: As the energy crisis continues, substitution demand for coal increases, improving the supply-demand balance. Companies with high coal price elasticity are poised to benefit early. Recommendations include: Yankuang Energy (600188.SH), Jinmei Coal Industry (601001.SH), and Shanxi Coal International (600546.SH). Investment logic two: With oil and gas prices at elevated levels, companies focused on coal chemical investments may see improved profitability in their chemical segments, boosting overall performance. Recommendations include: Yankuang Energy, China Coal Energy (601898.SH), China Shenhua Energy (601088.SH), and Huaibei Mining (600985.SH). Risk warnings: Production safety risks, international situation volatility risks, macroeconomic fluctuation risks, significant commodity price volatility risks, project construction delays, policy support falling short of expectations, and intensifying market competition risks.
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