GF Securities: November Coal Imports Drop 12% YoY, Seasonal Demand Still Has Upside Potential

According to GF Securities' research report, the long-term contract price for thermal coal rose by RMB 10/ton in November, and demand is expected to improve as the peak consumption season begins in December. After a rapid coal price surge since October, prices across coal categories have recently retreated but remain significantly higher than the Q2-Q3 average.

Post-December, stricter year-end safety inspections and production cuts by mines that have met annual targets may constrain supply, while seasonal demand is projected to rise further from December to January. Coal prices are expected to stabilize and rebound gradually. With inventories still below last year’s levels, restocking demand could also support prices, reinforcing the upward trend in coal prices for 2026.

Key insights from GF Securities: **Market Review**: - October electricity consumption grew 10.4% YoY, exceeding expectations, while non-power demand remained weak. Coal imports fell 9.7% YoY. - **Domestic coal prices**: Thermal coal spot prices rose then declined in November, while long-term contract prices increased further. Coking coal prices trended downward. - **International prices**: Australian thermal and coking coal prices continued rising in November. - **Domestic demand**: October power consumption rose 10.4% YoY, though steel and cement demand stayed weak; methanol demand was strong. - **Domestic supply**: October domestic coal output dropped 2.3% YoY, while November imports fell 12.0% YoY. - **Global supply-demand**: January-October global seaborne coal shipments declined 3.6% YoY, but emerging markets showed resilience. - **Inventory**: Power plants are stockpiling ahead of peak season, while midstream/upstream inventories rebounded amid weaker price expectations. - **Policy & corporate updates**: 2026 long-term contract policies were finalized, and stricter safety regulations have constrained Q4 output.

**Recent Market Trends**: - **Thermal coal**: Prices retreated from late-November highs, but seasonal demand is expected to pick up in December. Tight supply due to safety checks and mine output cuts may support a gradual price recovery. - **Coking coal**: Demand has entered a seasonal lull, but improved downstream operating rates, low inventories, and winter restocking needs could stabilize prices.

**Key Stock Picks**: 1. **Stable earnings & dividends**: CHINA SHENHUA (601008.SH, 01088), Shaanxi Coal Industry (601225.SH), China Coal Energy (601898.SH, 01898), Yankuang Energy (600188.SH, 01171), SDIC Power Energy (002128.SZ), Xinji Energy (601918.SH). 2. **Benefiting from demand recovery & supply tightening**: Shanxi Coking Coal (000983.SZ), Lu’an Environmental Energy (601699.SH), Huaibei Mining (600985.SH), Jinneng Holding Coal (601001.SH), Shougang Resources (00639), Yancoal Australia (03668), Pingmei Shenma (601666.SH), Shanxi Coal International (600546.SH), Huayang Energy (600348.SH). 3. **Long-term growth potential**: Baofeng Energy (600989.SH), CHINA QINFA (00866).

**Risks**: Unexpected declines in coal/coke prices, slower-than-expected capacity expansion, cost control challenges, and weaker earnings performance.