GTHT (Guotai Haitong Securities Co., Ltd.) released a research report stating that the coal market in 2025 exhibited stark contrasts between the first and second halves. Since June, peak summer electricity demand has exceeded expectations, with cumulative national electricity consumption recovering to 4.6% growth by August, disproving earlier pessimistic market forecasts. Concurrently, tightened domestic production controls since July have significantly reduced output, leading to a tightening supply-demand balance. This shift has reversed the H1 trend, propelling coal prices into a rapid upward trajectory.
Looking ahead to 2026, GTHT expresses strong optimism for a new coal price upcycle, anticipating further improvements in supply-demand dynamics. The report projects coal prices to rebound above RMB 800/ton in H2 2026. Key insights include:
**2025 Review: A Tale of Two Halves** H1 2025 saw weak demand due to weather disruptions, compounded by high inventories from surging Q4 2024 imports and domestic output. Coal prices plummeted, breaching key thresholds of RMB 800, 770, 700, and 650/ton, sparking fears of a return to 2015’s industry-wide losses. However, H2 demand rebounded sharply with summer electricity peaks, while production constraints tightened supply, reversing the earlier imbalance and driving prices upward.
**2026 Outlook: A New Cycle Begins** GTHT highlights demand as the primary driver of the upcoming cycle, with supply playing a supportive role. Emerging sectors like AI, renewables, and urban-rural electrification now dominate incremental power demand, decoupling electricity growth from broader economic trends and sustaining a steady 5%+ annual expansion. Meanwhile, policy shifts—including solar capacity slowdowns post-June 2025 and targeted subsidies replacing blanket support for wind/nuclear—may pressure renewable growth, easing substitution pressure on coal-fired power.
On the supply side, intensified regulatory scrutiny on overproduction since July is expected to cap domestic output elasticity. Coupled with stagnant imports amid global energy demand surges, 2026 supply is likely to mirror 2025 levels, further tightening the market.
**Global Energy Perspective: Structural Mismatch Fuels Coal’s Revival** The report underscores a bullish view on global energy demand, driven by industrial electrification, AI-driven data center expansion, and climate-induced extreme weather. However, aging grids in developed economies—reliant on intermittent renewables—struggle to meet AI’s stable power needs, reinforcing coal’s role as a baseload resource. Notably, the U.S. has seen its first significant coal demand rise in a decade, signaling a potential long-term inflection point.
**Risks:** Downstream demand shortfalls, steep steel price declines, or higher-than-expected imports could disrupt the outlook.