The substitution effect of energy becomes prominent? Coal stocks collectively strengthen, with 6 stocks' 2026 performance forecasts doubling

The coal sector performed strongly in the morning trading session on March 12, with Zhengzhou Coal & Electricity and Yankuang Energy hitting the daily limit-up; China Coal Energy, Shaanxi Black Cat, Baotailong, Lu’an Environmental Energy, Baotailong, and JinKong Coal also showed noticeable gains. The chemical coal industry also performed well, with LuHua Technology, JinMei Technology, JinNeng Technology, Yankuang Energy, and Wanwei High-tech hitting the daily limit-up.

Conflict Triggers Energy Substitution Effect?

On the news front, the US-Iran conflict has caused oil and gas prices to surge, triggering an energy substitution effect. According to a research report from Orient Securities, the transmission in the coal market is reflected in rising fuel costs leading to higher shipping fees, soaring natural gas prices prompting some regions to increase coal-fired power generation to replace expensive natural gas, which may lead to a seasonal increase in coal prices.

Changjiang Securities estimates that if the Strait of Hormuz remains blocked long-term, global coal demand for power generation could increase by 84.86 million tons annually; if China’s coal chemical plants operate at full capacity, this alone could boost domestic coal consumption by nearly 50 million tons.

Data from Choice by Eastmoney shows a clear tailing effect in recent thermal coal prices, with the 5500K thermal coal prices notably rising, reaching 690 yuan/ton as of the week ending March 8, up 10 yuan/ton from mid-February.

Potential Upside for Coal Prices

Guotai Junan further analyzed that although the US-Iran conflict does not directly impact the coal market, it still influences coal prices through chains such as “oil and gas risk premium increase → energy substitution,” “rising shipping and insurance premiums → higher onshore costs,” and “disruption in Middle Eastern chemical supply chains → increased coal chemical consumption”:

1. Since 2023, the oil-coal ratio and gas-coal ratio have respectively risen from 2.59 and 2.27 to 3.36 and 3.65 as of March 6. In an environment where both ratios expand simultaneously, the asset attributes of coal have changed. Based on a median oil-coal ratio of 2.59, if crude oil prices rise to $150 per barrel, there is a potential risk for thermal coal prices to rise to 1,000 yuan/ton.

2. Post US-Iran conflict, overseas coal prices (especially in Europe) respond more elastically to geopolitical shocks than domestic prices. European prices have stepped up sharply: European thermal coal prices surged quickly after the conflict; Newcastle and Asia-Pacific responses lag behind; China’s domestic spot market remains relatively weak.

3. Another focus of this geopolitical impact is on shipping channels and capacity. The risk of the Strait of Hormuz being blocked has led to a reassessment of risk premiums in energy shipping routes. Dry bulk freight prices from Indonesia and Australia to China have increased by 7.86% and 16.48% respectively since February 27, amid seasonal demand for coal and grain transportation and geopolitical risk hedging.

4. In recent years, the weight of coal chemical demand in the coal consumption structure has been rising. If the conflict persists, it could significantly boost marginal demand for coal chemicals: Iran is China’s largest methanol import source; if Iranian methanol exports are hindered by the conflict, domestic methanol prices will rise, stimulating increased utilization of coal-to-methanol/MTO plants and higher raw coal consumption. Additionally, with rising oil prices, the increased costs of oil-based routes also enhance the relative profitability of coal-based routes, providing medium-term support for coal prices, especially for chemical-grade coal.

High Growth Stocks Predicted for 2026

Institutional forecasts for coal stocks’ performance in 2026 are generally optimistic. Gansu Energy and Hengyuan Coal Power are predicted to see over tenfold growth in 2026; Shanxi Coking, Lanhua Sci-Tech, Yantai Energy, and Jiang Tung Equipment are expected to double their 2026 earnings.

Among these, Jiang Tung Equipment’s stock price has doubled since 2026; Yankuang Energy has increased by over 60%; Shanxi Coking, Panjiang Coal, Lu’an Environmental Energy, and JinKong Coal have risen over 30%.

Open Source Securities states that, amid high global political and economic uncertainty and expectations of domestic economic stabilization, investment behavior in the capital markets exhibits emotional pulses. The coal sector possesses both cyclical and dividend attributes; currently, coal holdings are at low levels, the fundamentals have reached the right side of the turning point, and it is an opportune time for deployment.

(Source: Orient Securities Research Center)