According to the financial news app, UBS Group released research reports stating that coal mining companies with higher level contract sales are better able to cope with the downward cycle of coal prices. Among coal industrial concepts, they prefer China Shenhua Energy (01088) with contract sales accounting for 80%, giving it a "neutral" investment rating. The target price has been raised from 28.5 Hong Kong dollars to 35.5 Hong Kong dollars. In addition, the bank downgraded its investment rating for Yankuang Energy (01171), with contract sales accounting for 20-30%, from "neutral" to "sell", and lowered the target price from 12.3 Hong Kong dollars to 8 Hong Kong dollars.

UBS Group believes that China's coal demand has already peaked. The year-on-year growth rate of thermal power generation from 2021 to 2026 is expected to slow to the range of 1-2%, compared to 6% growth last year, due to the continuous impact of renewable energy substitution. The bank projects that solar and wind power will account for 20% of China's total electricity generation in 2026, up from 16% last year. In terms of non-electrical downstream sectors, the bank believes that the demand for coal in smelting and building materials is also likely to decline, while the demand for coal chemical products is expected to recover starting in 2026.

The bank forecasts that next year's coal price will be 800 yuan per ton, equivalent to a 6% year-on-year decline. This is based on the reduction of 10 million tons in marine transportation coal demand and the price support for marine transportation coal. Considering the forecasted reductions of 25 million tons and 15 million tons in marine transportation coal demand for 2026 and 2027, the expected coal price is supported at around 700 yuan per ton.