--- title: "Guosheng Securities: The rebound in coal prices requires external intervention; policy intervention is a key factor in the cyclical turning point" type: "News" locale: "en" url: "https://longbridge.com/en/news/243639689.md" description: "Guosheng Securities released a research report indicating that coal prices have adjusted for nearly 4 years since October 2021, dropping from 1,615 yuan/ton to 618 yuan/ton, with a cumulative decline of 997 yuan/ton. Despite the low prices, coal companies have not significantly reduced production. Analyzing historical data, it is found that a halt in the decline of coal prices requires policy intervention, similar to the situations in 2008, 2015, and 2020. Currently, some production capacities are already at a loss, and cost support is gradually becoming apparent, with policy intervention seen as a key turning point" datetime: "2025-06-09T05:59:02.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/243639689.md) - [en](https://longbridge.com/en/news/243639689.md) - [zh-HK](https://longbridge.com/zh-HK/news/243639689.md) generator: "portal-rs" --- # Guosheng Securities: The rebound in coal prices requires external intervention; policy intervention is a key factor in the cyclical turning point According to Zhitong Finance APP, Guosheng Securities released a research report stating that since the peak of coal prices in October 2021, they have adjusted for nearly four years, with prices dropping from 1,615 yuan/ton on October 25, 2021, to around 618 yuan/ton on June 5, 2025, a cumulative decline of up to 997 yuan/ton. The absolute level has also fallen back to before the current round of coal price increases (January 2021). This round of coal supply and demand has shown significant mismatches, leading to a rapid decline in prices. Due to the short duration of low prices, there has not been a large-scale reduction in production by coal companies. Having been trapped in the downward price spiral for a long time, the market continues to search for a bottom without success, and sentiment has also dropped to a low point. However, a turning point is expected to come, as some production capacities have fallen into losses, cost support is gradually emerging, and it is just waiting for policies to take root and be reborn. ## Guosheng Securities' main viewpoints are as follows: **Review** By reviewing the three rounds of price bottoms in coal prices in 2008 (bottom around 500 yuan/ton), 2015 (bottom around 350 yuan/ton), and 2020 (bottom around 470 yuan/ton), it is found that there are many commonalities: during each round of coal price decline, there was no proactive large-scale production reduction by coal companies, although the underlying reasons varied; behind each round of coal price stabilization, there were policy adjustments and interventions (the "four trillion" stimulus plan in 2008 to support demand; supply-side reforms and shantytown renovations in 2015; and "liquidity release" after special macro events in 2020, along with investigations in Inner Mongolia and criminalization of overproduction, etc.). **2008 Coal Price Bottom: Strong Stimulus from the Demand Side** In the second half of 2008, the global financial crisis broke out, leading to a cliff-like drop in demand. Coal prices nearly halved in just about five months, falling from nearly 1,000 yuan in July 2008 to around 510 yuan/ton on December 15, 2008. To cope with the economic downturn pressure brought by the international financial crisis, China subsequently officially launched the "four trillion" economic stimulus plan, rapidly boosting downstream demand and thus driving coal prices to stop falling and start rising. Looking back at this round of price bottoming process, during the sharp decline in coal prices, domestic coal production did not show significant changes, meaning that domestic production did not shrink due to the plummeting coal prices. **2015 Coal Price Bottom: "Supply Reform + Shantytown Renovation" Policy Combination** From 2012 to 2015, domestic economic growth slowed down, and new coal production capacity was continuously released, gradually highlighting the problem of overcapacity. Coal prices continued to decline, with northern port coal prices dropping to around 350 yuan by the end of 2015. During the prolonged bottoming process of coal prices, domestic coal production did not show significant changes, meaning that domestic production did not shrink significantly due to the plummeting coal prices, a phenomenon that is basically consistent with 2008 (though the underlying reasons may differ slightly). Ultimately, it relied mainly on strong policy intervention on the supply side combined with the monetization of shantytown renovations to steadily boost the economy, allowing coal prices to stop falling. **2020 Coal Price Bottom: Special Macro Events Followed by Stable Growth and Limited Off-Balance Sheet Supply** In 2020, special macro events fully erupted. Due to the concentration of coal market supply being far greater than demand, the resumption of production in upstream coal mines after the New Year was significantly faster than downstream demand, leading to a serious mismatch between coal supply and demand. Coal prices once plummeted to around 470 yuan/ton on April 27, 2020, reaching a new low since August 2016 Afterwards, as special macro events gradually came under control and demand quickly recovered, along with a significant contraction in off-balance-sheet production, the supply-demand mismatch in the coal market gradually eased, and prices stopped falling and began to rise. The process of price bottoming in this round is somewhat similar to that of 2008, where demand was impacted in the short term by a "black swan" event, leading to a significant phase mismatch in supply and demand, resulting in a rapid price decline. Due to the short duration of low prices, there has also been no large-scale production cuts by coal companies. **Urgent need for policy support to reverse expectations and rekindle confidence** Learning from history and referencing the experiences of the previous three rounds of price bottoming, relying solely on spontaneous market forces (i.e., coal price decline → breaking cost → coal companies reduce production) to clear capacity, reverse the oversupply situation, and promote price stabilization is quite challenging. The bottoming and recovery of coal market prices usually require policy regulation to be realized, either starting from the demand side (the most typical being the "four trillion" stimulus policy in 2008), or starting from the supply side (the most typical being the supply-side structural reform initiated in 2015), or both approaches being implemented simultaneously. **Key Recommendations** Central coal enterprises China Shenhua (H+A), China Coal Energy (H+A); key recommendation for the turnaround of China Qinfa; "performance leads to stock performance," with strong performers like XINJI ENERGY, SHCI, and Electric Power Investment Energy, and HuaiBei Mining; flexible companies like Yancoal, Jinkong Coal, Haohua Energy, and PINGMEI COAL, as well as potential growth companies like Huayang Co. and Gansu Energy Chemical. Additionally, AnYuan Coal, which has recently completed a change in controlling stake and is currently undergoing asset replacement, is also worth paying close attention to. **Risk Warning:** The production progress of under-construction mines exceeds expectations. Downstream demand falls short of expectations. 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