Skyrocketing coal stocks, the next super trend?

Always considered “Old Deng Assets,” the coal sector has quietly hit a new all-time high.

Coal Stocks, Collective Surge

Coal, known as “Black Oil,” has attracted increased attention after the Middle East tensions triggered a surge in international oil prices. As the most autonomous and controllable energy source domestically and a core pillar of energy security, coal is gaining more focus, and related stocks are rising accordingly.

Amid market volatility, the coal sector index has been particularly strong, soaring over 4% on March 12 to reach a new high.

In individual stocks, China Shenhua, the largest in market value within the coal sector, hit a new high since 2008. Since its low in 2020, it has increased fivefold, with a current market value approaching 1 trillion yuan.

Yanzhou Energy, with a market cap over 200 billion yuan, hit the daily limit-up on March 12, approaching its historical high.

On the same day, Electric Power Investment (Dian Tou Energy), valued at over 70 billion yuan, reached a new high, more than doubling since its low in April last year.

China Coal Energy, with a market cap of 250 billion yuan, surged 6.61% and 8.1% on March 11 and 12 respectively, hitting multi-year highs.

Among small-cap coal stocks, Zhengzhou Coal & Electricity saw two consecutive limit-up days on March 12 and 13, with a current market value under 7 billion yuan.

Zhengzhou Coal & Electricity was once a major “monster stock” in coal. Between November and December 2020, its share price skyrocketed from below 2 yuan to nearly 10 yuan, a fivefold increase in about two months.

The surge back then was driven by a cold winter in Q4 2020, influenced by La Niña, which led to increased heating demand nationwide. Meanwhile, industrial production recovered rapidly, with record-high electricity loads, causing a temporary supply tightness in coal, and coal prices rose quickly. As a key supplier of thermal coal, Zhengzhou Coal & Electricity attracted attention.

At that time, speculators like Zhao Laoge and Fang Xinxia frequently appeared on the trading lists for Zhengzhou Coal & Electricity.

Now Zhengzhou Coal & Electricity has hit the limit-up again—could it be awakening its previous “monster stock” genes?

Recently, along with coal stocks, chemical stocks such as coal chemical, phosphate chemical, methanol, urea, epoxypropane, and para-xylene have also surged significantly.

This is because both coal and crude oil are upstream in the chemical industry, and their price fluctuations tend to pass downstream.

“Double Coking” Futures Prices, Volatile and Fluctuating

Recently, many large-cap stocks and “monster stocks” in the oil and gas sector have surged, with even the “Three Big Oil” companies hitting multiple daily limits, mainly driven by a sharp rise in international oil prices. Brent crude oil was around $70 at the end of February and surged to nearly $120 on March 9, a jump of about 70% in just a few days.

So, has coal prices recently surged?

The most direct way to observe coal prices is through coking coal futures and coke futures, which are important derivatives in the coal industry chain.

The last major surge in “Double Coking” futures occurred from May 2020 to October 2021, with coking coal futures rising from around 1,000 yuan to over 3,800 yuan, and coke futures from about 1,600 yuan to over 4,500 yuan.

The background was that starting in Q2 2020, domestic COVID-19 control measures improved, leading to a “revenge” restart in infrastructure and real estate sectors to catch up on delays. Steel mills maintained high blast furnace utilization, creating strong demand for coking coal and coke. From the second half of 2020, overseas pandemic severity caused global manufacturing capacity to decline, while China’s steel export orders surged, further boosting upstream materials like coal, coke, and ore. Additionally, coal mines in Shanxi and other regions temporarily shut down due to safety and environmental regulations, creating a supply gap. Steel mills’ profits improved, easing production restrictions, and demand for “double coking” materials surged, leading to supply-demand imbalance.

As a fundamental raw material for people’s livelihood and industry, a sharp rise in coal prices benefits upstream producers but can also impact the real economy. In late 2021, the government intervened, convening a supply and price stabilization meeting, proposing measures such as releasing coal capacity, stabilizing output, and guiding prices back to reasonable levels.

The Dalian Commodity Exchange also introduced measures to curb speculation, significantly restricting coking coal futures positions starting September 2021. Subsequently, prices of coking coal and coke declined sharply, and speculative enthusiasm was effectively suppressed.

From 2023 to 2025, due to supply and demand changes, the exchange repeatedly adjusted coking coal futures position limits, sometimes tightening, sometimes loosening.

In recent years, “Double Coking” futures prices have fallen sharply again. Currently, these futures prices are largely disconnected from the overall trend of the coal sector.

Same Coal Stocks, Huge Differences

Many traders rely on futures prices to trade stocks, but this is a major mistake. The main reason is that leading coal stocks like China Shenhua and Shaanxi Coal mainly focus on thermal coal mining, not coking coal or coke.

Although both belong to the coal sector, coking coal and coke differ fundamentally from thermal coal in downstream demand characteristics, cost structures, and bargaining power along the industry chain.

Thermal coal is mainly used for power generation and heating—an essential need for the economy. Regardless of economic conditions, electricity must be generated, and demand remains relatively stable. This stable, rigid demand makes the performance of thermal coal companies more predictable, appealing to value investors seeking “stable cash flow.” In contrast, coking coal and coke are primarily used for steelmaking, which is directly linked to real estate, infrastructure, and auto manufacturing. In recent years, as the real estate market has cooled, steel demand has weakened, leading to sluggish demand and prices for upstream coking coal and coke.

Many large thermal coal companies operate mines that are open-pit or simple in geology, with very low extraction costs, often located in Shaanxi, Inner Mongolia, and other new mining areas. They have fewer historical burdens, allowing them to maintain high profits even when coal prices fall. Conversely, main coking coal regions are often old industrial bases with heavier burdens, such as more retirees and higher pension costs, creating “rigid costs” that do not decrease even when coal prices drop, making these companies more vulnerable during downturns.

Thermal coal is mainly used for power generation, and large coal companies often sign “annual long-term contracts” with power plants to lock in profits. Even if spot prices fluctuate, these contracts provide relatively stable income and strong risk resistance. On the other hand, coking coal and coke companies mainly supply large steel enterprises, which have strong bargaining power. During steel industry downturns, steel mills tend to push down procurement prices for coke, squeezing the profits of coking coal and coke producers.

Main listed coking coal and coke companies in China include Shanxi Coking Coal, Shanxi Coking & Chemical, Shaanxi Black Cat, Meijin Energy, Pingmei Shenma, Panjiang Coal & Electric, and Jizhong Energy. Their stock performance overall lags behind that of China Shenhua and Shaanxi Coal, which focus on thermal coal.

For example, Shanxi Coking Coal’s current stock price is 7.45 yuan, down about 65% from its 2009 peak of 21.78 yuan; Shanxi Coking & Chemical is at 5.01 yuan, down about 57% from its 2021 high of 11.8 yuan.

This illustrates that within the coal sector, the stock performance of thermal coal companies and coking coal companies varies greatly.

Investors must clearly distinguish between the two and focus more on fundamentals to avoid pitfalls.

Author’s note: Personal opinions only, for reference.