Market and Weather Heating Up Together - Can the Coal Sector's Momentum Last?

CNR Beijing, March 13 (Reporter Gao Min) — According to the Voice of China Central Radio and Television’s “Trading Live” report, on the 12th, the A-share market experienced volatility and weakness, while the coal sector defied the trend and rose. The Wind Coal Index surged nearly 5% intraday, with many stocks hitting the daily limit or rising sharply.

Zhang Gang, Chief Investment Advisor at Southwest Securities, analyzed that the recent upward trend in the coal sector is driven by two main factors. Zhang explained, “First, the ripple effect caused by rising international energy prices—international oil prices soared significantly, and coal, as an energy-related commodity, also saw substantial gains. Second, increased demand for coal in metallurgy is boosting the market, with expectations of strong performance.”

Research analyst Zhuang Yang from Shenwan Hongyuan Research Institute assessed, “Currently, the PE ratio of the CSI Coal Index is about 14 times, and the PB ratio is around 1.5 times. Leading thermal coal stocks are valued at about 10 times PE, with dividend yields above 4%, reaching over 6% in some cases. The coal sector combines low valuation with high dividends, leaving room for recovery in the future.”

As the weather warms, heating in North China, Northeast China, and other regions will gradually end, leading to seasonal declines in thermal coal demand. Can the enthusiasm for the coal sector continue?

Zhang Gang analyzed, “Although the heating season ends, the summer electricity peak is approaching, and the market may once again shift towards ‘electricity trading,’ which could also lead to speculation in coal and thermal power generation. Over the year, coal is expected to experience phased upward movements, so investors should focus on seasonal and cyclical allocations.”

Zhang Yufeng, Chief Market Strategist at AVIC Securities, stated, “Key factors to watch for the coal sector’s future include—performance in annual and first-quarter reports; fluctuations in international energy prices and domestic coal prices; changes in demand from power plants; and shifts in supply and output from coal companies.”

Zhuang Yang believes that the push for energy independence, combined with environmental protection and supply-side reforms, has led to a sustained upward shift in the overall price center of coal. From a medium- to long-term perspective, low valuation and high dividend-yielding coal stocks remain a worthwhile focus for continued investment.

For specific strategies, Zhang Yufeng recommends adopting a value investing approach or focusing on the most suitable operations within the coal sector.

“Investors should avoid blindly chasing high prices. Instead, they should prioritize stable allocations, using dividend yields, performance stability, and current valuation levels as main considerations for buying on dips and long-term positioning,” Zhang Yufeng advised.