Domestic Demand for Coal Mining Machinery Stabilizes as Prices Fall, Overseas Market Expands Rapidly | Industry Trends

Due to the pullback in coal prices, industry expectations for the profitability of the coal machinery sector have also decreased. A reporter from Cailian Press, acting as an investor, learned from multiple coal machinery producers that despite the intensified competition in the upstream coal machinery market caused by the decline in domestic coal prices, the coal machinery sector still maintains a relatively high market demand due to the high capacity utilisation rate of coal mines and the requirements for intelligent transformation of domestic coal mines.

Meanwhile, the domestic coal machinery sector has intensified its efforts to expand into overseas markets in recent years, seeking new growth points. According to industry insiders, with the in-depth promotion of the "Belt and Road" Initiative, overseas demand for domestic coal machinery equipment is increasing, providing broad development space for Chinese coal machinery enterprises. Domestic coal machinery producers have successfully exported their products to regions such as Russia, Southeast Asia, Latin America, and Africa, achieving remarkable results in overseas market expansion.

Coal Prices Pull Back, Domestic Coal Machinery Demand Stable with Prices Falling, Market Concentration Rising

The coal market peaked at the beginning of last year, and coal prices have continued to fall this year. The Bohai-Rim Steam-Coal Price Index dropped from 731 yuan/mt at the beginning of the year to 669 yuan/mt, while the long-term agreement price of the Xinhua Coking Coal Price Index fell to around 1,000 yuan/mt, a decline of approximately 300 yuan/mt from the beginning of the year. The profitability of coal enterprises has pulled back, with China Shenhua Energy (601088.SH) reporting a net profit excluding non-recurring gains and losses of 11.705 billion yuan in Q1, a YoY decline of 28.89%, and Shanxi Coking Coal (000983.SZ) reporting a net profit excluding non-recurring gains and losses of 725 million yuan in Q1, a YoY decrease of 19.09%.

Coal prices are a leading indicator of the prosperity of the coal machinery sector. A representative from Zhengzhou Coal Mining Machinery Group (601717.SH) stated, "Coal prices affect the production and operation of downstream customers, which in turn may influence their decisions on equipment procurement or maintenance."

From the financial statements of coal machinery enterprises and the operating conditions of coal production enterprises, it can be seen that the demand for equipment from downstream coal enterprise customers remains relatively resilient, but product prices have pulled back, having a certain impact on the gross profit margins of coal machinery enterprises.

A representative from Chuangli Group (603012.SH) stated, "The annual change in the number of mainframe sales is not particularly significant and basically tends to stabilize."

In terms of prices, coal machinery products have indeed been impacted to a certain extent. To maintain market share, enterprises have more or less adopted price reduction strategies, as can be seen from the financial reports of relevant publicly listed firms. In Q1 this year, Tiandi Science & Technology (600582.SH) reported a gross profit margin on sales of 26.31%, a YoY decrease of 4.25 percentage points; Shandong Mining Machinery Group (002526.SZ) reported a gross profit margin on sales of 19.55%, a YoY decrease of 2.26 percentage points.

The aforementioned representative from Chuangli Group explained that since last year, there has been a decline in revenue in the coal industry, which has also affected upstream coal machinery enterprises, mainly in terms of machine prices. Coal machinery equipment is a necessity for coal mines, but when the economic benefits of downstream coal mines decline, they may reduce procurement prices, thereby affecting gross profit margins.

Additionally, another major reason why the current boom period for the coal machinery industry is longer than that for coal prices is the impact of policies. The intelligent transformation of coal mines has relatively extended the boom period for the domestic coal machinery industry. The "Guiding Opinions on Accelerating the Intelligent Development of Coal" issued by the National Energy Administration in 2020 required that large coal mines should basically achieve intelligence by 2025. The "Notice of the National Energy Administration on Further Accelerating the Intelligent Construction of Coal Mines to Promote High-Quality Development of the Coal Industry" issued in 2024 also set requirements for comprehensively promoting the intelligent development of coal mines under construction and the intelligent transformation of large coal mines and those with severe disasters.

According to personnel from Zhengzhou Coal Mining Machinery Group Co., Ltd., currently, about 20-30% of coal mines nationwide have completed intelligent transformation, but the total capacity of mines that have achieved intelligence should have exceeded half. The remaining coal mines, which face greater difficulties in transformation or have poorer operating conditions, will also meet the minimum regulatory requirements for transformation. The intelligent transformation of domestic coal mines is required to be comprehensively promoted; it is just a matter of time.

Furthermore, the increased technical requirements for intelligent coal mine equipment have also passively driven up the market concentration of top-tier enterprises. In the list of the top 50 Chinese coal machinery industry enterprises for 2024 released last month, the four major types of equipment produced by the top 50 coal machinery producers—shearers, roadheaders, scraper conveyors, and hydraulic supports—accounted for 91.55%, 87.4%, 76.78%, and 86.08% of the total statistics compiled by the association, respectively.

Staff from Zhengzhou Coal Mining Machinery Group Co., Ltd. stated that in recent years, the market concentration of top-tier enterprises has been relatively high, and these enterprises have certain advantages in product quality and stability. Although the overall domestic market demand has stabilized and some demand has slightly declined, the company's market share and bid-winning rate have continued to increase.

Export Value of Major Coal Machinery Equipment Doubles in Five Years, with Deeper Exchanges with Countries Along the "Belt and Road"

The domestic coal machinery industry has achieved remarkable results in overseas market expansion over the past two years. Multiple coal machinery producers have stated that the international competitiveness of many Chinese coal machinery equipment has reached the world's leading level. The recognition and demand for Chinese coal machinery equipment in overseas markets have continued to grow, especially in countries along the "Belt and Road," where the products and services of Chinese coal machinery enterprises have been widely recognized.

Le Bin, the executive director of Shanghai Huaxin Minfu Automatic Control Equipment Co., Ltd. (hereinafter referred to as Huaxin Minfu), who had just attended the 2025 Russia International Coal Mine Machinery Exhibition, told reporters from Cailian Press: "The company has intensified its efforts in overseas market expansion over the past two years, and the overseas sales of its products have continued to increase."

The export value of major domestic coal machinery equipment has grown rapidly over the past five years. Customs data indicates that the export value of self-propelled coal (cutting) mining machines, rock drills, or tunnel boring machines (corresponding coal machinery categories: shearers, roadheaders) increased from 2.282 billion yuan in 2020 to 5.251 billion yuan in 2024, marking a 130% increase. The export value of belt-type continuous cargo conveyors or elevators (corresponding coal machinery category: scraper conveyors) rose from 3.873 billion yuan in 2020 to 8.904 billion yuan in 2024, showing an approximate 130% increase. The export value of hydraulic or pneumatic automatic regulating or controlling instruments and devices (corresponding coal machinery category: hydraulic supports) grew from 956 million yuan in 2020 to 1.432 billion yuan in 2024, approaching a 50% increase. These figures demonstrate the strong competitiveness and expanding market share of China's coal machinery equipment in overseas markets.

Coal Machinery Export Data for the First Four Months of 2020-2025 (Data Source: Customs Statistical Data Query Platform)

Behind the growth in export sales is the active "going global" step taken by domestic enterprises. An overseas exhibition organizer told a reporter from Cailian Press that in the past two years, there has been a significant change in the attitude of mining equipment enterprises towards participating in overseas exhibitions, with the number of enterprises participating in overseas exhibitions increasing year by year. Compared to the pre-pandemic period, the number of Chinese exhibitors at some overseas exhibitions has roughly doubled.

This exhibition organizer has organized multiple groups of domestic coal mining machinery production enterprises to participate in coal mining machinery equipment exhibitions in countries such as Russia, South Africa, Australia, and Mexico this year.

Le Bin, the executive director of Huaxin Minfu, shared his insights on the company's experience in developing the Russian market, stating that in recent years, there has been a rapid increase in demand for equipment in Russia. Previously, the country's coal machinery equipment was mainly sourced from European and American producers, but in recent years, due to changes in the international situation, most have now shifted to purchasing Chinese equipment. However, there are differences in equipment demand between the two countries. Russian coal enterprises do not have high requirements for intelligence, and their demand leans more towards traditional equipment. It will still take some time to promote certain new-type equipment. The company has been seeking partners in the country to continuously deepen its presence in the market.

As domestic coal machinery enterprises rapidly expand in overseas markets, they are also gradually adapting to the differences between domestic and overseas markets. A representative from Zhengzhou Coal Mining Machinery Group stated that the company regards the international market as an important future growth source. However, overseas market demand is not particularly balanced, and most overseas mining is open-pit, resulting in relatively less demand for domestic underground mining equipment.

Regarding how to expand overseas markets, Le Bin believes that overseas market promotion is a long-term endeavor that requires patience. It is not possible to open up a market by participating in just one or two exhibitions. Additionally, it is necessary to deeply integrate with the local market, such as by seeking local partners and adapting to the procurement habits of overseas end-user mining enterprises.