Cathay Pacific Haitong: Reiterates its bullish view of the “global energy cycle” and “baseload power supply” over the next 5-10 years or welcome market value revaluation

The Zhitong Finance App learned that Cathay Pacific Haitong released a research report stating that it once again looks ahead to the “global energy cycle” of the next 5-10 years. Driven by AI and consumer electricity consumption brought about by global warming, global electricity demand is undergoing major changes in continuous acceleration and changes in the demand structure. The bank is optimistic that “baseload power” (natural gas, coal, nuclear energy) plays an important role in enhancing the stability of power systems and is more in line with emerging electricity demand, bringing room for continuous and steady upward demand growth, which is expected to usher in a global revaluation.

Cathay Pacific Haitong's main views are as follows:

Global electricity demand enters a new cycle: the pricing anchor shifts from the economic cycle to the power system

The bank believes that the growth rate of global electricity demand is showing a structural rise, and that it is gradually being desensitized from macroeconomic growth. AI data centers, industrial electrification, and global climate warming have become the core driving forces for new electricity consumption; as a result, the global energy system is entering a new cycle dominated by electricity demand, and marginal drivers of traditional energy prices are also gradually shifting from the “economic cycle” to “power peak and system reliability.” However, along with changes in the emerging electricity demand structure, the bank believes that the limitations of new energy sources are being revealed, and the importance of “baseload power supplies” in power systems has increased dramatically, which may lead to a revaluation of the market's value.

Natural gas: the number one marginal dispatchable source of global electricity expansion

The bank believes that as AI data centers, advanced manufacturing, residential refrigeration and new energy fluctuations drive the demand for stable output in power systems, the increase in demand for natural gas is increasingly concentrated in the power sector, and dependence on the macroeconomy and crude oil cycle continues to decline. At the same time, global gas engine orders are growing rapidly and delivery cycles are lengthening, and natural gas is becoming the first choice for adding reliable capacity. At the supply and demand level, although the centralized release of new global LNG production capacity from 2026 to 2030 will improve supply, the bank expects the global LNG market to enter limited and phased easing after 2028 due to effects such as geography and the progress of additional production capacity investment, rather than long-term deep excess. The bank determined that the US gas price center will rise from a low level in 2024, while European TTF and Asian JKM may slowly decline as new supply is added, but the decline is lower than the market's linear expectations, and price fluctuations caused by seasonal and geographical disturbances will increase.

Revaluation of coal and electricity assets, second-tier reliable capacity of the global power system

The bank believes that this round of coal power asset revaluation does not mean that the world has re-entered the large-scale new coal power cycle. Instead, against the backdrop of a long nuclear power construction cycle, limited supply of combustion engine equipment, and rising LNG prices and geographical risks, the world's huge stock of coal power units will become the easiest stable power source to be re-deployed in the next three to five years. In terms of economy, the US has already seen a clear gas switch in 2025, confirming that the operating economy of natural gas and coal has gradually crossed the switching threshold; from a global perspective, in most markets where high carbon price restrictions are not taken into account, current coal power still has a clear fuel cost advantage over imported natural gas power generation. Meanwhile, the 2026 US-Iran conflict on energy security further revealed the high sensitivity of LNG supply to liquefaction facilities, key waterways, and geopolitics. Coal has advantages such as scattered supply sources, diverse transportation routes, and long-term fuel storage, and its energy security value continues to be prominent. From being an asset to be withdrawn under the decarbonization framework, coal power is once again becoming a “ballast stone” of reliable capacity and fuel safety that cannot be ignored in the global power system. The longevity, utilization rate, and valuation system of its assets are expected to be systematically re-evaluated.

Risk warning: risk of geographical conflict, risk of global macroeconomic downturn.