HTSC·2025-06-17 01:16Investment Rating - The report maintains an "Overweight" rating for the coal industry [7] Core Insights - The ongoing Israel-Iran conflict is expected to drive oil prices higher, which historically correlates with an increase in coal prices due to their price linkage [1][12] - The coal chemical sector is experiencing significant demand growth, driven by the cost advantages of coal over oil in chemical production [2][39] - High temperatures and reduced water levels are anticipated to boost coal demand during the summer peak season [3][48] - Indonesia's coal production is projected to decline, which may improve the supply-demand balance for low-calorie coal in the market [4][53] - Despite a generally pessimistic market outlook for coal prices, there is a notable opportunity for price rebounds, particularly for undervalued coal companies [5] Summary by Sections Section 1: Oil and Coal Price Dynamics - The Israel-Iran conflict has led to increased oil prices, with Brent and WTI crude futures rising by 7.0% and 7.3% respectively on June 13 [1][14] - Historical data shows a strong correlation between oil and coal prices, with an average oil-coal price ratio of 3.37 since 2000 [1][18] Section 2: Coal Chemical Demand - The coal chemical sector's demand growth reached 16.4% from January to May, significantly exceeding previous forecasts [2][41] - The profitability of coal-based ethylene glycol production is expected to improve, with projected profits turning positive by May 2025 [2][39] Section 3: Seasonal Demand Factors - The average national temperature in May was 17.1°C, 0.9°C higher than the previous year, indicating increased electricity demand [3][48] - A forecasted 9% decline in hydropower generation hours is expected to translate into an additional 0.3 million tons of coal demand [3][50] Section 4: Indonesian Coal Production - Indonesia's coal production is expected to decrease by 13% in 2025, leading to a potential 20% reduction in export volumes [4][53] - This reduction is anticipated to alleviate the oversupply of low-calorie coal in the Chinese market [4][53] Section 5: Market Sentiment and Investment Opportunities - The current market sentiment for coal prices is pessimistic, but there is a significant potential for price recovery [5] - Recommended companies include China Shenhua, China Coal Energy, Shaanxi Coal and Energy, and Jinneng Holding Group, all of which are considered undervalued with strong dividend yields [5][58]