Hua Yuan Zheng Quan·2025-07-06 08:18Investment Rating - The investment rating for the coal industry is "Positive" (maintained) [4] Core Viewpoints - The report anticipates high electricity coal demand due to less rainfall and higher temperatures in summer 2025, leading to a continued reduction in coal inventory [4] - The average temperature in major coastal cities from July 1 to July 5, 2025, was 30.2°C, which is 2.7°C higher year-on-year, indicating a significant increase in electricity consumption [4][30] - The report suggests that the coal supply-demand balance has begun to rebalance, with coal prices at historical lows, and recommends focusing on companies with high long-term contract coal ratios [4] Summary by Sections Section 1: Coal Demand and Supply - The report highlights that summer 2025 is expected to see high electricity coal demand due to elevated temperatures and reduced rainfall, particularly in the Yangtze River basin [4][19] - The average temperature for the first half of 2025 was slightly higher than in 2024, with significant increases noted in central and eastern China [8][19] - The report predicts that the reduction in coal inventory will exceed expectations due to weak hydropower output from reduced rainfall [4][30] Section 2: Investment Recommendations - The report recommends focusing on leading coal companies such as China Coal Energy and China Shenhua Energy, which have a high proportion of long-term contracts and flexible pricing [4] - It also suggests paying attention to Shaanxi Coal and Yanzhou Coal Mining [4] Section 3: Temperature and Rainfall Analysis - The report indicates that the first half of 2025 experienced slightly less rainfall compared to the previous year, with most regions showing normal or reduced precipitation levels [13][19] - The forecast for summer 2025 suggests a significant overlap of high-temperature and low-rainfall areas, particularly in southern China, which may exacerbate drought conditions [19][27] Section 4: Inventory Trends - The report notes that coal inventory at ports has been continuously decreasing, driven by high daily consumption at power plants during the summer peak [4][30] - The report emphasizes that the ongoing high temperatures and increased electricity demand will support the trend of coal inventory reduction [4][30]