Nanhua Futures(SH:603093) Nan Hua Qi Huo·2025-09-30 11:31Group 1: Report Industry Investment Rating - Not provided in the document Group 2: Core Views of the Report - In Q4, under the constraints of the "Anti-Involution" and "Overproduction Inspection" policies, the domestic mine operating rate faces a theoretical upper limit, and the supply elasticity of coking coal is limited. As the starting year of the 15th Five-Year Plan in 2026, the long-term market expectation has significantly improved, and this year's winter storage scale is expected to be better than last year, providing phased support for coal and coke prices. However, the rebound height and sustainability of coal and coke prices ultimately depend on whether the supply-demand balance sheet of the downstream steel sector can achieve a "soft landing." The ideal scenario is for steel mills to proactively ease the steel inventory pressure through early maintenance and production cuts based on the anticipation of profit contraction, creating a favorable upward space for the industrial chain. Conversely, if the production adjustment of steel mills lags, the shrinking terminal demand will exacerbate the finished product inventory contradiction, triggering the negative feedback risk of the black industrial chain and restricting the rebound height of coal prices [1][54]. - The trading range of the coking coal main contract is (1100, 1300), and that of the coke main contract is (1550, 1800). Adopt a range-bound trading strategy for single-sided positions, and focus on the reverse spread between the January and May contracts of coking coal, with an recommended entry range of (-70, -60) [1][54]. Group 3: Summary by Directory Chapter 2: Market Review - In the first half of the year, due to factors such as the tariff war, the market had a generally pessimistic outlook on the far-month contracts. As a result, all links in the industrial chain continuously reduced speculative inventories, and the terminal replenishment willingness was low, leading to a deteriorating coking coal inventory structure. A large amount of inventory was积压 at the upstream mines, weakening their bargaining power and resulting in frequent price cuts for promotion. Although the supply-demand contradiction of coke itself was not prominent supported by high hot metal production, the coke price remained difficult to stabilize and showed overall weakness due to the collapse of cost support [2]. - Since June, the expected weak export did not occur. Instead, the year-on-year growth rate of steel exports remained high, and the inventory-to-sales ratio of the five major steel products continued to decline, indicating a healthy steel fundamentals. Meanwhile, the low domestic mine operation and insufficient imported arrivals led to a tightened coking coal supply. Domestically, affected by environmental protection restrictions and regional safety accidents, the operating rates of major coal-producing areas were generally lower than the seasonal average. In terms of imports, the shrinking import profit due to the continuous decline of domestic coal prices in the first half of the year suppressed the import enthusiasm, and the net import volume of coking coal decreased month by month. This structural gap laid the fundamental basis for the subsequent rebound of coking coal. From a valuation perspective, the basis of the coking coal main contract fluctuated between -150 and 150 yuan/ton in the past two years, and this value reached the upper limit at the end of May, indicating significant overselling in the futures market. Subsequently, coking coal started a valuation repair rebound. As the basis turned negative, the cash-and-carry funds entered the market, driving the long-dormant speculative demand to recover and promoting downstream coking enterprises to conduct concentrated replenishment, forming a spiral strengthening mechanism of "futures market rebound - stimulating downstream replenishment - mine de-stocking and price support" [6]. Chapter 3: Core Focus Points 3.1 Coking Coal Supply: Domestic Coal is Constrained by Policies, and the Operating Rate has a Theoretical Upper Limit - Since July, the national level has elevated the political significance of "anti-involution" in the coal industry to curb disorderly competition and stabilize coal prices. Shanxi Province, as the core production area of coking coal in China, accounts for nearly half of the output and is mainly composed of large state-owned mines, playing a strong exemplary and binding role in policy implementation. Shanxi proposed a production strategy of "increasing output to offset price decline" multiple times in the first half of the year, and there were also overproduction phenomena in some other provinces. From January to June, the output of above-scale industrial raw coal was 2.40 billion tons, a year-on-year increase of 5.4%, and the cumulative output was the highest in the same period of the past five years, overusing the production quota for the second half of the year to some extent. To achieve the policy goals of controlling production and stabilizing prices for the whole year, it is expected that major production areas (especially Shanxi, Inner Mongolia, and Shaanxi) will face strong overproduction inspection pressure before the end of the year, and the mine operating rate has a theoretical upper limit, which is expected to provide phased support for coking coal prices [11]. - The recently issued "Work Plan for Stable Growth of the Iron and Steel Industry (2025 - 2026)" by five departments clearly states that it is necessary to "stabilize the supply of raw fuels, increase the supply and price stability of raw fuels such as iron ore and coking coal, support the normal production of compliant mining enterprises, and avoid 'one-size-fits-all' industry rectification measures." This statement sends a clear policy signal that while ensuring safety production and compliant operation, more attention will be paid to the stability and continuity of the supply side to prevent sharp price fluctuations of raw materials caused by excessive supply tightening. Based on this orientation, the possibility of coking coal prices skyrocketing as in 2021 is relatively low. The current policy environment emphasizes "supply stability and price control" and "precise regulation," which is fundamentally different from the background of strong supply constraints and concentrated demand release in 2021. In addition, the strong overseas demand in 2021 provided additional support for prices, while although exports still show resilience this year, there is limited room for further growth on the basis of last year's high base, making it difficult to reproduce the combined effect of domestic and foreign demand [14]. 3.2 Coking Coal Imports: Pay Attention to the Impact of Imported Coal on the Balance Sheet - Currently, China's dependence on imported coking coal is approaching 20%, and the influence of imported coal on the domestic supply structure is continuously increasing. Since July, the price of Mongolian coal has rebounded by more than 300 yuan/ton from the low level, and the import profit has been rapidly repaired, significantly boosting the customs clearance enthusiasm of major ports such as Ganqimaodu. In terms of seaborne coal, as the domestic coking coal price rebounded, the import window was reopened. Recently, the coal shipments of major global coal-exporting countries have significantly increased, and it is expected that the arrivals of seaborne coking coal will remain at a high level in the fourth quarter. Against the background of the constraints on domestic coal mine operation by factors such as overproduction inspection, safety supervision, and environmental protection, the effective supplement of imported coal helps to relieve the supply pressure. On the other hand, the increasing import dependence also brings hidden concerns about the stability of coking coal supply. If domestic production continues to be restricted and there are disturbances in port transportation, policies, or geopolitics for imported coal (especially Mongolian coal with an increasing proportion), the coking coal supply-demand balance may be broken, significantly impacting prices. Therefore, coking coal imports will be one of the key variables affecting the coking coal market balance in the second half of the year [16]. 3.3 Demand: Positive Outlook at the End of the Year, Pay Attention to the Start Time of Winter Storage - During the Spring Festival, affected by factors such as coal mine holidays and logistics disruptions, the coking coal supply is temporarily tightened, and downstream enterprises usually conduct raw material reserves in advance to ensure production continuity, which is the "winter storage" process. The scale of winter storage is not only restricted by the actual supply but also affected by the downstream's expectation of the market in the coming year. When the expectation is optimistic, the replenishment is active; when it is pessimistic, the reserve is cautious. Looking back at the recent years' patterns, downstream coking plants usually start winter storage about 70 days before the Spring Festival, and the start time is strongly correlated with the rebound of the futures market. In most years, the winter storage behavior starts about one week after the rebound of the main contract and lasts until one week before the Spring Festival (except in 2024, when the market was overly pessimistic about the future, and the futures market did not show a seasonal rebound). The Spring Festival in 2025 is relatively late. Based on the historical winter storage rhythm, it is expected that this round of winter storage will start in mid-to-late November. Considering that 2026 is the starting year of the 15th Five-Year Plan and the policy expectation is positive, the market sentiment is expected to improve compared with last year. Therefore, although it is the traditional off-season, it is expected that the coking coal price will have strong bottom support and certain rebound potential at the end of this year [28]. Chapter 4: Valuation Feedback and Supply-Demand Outlook 4.1 Valuation Analysis - When the demand shrinks and causes steel mills to suffer losses, the profit pressure will be transmitted upstream along the industrial chain, usually manifested as steel mills reducing the purchase price of coke, thereby squeezing the coking profit. This feature was显著 in January - February and August - September 2024. In the first half of 2025, benefiting from the continuous decline of coking coal prices, the profits of steel mills and coking plants were generally stable, and there was no large-scale loss, especially the profit performance of steel mills was good. However, since July, as the expectation of the "Anti-Involution" policy has increased, the coking coal price has rebounded strongly, and the downstream profits have begun to be damaged. Coking plants have been the first to fall into losses, and the steel mill profits have also shrunk. Currently, most coking coal mines have turned losses into profits, and most steel products except for rebar can still maintain a profit of 50 - 100 yuan/ton, while coking plants have become the weakest link in the industrial chain, and some regions are approaching the break-even point or even suffering losses. Looking forward to the fourth quarter, if the coking coal price strengthens again due to supply contraction or the negative feedback of the black industrial chain occurs driven by weak demand, the downstream profits will be further pressured, ultimately leading to the reduction of blast furnace and coke oven production, which will in turn restrict the rebound space of coking coal prices [34]. 4.2 Supply-Demand Outlook - In the fourth quarter, under the constraints of the "Anti-Involution" and "Overproduction Inspection" policies, the operating rate of domestic coking coal mines has a theoretical upper limit, and the monthly average output may be lower than the same period in previous years. Meanwhile, the import profit of coking coal has been significantly repaired compared with the first half of the year, promoting the increase of coking coal imports, and the import proportion is expected to increase in the fourth quarter. Overall, although the imports effectively supplement the domestic supply, the coking coal market is unlikely to experience obvious oversupply under the limited domestic output. In addition, as the starting year of the 15th Five-Year Plan in 2026, the positive policy expectation boosts the market sentiment, and the downstream winter storage enthusiasm has increased. It is expected that this year's winter storage scale will be better than the same period last year, providing certain support for the coal price at the end of the year [37]. - There is a strong positive correlation between the short-term supply of coke and the immediate coking profit. As the post-festival coking coal replenishment demand temporarily declines and a round of coke price increase is implemented, the coking profit is expected to be slightly repaired, driving the short-term coke output to remain stable. Due to the high cost of starting and stopping coke ovens, coking plants usually maintain continuous production during the Spring Festival, so there is no significant seasonal characteristic in coke supply. It is expected that the output at the end of the year will be flexibly adjusted according to the coking profit. From the perspective of the capacity structure, the coke industry has been in a long-term overcapacity situation, resulting in its weak bargaining power in the industrial chain. The price mainly follows the fluctuation of the cost-side coking coal, showing obvious cost-driven characteristics. Although the winter storage demand for coking coal in the fourth quarter will support the coke price to a certain extent, limited by the bargaining power, the strength and sustainability of the coke price rebound are expected to be less than those of coking coal. It is recommended that industrial customers pay attention to the selling hedging opportunities of the near-month main contracts to avoid the risk of adverse price fluctuations [39]. - Recently, the rebound of coal prices has caused the steel mill profits to decline from the high level, and some products such as rebar have suffered losses, indicating that the pressure of profit contraction is being transmitted. However, most steel mills can still maintain a profitable state and have not reached the critical point of the negative feedback of the black industrial chain. It is expected that the hot metal production will remain resilient in the short term. However, as the traditional off-season for the black industry in the fourth quarter, the weakening demand will impact the steel supply-demand balance sheet, and the current relatively high hot metal production of over 2.4 million tons per day is difficult to maintain for a long time. In addition, there is also the pressure to meet the annual crude steel production reduction target in the fourth quarter, which may prompt steel mills to adjust their production plans in advance, helping to ease the steel inventory pressure. However, once the production adjustment of steel mills lags or the actual implementation of the crude steel production reduction policy is less than expected, the steel inventory pressure may further increase. Compared with the first half of the year, the absolute value of steel mill profits has significantly decreased, and the sensitivity of steel mills to losses has increased. If the profits are squeezed again, it is easy to trigger a negative feedback decline in the black industrial chain [50].