lu'an EED(SH:601699) Shenwan Hongyuan Securities·2025-10-20 01:31Core Insights - The report highlights the tightening safety regulations in the coal industry, which is expected to lead to a rebound in coal prices during the peak demand season, thus benefiting the performance of elastic stocks [3][4][10] - The analysis suggests that the coal supply is constrained due to stricter safety inspections, with a notable decrease in coal production in major regions like Shanxi [3][4] - The demand side shows a stable iron and steel production rate, which is expected to support coal prices, with projections indicating that thermal coal prices will stabilize between 700-750 RMB per ton [4][10] Supply Side Summary - Safety inspections in major coal-producing regions are becoming stricter, with the Ministry of Emergency Management announcing a comprehensive safety inspection plan for 2025 [3][4] - In August, Shanxi's raw coal production was 108 million tons, a year-on-year decrease of 6.7%, while national coal production fell by 3.2% [3][4] - September saw a continuous decline in coal imports for the seventh consecutive month, with imports at 46 million tons, down 3.3% year-on-year [3][4] Demand Side Summary - The "golden September and silver October" period maintains a high iron and steel production level, with daily output exceeding 2.4 million tons [4][10] - The inventory of coking coal has been decreasing since mid-June, with a significant drop in stocks, which is expected to drive up coking coal prices [4][10] - As winter approaches, the demand for thermal coal is expected to improve marginally, supporting price stability [4][10] Investment Analysis - Recommended stocks include Shanxi Coking Coal, Huaibei Mining, Lu'an Environmental Energy, and Yanzhou Coal Mining, which are seen as undervalued and likely to benefit from rising coal prices [4][10] - The report also suggests focusing on stable, high-dividend stocks like China Shenhua, Shaanxi Coal, and China Coal Energy, which are expected to perform well in the upcoming season [4][10] AI Capital Expenditure Insights - The report discusses the significant rise in AI capital expenditure in the U.S., which has become a crucial driver for the economy and capital markets [12][14] - AI-related investments have outpaced other sectors, with a notable increase in productivity attributed to AI technologies [12][14] - The report raises questions about whether the current AI investment boom is indicative of a bubble, contrasting it with the internet revolution of the 1990s [12][14][17] Recycled Aluminum Industry Insights - The recycled aluminum sector is poised for growth due to resource security needs and carbon neutrality goals, with projected production reaching 10.5 million tons by 2024 [20][22] - The report emphasizes the importance of developing a robust recycling system to reduce reliance on imported bauxite, as domestic reserves are dwindling [20][22] - The green premium for recycled aluminum is expected to increase as carbon pricing becomes more stringent, enhancing the strategic position of recycled aluminum in the market [20][22]