Investment Rating - The report suggests an increase in allocation to coal-related stocks due to the rebound in coal prices and the overall health of coal companies' balance sheets [5][6]. Core Views - The price of thermal coal is approaching 600 RMB, leading to negative feedback on the supply side. The report notes a continued decrease in coal imports as of May, with global coal shipment volumes to China at 4.85 million tons, a year-on-year decrease of 23.7% [5]. - The coal industry is undergoing a transformation driven by energy security and policy changes, indicating that coal may still be in a golden era. The supply of coal is expected to remain rigid due to strict capacity controls and increasing extraction difficulties [5]. - The report emphasizes that while macroeconomic conditions may temporarily affect coal demand, the rigid supply and rising costs will support coal prices, which are expected to maintain a volatile pattern [5]. Summary by Sections Thermal Coal - As of July 4, 2025, the Qinhuangdao 5500K thermal coal price is 623 RMB/ton, with a week-on-week increase of 0.5% and a year-on-year decrease of 25.8% [3][30]. - The average daily production of thermal coal from 462 sample mines is 5.661 million tons, reflecting a week-on-week increase of 1.2% [45]. - The inventory index for thermal coal is at 194.3, showing a year-on-year decline [3][49]. Coking Coal - The price of coking coal at the Jing Tang Port remains at 1230 RMB/ton, unchanged week-on-week, with a year-on-year decrease of 41.7% [4][83]. - The average daily production of coking coal from 523 sample mines is 739,000 tons, with a week-on-week increase of 0.15% [82]. - The inventory of coking coal at independent coking plants is 716,500 tons, reflecting a week-on-week increase of 5.57% [82]. Investment Opportunities - The report identifies several investment opportunities in the coal sector, including companies with strong resource endowments and stable operating performance, such as China Shenhua, Shaanxi Coal, and China Coal Energy [6]. - Companies benefiting from coal-electricity integration and those with production growth potential are also highlighted as attractive investment targets [6].

Group 1 - The current global energy landscape is undergoing a significant transformation, with coal potentially remaining in a golden era due to policy directions and energy security demands [1] - Coal supply is tight due to strict capacity control under dual carbon policies, increased safety and environmental regulations, and regional supply differentiation, particularly as eastern resources diminish and mining in Shanxi stabilizes [1] - The increasing difficulty of coal mining and heightened safety standards may lead to a new normal of underproduction, highlighting the scarcity of resources [1] Group 2 - Coal's status as a primary energy source is unlikely to change in the short term, with strong demand resilience driven by continuous growth in electricity generation [1] - The coal price is expected to maintain a fluctuating pattern, with coal companies showing strong profit sustainability and improved cash flow following balance sheet optimization [1] - The coal ETF (code: 515220) is the only coal ETF in the market, tracking the CSI Coal Index (code: 399998), which reflects the overall performance of listed companies involved in coal mining, processing, and sales [1]

Investment Rating - The report maintains a "stronger than market" rating for the coal industry [6] Core Viewpoints - The price of thermal coal is approaching 600 RMB, indicating supply-side negative feedback. In May, coal imports continued to decrease, and domestic production saw a month-on-month decline. With daily consumption improving, destocking is expected to commence, leading to a rebound in coal prices. The report suggests increasing allocation to coal stocks that benefit from price elasticity, with long-term core stocks showing high dividend yields and significant value [5][6] - The coal industry is currently in a golden era due to the energy transformation, with strict capacity control under carbon neutrality policies and increasing safety and environmental regulations limiting overproduction. Supply is regionally differentiated, with production difficulties increasing in eastern regions and a concentration of domestic capacity in the west, raising supply costs. The position of coal as a primary energy source is unlikely to change in the short term, and despite weak macroeconomic conditions affecting demand, rigid supply and rising costs support coal price stability [5][6] Summary by Sections Thermal Coal - As of June 13, 2025, the Qinhuangdao 5500K thermal coal price is 609 RMB/ton, unchanged week-on-week, with slight increases in Shanxi and Shaanxi production prices. The operating rate of coal mines in Shanxi, Shaanxi, and Inner Mongolia is 80.7%, down 0.8 percentage points week-on-week. Daily consumption at power plants has slightly increased, while coal inventories have decreased [3][4][5] - The long-term contract price for Qinhuangdao thermal coal (Q5500) is 669 RMB/ton, down 6.0 RMB/ton month-on-month and down 31.0% year-on-year [24] - The report highlights that the operating rates of coal mines in the three provinces (Shanxi, Shaanxi, Inner Mongolia) have slightly decreased, with a total production of 62,296 million tons year-to-date, an increase of 5.6% year-on-year [36] Coking Coal - As of June 13, 2025, the price of main coking coal at Jingtang Port is 1230 RMB/ton, down 40 RMB/ton week-on-week, with prices in Shanxi, Henan, and Anhui remaining stable. The operating rate of large coking plants is 79.3%, down 1.4 percentage points week-on-week [4][68] - The report notes that the average available days of coking coal in domestic independent coking plants is 9.7 days, down 1.02% [68]

Core Viewpoint - The coal market is currently stabilizing, with a potential recovery in coal prices expected as supply increases and demand decreases, particularly in the context of China Shenhua's (601088.SH) increased dividend payout for 2024 [1] Coal Market Overview - As of March 21, 2025, the price of Qinhuangdao 5500K thermal coal is 671 RMB/ton, down 10 RMB/ton week-on-week, indicating a significant drop in production prices [2] - The operating rate of coal mines in Shanxi, Shaanxi, and Inner Mongolia is 82.6%, up 0.7 percentage points week-on-week [2] - The methanol and urea operating rates are slightly down but remain historically high, with methanol at 85.3% (down 0.8 percentage points week-on-week) and urea at 87.1% (down 0.7 percentage points week-on-week) [2] Coking Coal Insights - As of March 21, the price of premium coking coal at Jingtang Port is 1380 RMB/ton, unchanged week-on-week, while prices in Shanxi have dropped significantly [3] - The operating rate of coking plants with capacities over 2 million tons is 76.4%, up 2.7 percentage points week-on-week [3] - The current energy transition and strict policies on capacity control are expected to keep coal in a favorable position, despite challenges in supply and production [3] Profitability and Cash Flow - Despite macroeconomic pressures and increased competition from renewable energy, coal prices are expected to remain high, supporting sustained profitability for coal companies [4] Investment Opportunities - Companies with strong resource endowments and stable performance, such as China Shenhua (601088.SH), Shaanxi Coal and Chemical Industry (601225.SH), and China Coal Energy (601898.SH), are recommended for investment due to their high dividend ratios [5] - Companies benefiting from coal-electricity integration, like Xinji Energy (601918.SH) and Shaanxi Energy (001286.SZ), are also highlighted for their ability to mitigate cyclical fluctuations [5] - Firms with production growth potential and sensitivity to coal price changes, such as Shanxi Coal International (600546.SH) and Yanzhou Coal Mining (600188.SH), are suggested for investment [5] - Companies with globally scarce resources, like Huabei Mining (600985.SH) and Pingmei Shenma Energy (601666.SH), are also recommended due to their long-term supply constraints [5]