Investment 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]

Industry Rating - The industry investment rating is "Outperform" [2] Core Insights - The report provides a comprehensive analysis of the coal industry from a global energy perspective, highlighting the interactions between China's coal balance and the ex-China balance, the historical linkage between oil and coal, and the impact of energy transitions in Europe and Asia [5][10][25][36] Summary by Sections Global Coal Balance and China's Interaction - The coal balances of China and ex-China have been interacting significantly post the Russia-Ukraine conflict, with ex-China balance dominating from 2021 to 2022 due to the European energy crisis and rising natural gas prices, leading to a rebound in European coal imports [10] - From 2023 to 2024, China's coal balance regained dominance, with coal imports increasing from 290 million tons in 2022 to 540 million tons in 2024, absorbing excess supply from ex-China [10] Global Energy Structure and Coal Market Overview - In 2023, coal, oil, and natural gas accounted for 26%, 32%, and 23% of global primary energy consumption, respectively, while renewable energy made up 8% [13] - The trend indicates a decarbonization process, with coal's share declining in developed regions but increasing in other countries [13] Consumer Countries - Europe - Europe's coal and natural gas shares in the power generation mix are expected to decline, with coal generation projected to drop to 260 TWh in 2024, a 2.2% decrease year-on-year [25] - The report estimates that European coal imports will continue to decrease, with a forecast of 10.774 million tons in 2024, down 3,179 million tons from the previous year [29] Consumer Countries - India - India's total electricity generation is expected to grow, with coal maintaining a dominant share of approximately 74% in the energy mix [39] - Coal production in India is projected to reach 103.904 million tons in 2024, with a growth rate of 7% [43] Consumer Countries - Southeast Asia - Southeast Asia is identified as a major driver of coal demand, with coal accounting for nearly 80% of the region's energy needs since 2010 [52] - The report anticipates a 1.7 million ton increase in coal imports in Southeast Asia by 2025, driven by recovering demand [53] Producer Countries - Indonesia - Indonesia's coal production is projected to reach 786.456 million tons in 2025, with a significant portion allocated for export [67] - The report highlights that Indonesia's domestic coal demand is primarily driven by metallurgical coal, which may impact the export of thermal coal [69] Producer Countries - Australia - Australia's coal production is expected to remain stable, with a projected output of 558.474 million tons in 2025 [80] - The report notes that Australia is a key player in global coal expansion, with 62% of new projects aimed at export [81] Producer Countries - Russia - Russia's coal exports are anticipated to decrease by approximately 12 million tons in 2025 due to sanctions and competitive disadvantages [83] - The report indicates that Russia's coal production is heavily influenced by domestic consumption and export demand dynamics [88] Producer Countries - United States - The U.S. coal production is projected to decline to 496.784 million tons in 2025, reflecting a decrease in domestic demand [104] - The report suggests that U.S. coal exports may remain stable, particularly for metallurgical coal, despite overall production declines [107]