Group 1 - The coal industry is experiencing a cost increase, with coal prices falling below the full cost, indicating that the industry may have reached its bottom [4][10][33] - The full cost of high-quality thermal coal from the Shanxi, Shaanxi, and Inner Mongolia regions to Qinhuangdao port is estimated to be 630 RMB/ton in 2024, which is an increase from previous years [4][33] - The report highlights that the average production cost of self-produced coal for major companies like China Shenhua, Shaanxi Coal, and China Coal Energy is around 200 RMB/ton, with China Shenhua having the lowest cost at 179 RMB/ton [21][20][10] Group 2 - The report indicates that high-cost production capacity is beginning to shrink, and supply-demand rebalancing is the core logic for the bottoming of coal prices [4][5] - Domestic low coal prices are suppressing imports, with a notable decrease in imported coal volumes since 2025, which is expected to continue [4][5] - Seasonal demand improvements for electricity generation are noted, with a decrease in port inventories since mid-May, suggesting a tightening domestic supply [4][5] Group 3 - The report recommends a strategic bullish outlook on the coal sector, particularly favoring companies with high long-term contract ratios and flexible pricing mechanisms, such as China Shenhua and China Coal Energy [5][4] - The report emphasizes that while coal prices may remain low for a period, the expectation is that supply will naturally clear over time, leading to a potential rebound in prices [5][4] - The analysis of transportation costs indicates that the average transportation cost from the pit to the Qinhuangdao port is approximately 200-250 RMB/ton, which is a critical factor in determining overall coal pricing [24][25][32]

Investment Rating - The investment rating for the coal mining industry is "Positive" [2] Core Viewpoints - The current phase is seen as the beginning of a new upward cycle in the coal economy, with a resonance between fundamentals and policies, making it an opportune time to invest in the coal sector [11][12] - The coal market is expected to stabilize and gradually recover in price, supported by seasonal demand increases and a solid bottoming out of coal prices [11][12] - The underlying investment logic of coal capacity shortages remains unchanged, with a short-term supply-demand balance and a long-term gap still present [11][12] Summary by Sections Coal Price Tracking - As of June 1, the market price for Qinhuangdao port thermal coal (Q5500) is 613 CNY/ton, unchanged from the previous week [28] - The price for main coking coal at Jingtang port is 1290 CNY/ton, down 30 CNY/ton from the previous week [30] - International thermal coal prices show slight fluctuations, with Newcastle coal at 67.2 USD/ton, up 0.2 USD/ton week-on-week [28] Supply and Demand Tracking - The capacity utilization rate for sample thermal coal mines is 96.1%, down 1 percentage point week-on-week [11][12] - Daily coal consumption in inland provinces decreased by 35.7 thousand tons/day (-11.29%) [11][12] - The high furnace operating rate is reported at 83.87%, an increase of 0.18 percentage points [11][12] Inventory Situation - Coal inventories in coastal provinces increased by 12.7 thousand tons, with daily consumption down by 16.5 thousand tons/day [11][12] - The inventory of thermal coal at Qinhuangdao port is reported at 675 thousand tons, down 7.5% week-on-week [6] Investment Recommendations - Focus on stable and high-performing companies such as China Shenhua, Shaanxi Coal, and China Coal Energy [12] - Attention should also be given to companies with significant price elasticity like Yanzhou Coal and Electric Power Energy [12] - The coal sector is characterized by high performance, cash flow, and dividends, making it a compelling investment opportunity [12]

Investment Rating - The investment rating for the coal mining industry is "Positive" [2] Core Viewpoints - The current phase is seen as the beginning of a new upward cycle for the coal economy, with a resonance between fundamentals and policies, making it an opportune time to invest in the coal sector [11][12] - The coal price is expected to stabilize at a new level, supported by a slowdown in coal production growth, particularly in high-cost regions like Xinjiang, and a decrease in coal imports [11][12] - The coal sector is characterized by high profitability, cash flow, return on equity (ROE) between 10-20%, and dividend yields exceeding 5%, indicating strong core asset attributes [11][12] Summary by Sections 1. Coal Price Trends - As of May 24, the market price for Qinhuangdao port thermal coal (Q5500) is 613 RMB/ton, down 5 RMB/ton week-on-week [3][30] - The price for coking coal at Jing Tang port is 1320 RMB/ton, down 30 RMB/ton week-on-week [3][32] - International thermal coal prices show a mixed trend, with Newcastle thermal coal at 68.0 USD/ton, down 1.0 USD/ton week-on-week [3][30] 2. Supply and Demand Dynamics - The utilization rate of thermal coal mines increased to 97.1%, while coking coal mine utilization decreased to 86.3% [11][12] - Daily coal consumption in coastal provinces rose by 7.10 thousand tons/day (+3.93%) and in inland provinces by 6.00 thousand tons/day (+1.93%) [11][12] - The April coal production in China was 390 million tons, reflecting a 5 million ton decrease from March, indicating a contraction in supply [11][12] 3. Investment Strategy - The report emphasizes the importance of investing in high-quality coal companies with stable operations and strong performance, such as China Shenhua, Shaanxi Coal, and others [12][13] - The coal sector is expected to maintain high performance and cash flow, with a favorable outlook for the next 3-5 years due to ongoing supply constraints [12][13] 4. Market Performance - The coal sector saw a 0.98% increase this week, outperforming the broader market, which saw a 0.18% decline [15][18] - The thermal coal segment rose by 1.62%, while the coking coal segment experienced a slight decline [15][18]

Summary of Conference Call on Coal Industry Industry Overview - The coal industry is currently experiencing a significant downturn in prices, particularly at the Qinhuangdao port, where prices dropped from 640 RMB to 623 RMB, a decline of over 2.5% in a week [2] - The overall production in April showed a slight decrease, particularly in regions with a high proportion of private enterprises, such as Ordos and Yulin [1][3] Key Points and Arguments - **Price Dynamics**: The rapid decline in port coal prices is primarily driven by increased trading activity rather than production improvements. The increase in import coal prices remains significantly higher than domestic prices, indicating a resilient overseas market [1][5][12] - **Inventory Levels**: Qinhuangdao port's inventory rose slightly to 760,000 tons, while total northern inventory decreased to 3,250,000 tons. Power plant inventories remained stable, reflecting a high overall inventory level at major ports [6] - **Stock Performance**: Despite falling coal prices, coal stocks such as Shenhua and Yancoal saw price increases of nearly 5% and 2%, respectively. The low allocation of coal in public fund equity holdings suggests a potential for upward movement in stock prices [7][8] - **Production Trends**: Domestic coal production is expected to remain low in Q2, with state-owned enterprises reducing output and private companies cutting back due to low prices. The average daily production in Ordos for the first five months is below 2023 levels [9][10] - **Demand Recovery**: There is a marginal improvement in demand as electricity consumption begins to rise, with total electricity usage gradually increasing despite a decline in hydropower generation [13] Additional Important Insights - **Import Coal Trends**: April saw a month-on-month decline in import coal volume, with an expected total import of 450 million tons for the year, down from 540 million tons in 2022. This reduction may offset domestic production increases, leading to a negative growth scenario in supply [11][12] - **Market Sentiment**: The recent price drop is attributed more to trading factors rather than a significant imbalance in supply and demand. Market confidence is expected to gradually recover in the coming months [9] - **Investment Opportunities**: The coal sector is currently underweighted in institutional portfolios, presenting a potential opportunity for short-term trading. Recommended stocks include China Coal Energy, China Shenhua, Shaanxi Coal, and Jinko Coal, which are seen as having good investment value in the current market environment [17] Future Price Expectations - The price level of 620-630 RMB/ton is considered a bottom, with a potential for upward movement as demand increases during the peak season. If prices rise by 100 RMB, the overall average price for the year may need to be adjusted [15][16]

Investment Rating - The investment rating for the coal mining industry is "Positive" [2] Core Viewpoints - The current phase is seen as the beginning of a new upward cycle in the coal economy, with a resonance between fundamentals and policies, making it an opportune time to accumulate coal sector assets [11][12] - The underlying investment logic of coal supply shortages remains unchanged, with a short-term balance in supply and demand but a medium to long-term gap still anticipated [11][12] - The coal price is expected to stabilize and rise, with historical patterns suggesting a potential turning point in consumption by late May as the summer electricity demand season approaches [3][11] Summary by Sections Coal Price Tracking - As of May 16, the market price for Qinhuangdao port thermal coal (Q5500) is 618 CNY/ton, down 17 CNY/ton week-on-week [29] - The international thermal coal FOB price for Newcastle (NEWC5500) is 69.3 USD/ton, down 0.3 USD/ton week-on-week [29] - The price for coking coal at Jing Tang port is 1350 CNY/ton, down 30 CNY/ton week-on-week [31] Supply and Demand Tracking - The capacity utilization rate for sample thermal coal mines is 96.1%, down 0.3 percentage points week-on-week [3][47] - The daily coal consumption in inland provinces decreased by 1.20 million tons/day (-0.39%), while coastal provinces saw an increase of 7.10 million tons/day (+4.09%) [3][48] - The chemical industry’s coal consumption decreased by 22.31 thousand tons/day (-3.11%) [11] Inventory Situation - As of May 15, coal inventory in inland provinces increased by 337 thousand tons, while coastal provinces saw a decrease of 26 thousand tons [48] - The available days of coal in inland provinces increased by 0.20 days, while it decreased by 0.80 days in coastal provinces [48] Company Performance - The coal sector has shown resilience, with a 1.65% increase in the coal sector index, outperforming the broader market [14] - Key companies to focus on include China Shenhua, Shaanxi Coal and Chemical Industry, and others with stable operations and strong performance [12][13]

Investment Rating - The investment rating for the coal mining industry is "Positive" [2] Core Viewpoints - The current phase is seen as the beginning of a new upward cycle in the coal economy, with a resonance between fundamentals and policies, making it an opportune time to accumulate coal sector investments [12][13] - The coal price is expected to remain weak in May due to seasonal demand fluctuations, but there is a bottom support for prices, and a gradual recovery is anticipated as the peak season approaches [3][12] - The underlying investment logic of coal supply shortages remains unchanged, with a balanced short-term supply and demand but a medium to long-term gap still present [12][13] Summary by Sections Coal Price Tracking - As of May 10, the market price for Qinhuangdao port thermal coal (Q5500) is 635 CNY/ton, down 17 CNY/ton week-on-week [30] - The international thermal coal price for Newcastle (NEWC5500) is 69.8 USD/ton, down 0.5 USD/ton week-on-week [30] - The price for coking coal at Jing Tang port is 1380 CNY/ton, down 20 CNY/ton week-on-week [32] Supply and Demand Tracking - The capacity utilization rate for thermal coal mines is 96.4%, an increase of 2.5 percentage points week-on-week [47] - The daily coal consumption in inland provinces has increased by 33.80 thousand tons/day, a rise of 12.17% week-on-week [12] - The daily coal consumption in coastal provinces has decreased by 12.40 thousand tons/day, a decline of 6.67% week-on-week [12] Inventory Situation - As of May 9, coal inventory at Qinhuangdao port has increased to 753 thousand tons, up 8.0% week-on-week [5] - The inventory of coking coal at production sites has risen to 390.43 thousand tons, an increase of 8.9% week-on-week [5] Company Performance - The coal sector has shown a 1.47% increase this week, underperforming the broader market [15] - Key companies to focus on include China Shenhua, Shaanxi Coal, and China Coal Energy, which are noted for stable operations and solid performance [13]

Investment Rating - The investment rating for the coal industry is "Positive" [2] Core Viewpoints - The current phase is seen as the beginning of a new upward cycle for the coal economy, with a resonance between fundamentals and policies, making it an opportune time to accumulate coal sector investments [11][12] - The underlying investment logic of coal capacity shortages remains unchanged, with a short-term supply-demand balance and a long-term gap still present [11][12] - The trend of coal prices establishing a bottom and moving to a new platform is expected to continue, with high profitability, cash flow, return on equity (ROE) of 10-20%, and dividend yields over 5% for quality coal companies [11][12] - The coal sector is considered undervalued, with overall valuation expected to improve, supported by high premiums in the primary mining rights market and a price-to-book (PB) ratio around 1 for most companies [11][12] Summary by Sections Coal Price Trends - As of May 4, the market price for Qinhuangdao port thermal coal (Q5500) is 652 CNY/ton, down 3 CNY/ton week-on-week [3][30] - The price for Shanxi-produced coking coal at Jingtang port remains stable at 1400 CNY/ton [32] Supply and Demand Tracking - The capacity utilization rate for sample thermal coal mines is 93.9%, down 0.3 percentage points week-on-week, while the utilization rate for coking coal mines is 89.74%, up 1.36 percentage points [4][47] - Daily coal consumption in inland provinces decreased by 18.40 thousand tons/day (-6.21%), while consumption in coastal provinces increased by 9.30 thousand tons/day (+5.27%) [4][48] Inventory and Transportation - As of April 29, coal inventory in inland provinces increased by 2.59% week-on-week, while coastal provinces saw a 0.77% increase [48] - The daily coal consumption in coastal provinces is showing an upward trend, indicating a potential increase in demand as the summer peak approaches [4][48] Investment Recommendations - Focus on stable and robust performers such as China Shenhua, Shaanxi Coal, and China Coal Energy, as well as companies with high elasticity like Yanzhou Coal and China Power Investment [12]

Investment Rating - The investment rating for the coal industry is "Positive" [2] Core Viewpoints - The current phase is seen as the beginning of a new upward cycle for the coal economy, with a resonance between fundamentals and policies, making it an opportune time to accumulate coal sector investments [11][12] - The underlying investment logic of coal capacity shortages remains unchanged, with a short-term supply-demand balance and a long-term gap still present [11] - The trend of coal prices establishing a bottom and moving to a new platform is expected to continue, with high profitability, cash flow, return on equity (ROE) of 10-20%, and dividend yields over 5% for quality coal companies [11][12] - The coal sector is considered undervalued, with overall valuation expected to improve, supported by high premiums in the primary mining rights market and a price-to-book (PB) ratio around 1 for most companies [11][12] Summary by Sections Coal Price Trends - As of May 4, the market price for Qinhuangdao port thermal coal (Q5500) is 652 CNY/ton, down 3 CNY/ton week-on-week [3][30] - The price for Shanxi-produced coking coal at Jingtang port remains stable at 1400 CNY/ton [32] Supply and Demand Tracking - The capacity utilization rate for sample thermal coal mines is 93.9%, down 0.3 percentage points week-on-week, while the utilization rate for coking coal mines is 89.74%, up 1.36 percentage points [4][47] - Daily coal consumption in inland provinces decreased by 18.40 thousand tons/day (-6.21%), while consumption in coastal provinces increased by 9.30 thousand tons/day (+5.27%) [4][48] Inventory and Transportation - As of April 29, coal inventory in inland provinces increased by 2.59% week-on-week, while coastal provinces saw a 0.77% increase [48] - The daily coal consumption in coastal provinces is showing an upward trend, indicating a potential increase in demand as the summer peak approaches [4][48] Investment Recommendations - Focus on stable and robust performers such as China Shenhua, Shaanxi Coal, and China Coal Energy, as well as companies with high elasticity like Yanzhou Coal and China Power Investment [12]

Investment Rating - The investment rating for the coal mining industry is "Positive" [2] Core Viewpoints - The current phase is seen as the beginning of a new upward cycle in the coal economy, with a resonance between fundamentals and policies, making it an opportune time to accumulate coal sector investments [10][11] - The coal price is believed to have reached a bottom, with expectations of a rebound in demand for replenishment in mid to late May [10][11] - The underlying investment logic of coal capacity shortages remains unchanged, with a short-term supply-demand balance and a long-term gap still present [10][11] Summary by Sections Coal Price Tracking - As of April 26, the market price for Qinhuangdao port thermal coal (Q5500) is 657 CNY/ton, down 8 CNY/ton week-on-week [22][27] - The international thermal coal FOB price for Newcastle (NEWC5500) is 70.6 USD/ton, down 0.5 USD/ton week-on-week [22][27] - The price for coking coal at Jing Tang port remains stable at 1400 CNY/ton [29] Supply and Demand Tracking - The capacity utilization rate for sample thermal coal mines is 94.2%, down 1.7 percentage points week-on-week, while the utilization rate for coking coal mines is 88.38%, up 0.68 percentage points [10][44] - Daily coal consumption in inland provinces decreased by 10.70 thousand tons/day (-3.5%), while consumption in coastal provinces increased by 4.40 thousand tons/day (+2.48%) [10][45] Inventory Situation - As of April 24, coal inventory in inland provinces increased by 186.10 thousand tons, while inventory in coastal provinces decreased by 24.50 thousand tons [45] - The available days of coal in inland provinces increased by 1.60 days, while it decreased by 0.50 days in coastal provinces [45] Investment Recommendations - Focus on stable and robust companies such as China Shenhua, Shaanxi Coal, and China Coal Energy, as well as those with significant rebound potential like Yanzhou Coal and Datong Coal [11]