Core Viewpoint - The coal supply is expected to decline by 2026, with marginal improvements in thermal power and stabilization in non-electric sectors, leading to an overall improvement in the coal industry's outlook [1]. Industry Review - In 2025, coal prices are projected to decrease initially before recovering, with the coal sector expected to yield positive absolute returns for the year, although underperforming compared to the CSI 300 index [1]. Supply Situation - Domestic supply is anticipated to decline in 2026 due to production restrictions. In terms of provinces: Shanxi is expected to see a decrease in washed coal output, Inner Mongolia's production is at its peak, Shaanxi faces capacity exit pressures, and Xinjiang has potential for increased output [2]. - For imported coal, a decrease in imports is expected in 2025, with a year-on-year decline of 10.9% from January to October. A slight recovery is anticipated in 2026, with specific expectations for thermal and coking coal [2]. Demand Situation - Electricity demand is expected to see significant replacement by hydropower, with continued high growth in wind and solar energy. A reduction in thermal power is projected for 2025, but the elasticity coefficient for electricity demand is expected to recover in 2026, positively impacting thermal power demand [3]. - Non-electric demand is anticipated to maintain high levels in coal chemical industries, with improvements expected in the real estate and infrastructure sectors due to macroeconomic policies, leading to a further reduction in the decline rate in 2026 [3].