Investment Rating - The report maintains an "Overweight" rating for the coal industry [1] Core Insights - The ongoing negotiations regarding Indonesia's coal production quotas for 2026 have led some mines to suspend spot coal exports, which is expected to impact China's monthly average thermal coal consumption and imports by 0.5% and 4.2% respectively [2][3] - The export quota dispute is identified as the primary cause of the current fluctuations in Indonesia's coal supply, with the government planning to reduce the export quota from 790 million tons in 2025 to around 600 million tons in 2026 [2] - The report suggests that the impact of spot export restrictions on China's coal supply and demand is limited, as long-term contracts account for 90% of coal imports from Indonesia [3] - If the export restrictions extend to long-term contracts, the potential impact on China's monthly thermal coal consumption could reach 4.9% and imports could drop by 42% [4][8] - China's domestic coal production capacity is deemed sufficient to counteract supply disruptions, with the ability to cover approximately 36 million tons of coal supply, equivalent to 2.1 months of imports from Indonesia [5] Summary by Sections - **Export Quota Negotiations**: Indonesian mines are pausing spot coal exports due to disputes over production quotas, which may lead to a more flexible and self-driven export limitation by companies [2] - **Impact on China**: The suspension of spot exports is projected to have a minor effect on China's coal consumption and imports, with a maximum potential impact of 170 million tons per month if spot exports are completely halted [3] - **Domestic Response**: China's coal production capacity is capable of adjusting to maintain supply levels, mitigating the potential impact of Indonesian export restrictions [5] - **Price Implications**: If the export restrictions persist, it could lead to an increase in coal prices, benefiting companies with significant exposure to spot coal [8]