Report Industry Investment Rating - Not provided Core Viewpoint - In the short term, the coal market will maintain a relatively strong pattern due to demand support and sentiment transmission. In the long term, the supply remains in a loose pattern, and attention should be paid to non - power coal consumption and restocking [2] Summary by Related Catalogs Market Analysis - **Futures and Spot Prices**: As of October 17, the Yulin 5800 - kcal index was 613.0 yuan/ton, up 46.0 yuan/ton week - on - week; the Ordos 5500 - kcal index was 555.0 yuan/ton, up 51.0 yuan/ton week - on - week; the Datong 5500 - kcal index was 625.0 yuan/ton, up 50.0 yuan/ton week - on - week. The CCI Import 4700 index was 72.5 dollars/ton, up 2.8 dollars/ton week - on - week, and the CCI Import 3800 index was 56.3 dollars/ton, up 2.3 dollars/ton week - on - week [1][5] - **Port Inventory**: As of October 17, the total inventory of northern ports was 2183.0 million tons, a decrease of 142 million tons from last week [1] - **Power Plant Inventory**: As of October 17, the coal inventory of six coastal power plants was 1388.4 million tons, a decrease of 34.7 million tons from last week; the average available days were 17 days, the same as last week; the daily coal consumption was 83.5 million tons, a decrease of 0.8 million tons from last week [1] - **Freight Index**: As of October 17, the Ocean Coal Freight Index (OCFI) was 1046.24 points, up 143.23 points. The Baltic Dry Index (BDI) was 2069.00 points, up 23.00 points, a 1.12% increase [1] Supply - After the holiday, mines resumed production, but safety inspections became stricter, affecting the rapid release of production [8] Consumption - The terminal demand of downstream metallurgy and chemical industries continued to be released. The purchase prices of large groups increased, and the transportation demand of platform traders increased. There were queues of coal - hauling trucks at some mines, and the coal mine inventory decreased [2][10] Inventory - Due to good downstream demand, the coal mine inventory decreased [13]

Core Insights - Domestic thermal coal prices increased month-on-month, while international offshore prices for thermal coal from Australia, South Africa, and Europe decreased [2][4] - Coal inventory at three major ports decreased both month-on-month and year-on-year, indicating a tightening supply [3][5] - Daily coal consumption by the six major power generation groups declined month-on-month and year-on-year, reflecting reduced demand [3][5] Inventory and Consumption - As of September 29, total coal inventory at Qinhuangdao, Huanghua, and Caofeidian ports was 12.188 million tons, down 2.137 million tons month-on-month, a decrease of 17.32%, and down 2.368 million tons year-on-year, a decrease of 18.84% [3] - Daily average coal consumption by the six major power generation groups was 839,800 tons, down 105,400 tons month-on-month, a decrease of 11.15%, and down 24,800 tons year-on-year, a decrease of 2.87% [3] Price Movements - As of September 30, the price of Shanxi mixed 5500 thermal coal at Qinhuangdao was 701.00 RMB/ton, an increase of 9 RMB/ton month-on-month, a rise of 1.30% [2] - International thermal coal prices showed a downward trend: Newcastle port price was $103.30/ton, down $6.40/ton month-on-month, a decrease of 5.83%; South Africa's Richards Bay price was $82.20/ton, down $6.60/ton, a decrease of 7.43%; and European DES ARA price was $91.30/ton, down $8.00/ton, a decrease of 8.06% [2] Production Trends - In August, coal production from key state-owned mines in Shaanxi, Shanxi, and Inner Mongolia showed mixed results: Shaanxi produced 21.119 million tons, up 360,000 tons year-on-year, an increase of 0.67%, and up 467,000 tons month-on-month, an increase of 2.26%; Shanxi produced 46.328 million tons, down 707,400 tons year-on-year, a decrease of 13.25%, but up 986,000 tons month-on-month, an increase of 2.17%; Inner Mongolia produced 18.214 million tons, down 33,000 tons year-on-year, a decrease of 0.18%, but up 378,000 tons month-on-month, an increase of 2.12% [2]

Core Insights - The coal inventory in China is at a historically high level as of June 2025, with key coal enterprises holding 102 million tons, which is stable compared to the previous month and represents a year-on-year increase of 51.9% [1] - National thermal power plants have a coal stock of 21 million tons, reflecting a month-on-month increase of 5.9% and a year-on-year increase of 3.8% [1] - Coal inventory at the Bohai Rim ports stands at 27.65 million tons, showing a month-on-month decrease of 8.5% but a year-on-year increase of 2.5% [1] Inventory Trends - In late July, the coal inventory of key monitored coal enterprises decreased by 8.7% compared to the end of the previous month [1] - The coal stock at thermal power plants increased by 2.3% compared to the end of the previous month [1] - The coal inventory at Bohai Rim ports decreased by 5.8% compared to the end of the previous month [1]

Report Summary 1. Report Industry Investment Rating No relevant content provided. 2. Core View The report concludes that as of late June, coal production in major producing areas has declined, but overall supply remains relatively abundant. Power plant inventory depletion is slow, and with the impact of imported coal, power plants only maintain necessary purchases. Port inventory is continuously decreasing. As temperatures rise nationwide, power plant daily consumption will continue to increase seasonally, and there will be necessary purchases later. The port FOB price is temporarily stable, and coal prices in the pithead area are expected to remain stable [5]. 3. Summary by Directory Market Review - On June 23, port market price - holding sentiment persisted, and trader quotes continued to rise. For example, the 5500 - kcal market quote was 615 - 620 yuan/ton, and different regions had their own price ranges for various coal types [3]. Important News - In May 2025, China imported 2865.3 million tons of thermal coal (non - coking coal), a year - on - year decrease of 16.06% and a month - on - month decrease of 0.96%. From January to May 2025, the cumulative import of thermal coal was 14500.2 million tons, a year - on - year decrease of 7.9%. In May 2025, China imported 738.7 million tons of coking coal, a year - on - year decrease of 23.7% and a month - on - month decrease of 16.9% [4]. Logical Analysis - **Supply**: Pithead prices have temporarily stopped falling and stabilized. Some coal mines have shut down, and the coal mine operating rates in major coal - producing areas in Shanxi, Shaanxi, and Inner Mongolia have declined. As of June 22, the coal mine operating rate in Ordos was 66%, and in Yulin it was 44%. The daily coal output in Ordos and Yulin was around 3.7 million tons, but the overall domestic supply was still abundant. The domestic and imported markets showed different trends, with the domestic coal price basically stable and imported coal prices falling [5]. - **Demand**: Power plant loads were generally low, and inventories were at high levels. Power plants mainly relied on long - term contract coal. Some coastal power plants had nearly completed their August imported coal purchases. Non - power sectors such as cement had low operating rates, while the operating rates of coal - to - methanol and coal - to - urea were high, and the demand for chemical coal was fair, providing stable support for coal prices in the pithead area [5]. - **Inventory**: Due to shipping losses, port inflows decreased. The daily average freight volume of the Datong - Qinhuangdao line dropped to 1 million tons, and the number of approved carriages by the Hohhot Railway Bureau dropped to around 30. Outflows were low, and port inventory continued to decrease. As of June 23, the inventory at Bohai Rim ports was around 26.7 million tons, a reduction of 5 million tons from the high level but still relatively high. Coastal power plant daily consumption increased seasonally, but inventory depletion was slow, and inland power plant inventories remained high [5].

Investment Rating - The industry investment rating is "Positive" [2] Core Viewpoints - The report indicates a decline in thermal coal prices, with significant increases in coal inventory at three major ports [5][30] - The average daily coal consumption of the six major power generation groups has decreased month-on-month, while year-on-year growth is observed [39] - Domestic shipping costs have decreased month-on-month, while international shipping costs show mixed trends [49] Summary by Sections 1. Thermal Coal Prices - As of May 9, the price of Shanxi mixed thermal coal at Qinhuangdao is 635 CNY/ton, down 4.80% from the previous month [3][14] - International thermal coal prices have also decreased, with Newcastle coal at 94 USD/ton, down 3.09% month-on-month [17] 2. Production - In March, the monthly coal production from key state-owned mines in Shaanxi, Shanxi, and Inner Mongolia increased month-on-month [23] - The total coal production in March was 44,058.20 million tons, a year-on-year increase of 10.33% [20] 3. Imports - The monthly import volume of coal and lignite in April was 37.83 million tons, a decrease of 2.34% month-on-month [26] - The monthly import of thermal coal in March was 9.18 million tons, an increase of 4.85% month-on-month but a decrease of 30.58% year-on-year [26] 4. Inventory - As of May 9, the total coal inventory at the three major ports reached 15.76 million tons, an increase of 12.73% month-on-month [30] - The average available days of coal inventory for the six major power generation groups increased by 5.11% month-on-month [38] 5. Downstream Demand - The average daily coal consumption of the six major power generation groups was 759,400 tons, a decrease of 0.26% month-on-month [39] - National electricity generation in March increased by 4.06% year-on-year, while thermal power generation decreased by 1.96% [41][48] 6. Freight Rates - Domestic shipping costs from Qinhuangdao to Shanghai decreased by 13.92% month-on-month [49] - International shipping costs from Newcastle to China decreased by 3.79% month-on-month [49]

Investment Rating - The report maintains an "Accumulate" rating for the coal mining industry [7] Core Viewpoints - High inventory pressure is evident, leading to a further decline in coal prices. As of May 9, coal inventory at the Bohai Rim ports reached 33.051 million tons, up 6.50% week-on-week and 42.15% year-on-year, marking the highest level for the same period [2][5] - The recent week saw a downward trend in port coal prices, with the Qinhuangdao port's thermal coal price averaging 638 RMB/ton, down 14 RMB/ton (-2.18%) compared to the previous week, indicating that downstream pressure is greater than upstream [2][3] - The report suggests that short-term stabilization of coal prices may require a recovery in demand, recommending a defensive approach towards the sector and favoring companies with high long-term contract ratios and stable profits, such as China Shenhua and China Coal Energy [5] Summary by Sections Coal Price Trends - The Qinhuangdao port's thermal coal price (5500 kcal) averaged 638 RMB/ton, down 14 RMB/ton (-2.18%) for the week of May 5-9 [3] - The average price of thermal mixed coal at the Yulin pit in Shaanxi (5800 kcal) was 510 RMB/ton, down 6 RMB/ton (-1.21%) [3] Inventory Levels - As of May 9, coal inventory at Qinhuangdao port was 7.53 million tons, up 8.03% week-on-week and 56.22% year-on-year, also at a record high for the same period [5] - The Bohai Rim port coal inventory reached 33.051 million tons, reflecting a 6.50% increase week-on-week and a 42.15% increase year-on-year [5] Production and Utilization Rates - The operating rate of 110 sample coal washing plants was 62.4%, down 0.5 percentage points week-on-week and 1.7 percentage points year-on-year, remaining at a five-year low [4] - The capacity utilization rate of 247 blast furnaces was 92.09%, up 0.09 percentage points week-on-week and 4.42 percentage points year-on-year, with a daily average pig iron output of 2.457 million tons, up 0.1% week-on-week and 4.7% year-on-year [4] Key Company Financials - China Shenhua (601088.SH) is projected to have an EPS of 2.50 RMB in 2025, with a PE ratio of 16, and is rated "Accumulate" [6] - China Coal Energy (601898.SH) is expected to have an EPS of 1.31 RMB in 2025, with a PE ratio of 8, also rated "Accumulate" [6]

Summary of Conference Call Industry Overview - The conference call primarily discusses the coal industry, focusing on pricing trends, inventory levels, and market dynamics in both domestic and international contexts [1][2][3][4][5][6]. Key Points and Arguments 1. **Price Trends**: - As of the last week, port prices for coal have dropped to 688, with some prices falling below 686, indicating a continued downward trend [1]. - The price at the pit has seen a slight increase of 2% to 3% after significant previous declines, but overall, prices are still in a phase of gradual bottoming out without a clear upward trend [1][6]. 2. **Inventory Levels**: - High inventory levels at ports are contributing to the downward pressure on prices, with total inventory at northern ports reported at 3,111 million tons, down slightly from 3,158 million tons but still at historically high levels [5]. - Power plants are also experiencing high inventory levels, leading to a lack of purchasing activity [5][6]. 3. **Market Dynamics**: - There is a notable price inversion between pit and port prices, with pit prices around 740 while port prices remain below 690, leading to reduced shipping activity to ports [2]. - Internationally, Australian and Indonesian coal prices are stable or increasing, with Indonesian prices rising nearly 1% to 83.7 USD, but still showing a significant price inversion compared to domestic prices [3]. 4. **Policy and Regulation**: - There are rumors regarding potential restrictions on coal imports, but the likelihood of significant policy changes is considered low due to the ongoing focus on energy security [12][13]. - The discussion includes the impact of stricter inspections on imported coal, which may delay procurement but is not expected to significantly alter overall import volumes [15][16]. 5. **Future Outlook**: - The coal market is expected to remain weak in the short term, with prices likely to continue fluctuating downwards, although there is potential for a bottoming out phase to begin around late April to early May [22][24]. - Long-term investment in coal stocks, particularly in dividend-paying companies like China Shenhua and Northeast Energy, is recommended as a defensive strategy [23][24]. Other Important but Overlooked Content - The call highlights the cautious sentiment among power plants regarding future coal purchases, with expectations that long-term contracts will not be signed aggressively due to current market conditions [17][18]. - The potential for a price rebound is acknowledged, but it is suggested that any significant upward movement in coal prices will take time and may not occur until the market stabilizes [24]. - The focus on maintaining price stability through inventory management strategies by major coal companies is emphasized, indicating a strategic approach to mitigate price volatility [21][22].