Core Viewpoint - The coal industry is experiencing a decline in profitability due to falling coal prices, with 2025 Q2 marking the peak of pressure on the sector, although leading companies have reported better-than-expected performance, indicating that downside risks have been clarified [1][3]. Demand Side Summary - In 2025 H1, thermal power generation accounted for 64.8% of total electricity generation, remaining the primary source. Total electricity consumption reached 4.8 trillion kWh, a year-on-year increase of 3.7%. The total electricity generation for the year is projected at 4.5 trillion kWh, up 2.3% year-on-year. Thermal power generation in H1 was 2.94 trillion kWh, down 2.4% year-on-year. In Q2, total electricity consumption increased to 2.46 trillion kWh, reflecting a 6% year-on-year growth [2]. Supply Side Summary - In 2025 H1, raw coal production was 2.4 billion tons, a year-on-year increase of 5.4%. However, there was a decrease of 8 million tons compared to H2 2024, indicating a self-imposed reduction in production within the industry [2]. Price Summary - The average price of thermal coal (Q5500) at Huanghua Port in H1 was 685.9 RMB/ton, down 22.4% year-on-year. In Q1, the average price was 730.7 RMB/ton, a decrease of 19.86%, while in Q2, it dropped to 641.7 RMB/ton, down 25.3% year-on-year. The average price of coking coal at Jingtang Port was 1377.7 RMB/ton, down 38.5% year-on-year [2][3]. Financial Performance Summary - In 2025 H1, the coal sector (Shenwan) achieved a total revenue of 578.1 billion RMB, a year-on-year decline of 18.6%, and a net profit attributable to shareholders of 54.2 billion RMB, down 31.3%. In Q2, revenue was 293.5 billion RMB, a year-on-year decline of 16.5%, but a quarter-on-quarter increase of 3.1%. The net profit for Q2 was 24.2 billion RMB, down 37% year-on-year and 19.7% quarter-on-quarter. Despite an average industry profit decline of 30%, leading companies like China Shenhua, China Coal Energy, and Yanzhou Coal Mining outperformed the industry [3][4]. Cost Control Summary - The average selling price of self-produced coal for 13 A-share listed companies was 520 RMB/ton in H1, down 22.8% year-on-year. The cost per ton of coal was 345 RMB/ton, a decrease of 19.6% year-on-year. The gross profit per ton was 175 RMB/ton, down 28.6% year-on-year. Although coal prices continued to decline in Q2, the decline in gross profit margins was significantly narrower due to improved cost control measures by listed coal companies [4]. Cash Flow and Debt Summary - The coal sector's operating cash flow has significantly declined year-on-year. However, the sector's debt ratio has improved, decreasing from 49.2% in 2020 to 47.2% in H1 2025, benefiting from high industry prosperity and improved asset structures [4].