Supply: Marginal Increment Significantly Reduced - Domestic coal production from January to May increased by approximately 130 million tons year-on-year, while imports decreased by about 16 million tons, indicating an overall increase in supply [3][7] - The domestic raw coal production reached 1.99 billion tons from January to May, reflecting a year-on-year increase of 6%. However, the growth rate is expected to narrow in the second half of the year, with an estimated total production of around 4.85 billion tons for 2025, representing a year-on-year increase of 9 million tons (2%) [3][9] - The decrease in imports is attributed to weak demand, high inventory levels, and diminishing price advantages of imported coal. For the first five months of 2025, coal imports totaled 19 million tons, a year-on-year decrease of approximately 16 million tons (8%) [3][64] Demand: Short-term Improvement Expected, Medium-term Resilience Visible - National commodity coal consumption from January to May reached 2.05 billion tons, showing a slight year-on-year increase of 0.1 billion tons (0.5%). The demand is expected to improve in the second half of the year as the consumption peak season approaches [3][4] - In the thermal power sector, the demand is under pressure due to slowing electricity growth and competition from renewable energy. However, the demand for thermal power is expected to rebound in the second half of the year [3][4] - Non-electric demand, particularly from the chemical sector, remains strong, with significant year-on-year growth in coal-to-PVC, coal-to-ethylene glycol, and coal-to-methanol production [3][4] Inventory: High Port Inventory Declining, De-stocking Remains Focus - Port inventories are currently at high levels but are expected to decline as demand improves in the peak consumption season. The focus will remain on de-stocking [4] Price: Thermal Coal Prices at Bottom, Coking Coal Prices Showing Stages of Rebound - The average market price of Qinhuangdao Q5500 thermal coal fell by approximately 199 yuan/ton in the first half of 2025, a year-on-year decrease of 23%. However, there is potential for price rebound as supply-demand dynamics improve [3][57] Investment Recommendations: High Dividend Value Still Exists, Stage Game Elasticity - The report suggests that despite the downward pressure on coal prices, there is still potential for a rebound in the second half of the year. The resilience of coal demand is viewed positively in the medium term [3][4] - Key investment targets include stable-performing coal companies such as China Shenhua, China Coal Energy, and Shaanxi Coal and Chemical Industry, as well as elastic stocks like Electric Power Investment and Jinko Coal Industry [3][4]

Core Insights - The coal industry is experiencing significant supply contraction due to falling prices, with over 53.64% of coal companies reporting losses as of April 2025, the highest level since 2018 [1][20][22] - Electricity demand is expected to rebound with the onset of summer, as average daily power generation showed a year-on-year increase of 3.32% in mid-May 2025, despite a 14.37% decline in hydroelectric power generation [1][59] - A strong expectation for a rebound in thermal coal prices is anticipated as demand increases with rising temperatures, potentially peaking during the July-August consumption high [2][59] Supply and Demand Analysis - The coal supply has contracted significantly, with April 2025 coal production down 11.64% month-on-month, primarily due to reductions in output from regions like Xinjiang and Inner Mongolia [20][59] - The decline in coal imports, which fell by 16.4% year-on-year in April 2025, is expected to support the domestic market [24][26] - The overall supply reduction is greater than the demand decrease, indicating that coal prices are currently in an oversold state [20][21] Investment Recommendations - Recommended stocks include industry leaders with stable performance such as China Shenhua, Shaanxi Coal, and China Coal Energy, as well as growth-oriented companies like Jinkong Coal and Shanmei International [3] - The report highlights the defensive value of leading companies with low debt and high cash flow, which are expected to benefit from market confidence and potential asset injections [2][3] Price Outlook - Thermal coal prices are expected to rebound due to seasonal demand increases and supply tightening, with a peak anticipated during the summer consumption high [2][59] - Coking coal prices are projected to stabilize, supported by a bottoming out of thermal coal prices and potential increases in export demand due to easing trade tensions [2][60]