Core Viewpoint - The coal industry is currently in a new round of prosperity cycle that began in 2021, with decreasing volatility and a gradual return to reasonable price ranges [1] Group 1: Industry Trends - Since July 2025, domestic policies aimed at "anti-involution" and "overproduction checks" have limited supply elasticity, leading to stabilization and recovery of coal prices [1] - The coal mining industry accounts for approximately 2.3% of the Producer Price Index (PPI), and fluctuations in coal prices have a significant transmission effect on PPI, with expectations of a positive PPI for coal by the second quarter of 2026 at the latest [1] - In the fourth quarter, coal prices are expected to continue rising due to low social inventory levels, supply constraints from safety and environmental inspections, increased railway freight rates, and the upcoming peak winter demand season [1] Group 2: Investment Products - The coal ETF (515220) tracks the China Securities Coal Index (399998), which selects listed companies focused on coal mining, processing, and related equipment manufacturing, ensuring high industry purity through a significant share of main business [1] - The index components cover core segments of the coal industry chain, exhibiting high industry concentration and cyclical characteristics, closely following coal price movements to reflect the overall performance of related listed companies [1]

Investment Rating - The coal industry is rated as "Positive" [2] Core Viewpoints - The coal industry is currently in a new round of prosperity cycle that started in 2021, with price fluctuations gradually returning to a reasonable range [3][11] - The impact of coal prices on the Producer Price Index (PPI) is significant, with expectations that coal PPI will turn positive by the second quarter of 2026 [3][41] - The supply-demand situation in the coal market is expected to remain balanced, with regional disparities, driven by policies that restrict supply and increasing mining costs [3][12] Summary by Sections 1. Coal Supply and Demand Review and Outlook - The coal market has experienced a significant price increase since 2021 due to global economic recovery and structural mismatches in supply and demand [11] - From 2023 to June 2025, coal prices have declined to recent lows due to a phase of supply-demand loosening, but have stabilized since July 2025 due to policy constraints [3][11] - The demand for coal is expected to remain stable, supported by electricity generation and industrial needs, despite a peak in overall coal demand [16][19] 2. Correlation Analysis between Coal and PPI - The coal mining sector has a weight of approximately 2.3% in the PPI index, and coal price fluctuations have a strong transmission effect on PPI [38][39] - The coal industry has been a significant contributor to PPI changes, especially during periods of PPI recovery [41][44] 3. Historical Opportunities in Coal Sector during PPI Recovery - Historical data shows that the coal sector has experienced significant price increases during previous PPI recovery phases, particularly in 2016 and 2021 [3][4] - The coal sector's performance is often led by small to mid-cap companies with high growth potential during the early stages of PPI recovery [4] 4. Investment Recommendations - The report suggests focusing on companies that benefit from rising coal prices, such as Shanxi Coking Coal, Lu'an Environmental Energy, and Shenhua Shares [4] - Companies with stable performance and dividend attributes, such as Shaanxi Coal and China Coal Energy, are also recommended for investment [4]