Investment Rating - The report maintains a positive investment outlook on the coal sector, recommending a focus on key players such as China Shenhua Energy, Shaanxi Coal and Chemical Industry, and China Coal Energy, while also keeping an eye on Yanzhou Coal Mining and Jinneng Holding [3][4]. Core Insights - The coal sector has reached a cyclical bottom in Q2 2025, with a reversal in supply-demand dynamics and sufficient release of downward risks [1]. - Coal prices have recently entered a rational decline after a period of increase, with future price stability dependent on winter demand [3][4]. - The report highlights the ongoing global energy challenges, particularly in the U.S., where electricity supply issues are exacerbated by rising demand driven by AI and extreme weather [3][4]. Summary by Sections Coal Price Tracking - As of December 12, 2025, the price of Q5500 coal at Huanghua Port is 763 RMB/ton, down 38 RMB/ton (-4.7%) from the previous week [5][6]. - The price of Q5000 coal at Huanghua Port is 662 RMB/ton, down 39 RMB/ton (-5.6%) [5][6]. - Inventory levels have increased across major ports, with Qinhuangdao's inventory rising to 7.3 million tons, up 480,000 tons (7.0%) [19][20]. Coking Coal Data Tracking - The price of main coking coal at Jingtang Port remains stable at 1650 RMB/ton, while other grades have seen slight declines [36]. - The average price of primary metallurgical coke at major domestic ports is 1686 RMB/ton, down 55 RMB/ton (-3.2%) [61]. Global Coal Market Dynamics - The offshore price of Newcastle Q5500 coal has decreased by 8 USD/ton (-8.8%), making domestic coal more cost-effective compared to imports [15][22]. - The report notes that Australian coking coal prices have increased by 3 USD/ton (1.4%), while costs for domestic coking coal remain lower than imported options [47]. Long-term Contracts and Pricing Trends - The annual long-term contract price for Q5500 coal at Northern Ports has increased to 694 RMB/ton, up 10 RMB/ton (1.5%) from the previous month [26]. - The comprehensive trading price for Q5500 coal in Qinhuangdao is 709 RMB/ton, down 6 RMB/ton (-0.8%) from the previous week [38].

Core Viewpoint - The coal sector has confirmed its cyclical bottom in Q2 2025, with a reversal in supply-demand dynamics and sufficient release of downside risks [1] Group 1: Coal Price Trends - Domestic coal prices have transitioned from an upward trend to a rational decline since November, with the focus on whether winter demand can exceed expectations [1] - As of December 5, 2025, the price of Q5500 coal at Huanghua Port was 801 RMB/ton, down 27 RMB/ton (-3.3%) from the previous week [2] - The adjustment of long-term coal contracts for 2026 aims to enhance the upper limit while ensuring compliance rates, which is beneficial for sector valuation [1] Group 2: Supply and Demand Dynamics - Domestic supply remains stable while imports continue to decrease, with total supply expected to maintain a steady decline throughout the year [2] - The demand side shows significant improvement during the off-season, with Q3 profitability expected to rebound [2] - As of December 5, 2025, the inventory of coking coal at three ports totaled 2.9 million tons, with a utilization rate of 79.18% for coking enterprises with over 200,000 tons [3] Group 3: Global Energy Landscape - The short-term position of coal in the global energy landscape remains strong, with attention drawn to issues such as electricity shortages in the U.S. [1] - The cost of domestic Q5500 coal is 35 RMB/ton lower than that of Australian imported coal, indicating competitive pricing [3] - The price of Australian coking coal increased by 7 USD/ton (3.1%) to 222 USD/ton, highlighting fluctuations in global coal pricing [3]

Investment Rating - The report maintains a positive investment outlook for the coal sector, recommending a focus on key players such as China Shenhua Energy, Shaanxi Coal and Chemical Industry, and China Coal Energy, while also keeping an eye on Yanzhou Coal Mining and Jinneng Holding [3]. Core Insights - The coal sector has reached a cyclical bottom in Q2 2025, with supply-demand dynamics showing signs of reversal and downward risks being fully released [1]. - Domestic coal prices have transitioned from an upward trend to a rational decline, with a focus on whether winter demand will exceed expectations [3]. - The introduction of a new long-term coal contract mechanism for 2026 is expected to support industry profitability at the bottom of the cycle [3]. - The report highlights the ongoing importance of coal in the global energy landscape, particularly in light of electricity supply issues in the U.S. [3]. Summary by Sections Coal Price Trends - As of December 5, 2025, the price of Q5500 coal at Huanghua Port is 801 RMB/ton, down 27 RMB/ton (-3.3%) from the previous week [6][12]. - The report notes a significant improvement in demand during the off-season, with Q3 profits expected to rebound [3]. Supply and Demand Analysis - Domestic coal supply remains stable, with imports continuing to decline; total supply is expected to maintain a steady decline throughout the year [3]. - The report indicates that if temperatures drop significantly in December and January, residential electricity demand may rise, potentially halting the decline in coal prices [3]. Long-term Contract Mechanism - The 2026 long-term coal contract mechanism has been clarified, allowing for more market-driven pricing adjustments, which is expected to enhance the industry's valuation [3]. Inventory and Market Dynamics - As of December 5, 2025, Qinhuangdao's coal inventory is 6.82 million tons, an increase of 820,000 tons (13.7%) from the previous week [24]. - The report notes that the average price of primary metallurgical coke at major domestic ports has decreased by 43 RMB/ton (-2.41%) [70]. Focus on Key Companies - The report emphasizes the importance of monitoring the performance of major coal companies, particularly in light of changing market conditions and pricing mechanisms [3].