Core Viewpoint - The report from HSBC indicates that China's coal spot prices continue to decline, with the price of Qinhuangdao 5500 kcal thermal coal dropping to approximately 610 RMB/ton, marking a five-year low [1] Group 1: Price Trends - Despite expectations of price stabilization due to seasonal consumption recovery and pre-summer stockpiling, HSBC believes that seasonal stockpiling is unlikely to lead to a substantial rebound in coal prices [1] - The risk remains that coal prices could fall below 600 RMB/ton in the coming months due to historically high domestic production and elevated port inventories [1] - Currently, coal prices have decreased by 30% compared to the same period last year, a decline that exceeds market expectations [1] Group 2: Demand Analysis - Since March, the average daily coal consumption of major power plants has rebounded to levels comparable to last year and the past three-year average, with a reported daily coal consumption of 772.9 thousand tons as of May 26, reflecting a year-on-year increase of 2.2% [4] - HSBC does not consider demand to be the primary driver behind the decline in coal prices this year, anticipating that coal demand in China will remain similar to last year's levels due to the peak electricity demand period and the water power generation season [4] Group 3: Supply and Inventory Issues - The imbalance in supply is identified as the main factor dragging down coal prices, with domestic coal production reaching historical highs, showing a year-on-year increase of 6.6% from January to April, primarily driven by production recovery in Shanxi and capacity expansion in Xinjiang [6] - Although production decreased by 12% month-on-month last month, coal companies are expected to continue increasing production to maximize profits, leading to supply growth outpacing demand growth for the remainder of the year [6] - Port inventory remains a significant concern, with current levels still 21% higher than the same period last year, posing a major obstacle to any potential price rebound [9]