According to Zhitong Finance APP, Guotai Haitong Securities Co., Ltd. released a research report stating that Q2 2025 has clearly become the price bottom of this coal price downward cycle, and with significant price recovery in July, industry profits are expected to rebound. The firm believes that Q2 2025 marks the fundamental turning point, with the coal industry's downside risks fully released. Given the controlled and clearly defined long-term downside risks, the sector deserves more long-term capital allocation.
Coal prices have peaked and fallen back, while the industry's "anti-involutionary" trend continues to develop. The Urumqi Bureau plans to raise the discount rates for direct-through projects outside Xinjiang on September 1st, and Guotai Haitong Securities Co., Ltd. expects this will further restrict coal transportation from Xinjiang. The Shaanxi Development and Reform Commission issued a notice on optimizing coal production supply to promote stable coal market operations, emphasizing stable coal supply and pricing. Guotai Haitong Securities Co., Ltd. views this as reflecting the second-wave fermentation of anti-involutionary policies. As these policies gradually tighten, coal prices are expected to stabilize at the bottom, ensuring stable and orderly coal supply and demand.
Industry interim reports have been completed, showing that H1 2025 industry-wide performance decline was mainly due to falling coal prices, while leading companies demonstrated strong cost control capabilities with sequential cost reductions. Guotai Haitong Securities Co., Ltd. believes Q2 2025 has clearly become the price bottom of this coal price downward cycle, and expects industry profits to recover with significant July price improvements.
1) Demand side: July's total social electricity consumption grew 8.6% year-over-year, thermal power generation increased 4.3% year-over-year, accelerating 3.2 percentage points from June, significantly improving the supply-demand balance.
2) Supply side: July raw coal production reached 380 million tons, declining 40 million tons month-over-month. Guotai Haitong Securities Co., Ltd. attributes this significant sequential decline to production and sales disruptions caused by extreme rainfall in Inner Mongolia and Shaanxi regions.
Looking at full-year production, H2 output is expected to decline slightly month-over-month due to "over-capacity inspections," with estimated production of 2.35-2.4 billion tons, bringing full-year output to 4.75-4.8 billion tons, roughly flat year-over-year. Combined with declining import certainty, total supply shows a downward trend.
Guotai Haitong Securities Co., Ltd. believes Q2 2025 represents the fundamental turning point, with coal industry downside risks fully released. Given controlled and clearly defined long-term downside risks, the sector warrants more long-term capital allocation.
Thermal Coal: Prices peaked and declined. As of September 5th, Q5500 warehouse prices at northern Huanghua Port stood at 691 yuan/ton, down 11 yuan/ton (-1.6%) from the previous week. On the supply side, domestic production remains stable while imports continue shrinking: full-year total domestic plus import supply is expected to maintain stable decline; on the demand side, Guotai Haitong Securities Co., Ltd. expects significant demand improvement from June-August, with Q3 profits likely to rebound.
Coking Coal: Both spot and futures rebounded, with molten iron production expected to remain strong during the off-season. As of September 5th, Jingtang Port's main coking coal warehouse price (Shanxi origin) was 1,550 yuan/ton, down 80 yuan/ton (-4.9%) from the previous week. Last week's average daily molten iron production was 2.4 million tons, slightly down sequentially. Guotai Haitong Securities Co., Ltd. believes the steel sector's off-season remains robust, with demand continuing to improve.
Industry Review: 1) As of September 5, 2025, Jingtang Port's main coking coal warehouse price was 1,550 yuan/ton (-4.9%), port first-grade coke at 1,704 yuan/ton (-0.4%), combined coking coal inventory at three ports totaled 2.69 million tons (0.1%), and operating rates for coking enterprises above 2 million tons capacity reached 79.18% (0.08PCT).
2) Australia's Newcastle Port Q5500 FOB price fell 1 USD/ton (-0.7%), with northern port (Q5500) seaborne coal costs 31 yuan/ton lower than Australian import coal costs; Australian coking coal CIF price was 197 USD/ton, down 3 USD/ton (-1.4%) from the previous week, with Jingtang Port's Shanxi-origin main coking coal costs 69 yuan/ton lower than Australian imported hard coking coal.