According to a research report by Guotai Haitong, China's coal imports in October 2025 totaled 41.737 million tons, a decline of 4.266 million tons (9.27% month-on-month) compared to September's 46.003 million tons, as per customs data. Coal prices continued rising in November, with 5,500 kcal thermal coal surpassing 800 yuan per ton. The core driver behind this upward trend is the fundamental reversal in the coal industry's supply-demand balance since May, a shift expected to sustain medium-term price momentum.

**Supply Side:** Coal production has contracted significantly due to regulatory measures against overcapacity. Following the National Energy Administration's intervention in July to curb excessive competition, nationwide output from July to September stood at 380 million, 390 million, and 410 million tons, respectively, marking consecutive year-on-year declines. For Q4, production is projected to dip slightly amid stricter oversight, with monthly output likely stabilizing at 390–400 million tons. Full-year output is estimated at ~4.75 billion tons, down 30–50 million tons year-on-year.

**Demand Side:** Electricity consumption growth rebounded to 4.6% cumulatively in August–September, a sharp recovery from Q1's 2.5%, with annual growth expected to exceed 5%. Despite the traditional off-season in September–October, demand outperformed expectations, with post-holiday consumption in East China hitting a five-year high for the period, while inventories remained lower than 2023–2024 levels.

**Thermal Coal:** Prices rose off-season. As of November 7, 2025, Q5500 coal at Huanghua Port traded at 818 yuan/ton, up 40 yuan (5.1%) weekly. Domestic supply remains steady, but imports continue shrinking, keeping total supply on a downward trajectory. Meanwhile, stronger-than-expected off-season demand may boost Q3 profitability.

**Coking Coal:** Spot and futures prices rebounded. The price of Shanxi-produced premium coking coal at Jingtang Port reached 1,800 yuan/ton on November 7, up 60 yuan (3.4%) weekly. Despite a marginal drop in daily pig iron output, demand resilience suggests a "non-off-season" trend.

**Market Snapshot:** 1) As of November 7, Jingtang Port coking coal rose 3.4% to 1,800 yuan/ton, while port-grade coke dipped 0.5% to 1,696 yuan/ton. Coking coal inventories at three ports totaled 2.978 million tons (+5.0%), and utilization rates at major coke producers edged up 0.08 ppt to 79.18%. 2) Australia’s Newcastle Q5500 FOB price climbed $3/ton (3.3%), making Chinese domestic coal 23 yuan/ton costlier than imports. Australian coking coal landed at $212/ton (+0.3% weekly), with Jingtang Port’s premium coking coal priced 65 yuan/ton above imports.

**Top Picks:** Dividend-focused plays like China Shenhua (601088, 01088), Shaanxi Coal (601225), and China Coal (601898, 01898), alongside Yanzhou Coal (600188) and Jinneng Holding Coal (601001).

**Risks:** Slower macroeconomic growth, surge in coal imports, or unexpected supply increases.