According to a research report, as of August 15, the spot price of Q5500 thermal coal at Huanghua Port reached 708 yuan per ton, rising 16 yuan per ton (2.3%) from the previous week. July data showed raw coal production of 380 million tons, down 40 million tons month-on-month, with the significant monthly decline primarily attributed to extreme rainfall in Inner Mongolia and Shaanxi regions that disrupted production and sales.

Looking at full-year production outlook, the second half is expected to see a slight month-on-month decline in national output due to "over-capacity inspection" impacts, with projected production of 2.35-2.4 billion tons in H2 and full-year production of 4.75-4.8 billion tons, remaining roughly flat year-on-year. Combined with declining certainty in imports, total supply shows a downward trend.

**Coal Prices Accelerate Above 700 Yuan Mark; SOE Reform Leader Shenhua Makes Major Acquisition as Industry "Anti-Involution" Continues**

On August 2, 2025, CHINA SHENHUA announced preliminary consideration of issuing shares and paying cash to acquire coal, pithead coal power, coal-to-oil, coal-to-gas, and coal chemical assets held by National Energy Group, along with raising supporting funds. This potentially represents significant progress in Shenhua's SOE reform, with continued expectations for various reform developments ahead.

On July 31, the National Energy Administration announced organizing key coal-producing provinces (regions) including Shanxi, Shaanxi, Inner Mongolia, and Xinjiang to conduct coal mine production inspections, urging enterprises to strictly organize production according to announced capacity and prohibiting over-capacity production. The industry's anti-involution trend deserves continued attention.

On August 13, the National Mine Safety Administration released the "Coal Mine Safety Regulations (2026 Edition)" at a press conference, further emphasizing safety production.

**Supply-Demand Analysis:**

1) Demand side: July thermal power generation increased 4.3% year-on-year, accelerating 3.2 percentage points from June, significantly improving the supply-demand balance.

2) Supply side: July raw coal production was 380 million tons, down 40 million tons month-on-month, with the decline mainly due to extreme rainfall in Inner Mongolia and Shaanxi disrupting production and sales. For full-year production outlook, H2 national output is expected to decline slightly month-on-month due to "over-capacity inspection" impacts, with projected production of 2.35-2.4 billion tons in H2 and 4.75-4.8 billion tons for the full year, roughly flat year-on-year. Combined with declining import certainty, total supply shows a downward trend.

Q2 2025 represents a fundamental turning point, with downside risks in the coal industry fully released. Against a backdrop where medium to long-term downside risks are controllable and clearly defined, the sector deserves greater allocation from long-term capital.

**Thermal Coal: Prices Launch Comprehensive Recovery**

As of August 15, Q5500 thermal coal spot prices at Huanghua Port reached 708 yuan per ton, up 16 yuan per ton (2.3%) from the previous week. On the supply side, domestic production remains stable while imports continue to decline, with total domestic plus import supply expected to remain basically stable for the full year. On the demand side, the inflection point in daily consumption appears to have emerged, potentially reversing the current supply-demand imbalance.

**Coking Coal: Both Spot and Futures Rebound; Hot Metal Production Expected to Remain Strong in Off-Season**

As of August 15, 2025, primary coking coal warehouse prices at Jingtang Port (Shanxi origin) remained at 1,610 yuan per ton (unchanged). Average daily hot metal production last week was 2.4 million tons, slightly down from the previous week. High hot metal production reflects that this year's price declines in coking coal and coke have significantly strengthened steel mill profitability compared to 2024. Combined with temporarily delayed tariffs boosting export rushes and major increases in steel billet exports circumventing anti-dumping measures, steel's off-season is likely to remain strong, with demand continuing to improve.

**Investment Recommendations:**

From a sector recommendation perspective, core dividend stocks remain recommended: CHINA SHENHUA (01088), Shaanxi Coal Industry, and China Coal Energy. Continued recommendations include Yankuang Energy and Jinneng Holding Coal Industry.

**Risk Warnings:**

Macroeconomic growth below expectations; large-scale imported coal influx; supply exceeding expectations.