Guosen Securities released a research report stating that the coal industry has cleared negative factors from Q2 earnings, with the golden September and silver October non-electricity demand peak season approaching. The supply side still faces contraction expectations, coal prices have confirmed their bottom, and a rebound is anticipated. The firm recommends focusing on: ①Growth targets: Power Investment Energy (002128.SZ), Xinji Energy (601918.SH); ②Medium to long-term stable targets: CHINA SHENHUA (601088.SH, 01088), CHINA COAL (601898.SH, 01898), Shaanxi Coal Industry (601225.SH); ③Elastic targets: Jinneng Holding Shanxi Coal Industry (601001.SH), Huaibei Mining (600985.SH); ④Coal machinery leader Tiandi Science & Technology (600582.SH), among others.

**Coal Industry 2025 Q2 Performance Summary: Performance Bottoming Out, Improvement Expected**

In Q2, national raw coal production remained at high levels, while commodity coal consumption during the off-season declined 11.8% quarter-over-quarter, with supply-demand clearly loose. Combined with high social inventory levels, coal prices continued declining. Except for the coke sector which benefited from falling coking coal prices showing improved performance, coal enterprises generally faced pressure and hit bottom. By sector, benefiting from the dual-track pricing system, thermal coal companies saw relatively smaller declines in selling prices and smaller profit drops; the anthracite sector experienced the largest decline in profitability, mainly due to lower long-term contract coal ratios and greater volatility in coal selling prices; coking coal selling price declines were also relatively small, mainly because coal prices had fallen to bottom levels with Q2 being a slow bottoming-out phase; although the coal chemical sector also benefited from falling coal prices, product-side selling prices declined more significantly, leading to reduced profitability.

At the company level, leading coal enterprises such as CHINA SHENHUA and CHINA COAL maintained relatively stable performance due to higher long-term contract coal ratios and effective cost reduction, highlighting their core competitiveness. In the second half, with demand improvement and coal price rebounds, coal enterprise performance improvement is expected.

**Supply: July Coal Production Decreased, Imports Slightly Recovered, Supply Contraction Expectations Remain**

Due to rainfall and over-production inspections, July peak season production declined significantly; the impact may continue into August; current supply tightening expectations persist. Domestic supply decreased by 40 million tons month-over-month in July, also down 9 million tons year-over-year; by production region, all four major production areas saw output decreases, with Xinjiang showing the largest month-over-month decline; as of August 24, August sample coal mine cumulative production remained slightly down both month-over-month and year-over-year.

In July, domestic trade coal prices rose, imported coal regained price advantages, and import volumes recovered month-over-month, though still at relatively low levels historically. July imports of coal and lignite totaled 35.61 million tons, down 22.9% year-over-year but up 7.8% month-over-month. By region, Indonesian coal showed significant increases, while Russian coal imports declined.

**Demand: Peak Season Thermal Power Demand Significantly Improved, Golden September Silver October Non-Electricity Demand Ready to Take Over**

July entered the demand peak season with thermal power generation accelerating month-over-month, chemical coal maintaining strong demand, and pig iron production relatively high, though cement demand remained weak. Overall, July commodity coal demand improved significantly. Looking ahead to September, although the summer electricity coal consumption peak season ends, the golden September silver October non-electricity consumption peak season approaches, combined with subsequent winter storage demand, coal demand is expected to remain supported.

In July, national commodity coal consumption reached 450 million tons, up 1.9% year-over-year and 12.5% month-over-month. By downstream sector, July peak season demand improved significantly, with total social electricity consumption breaking through one trillion kWh for the first time, up 8.6% year-over-year, with growth rates 3.2 percentage points higher than June. During demand peak season with wind power off-season and hydropower declining year-over-year, July thermal power increased 4.3% year-over-year, with growth rates 3.2 percentage points higher than June, showing significant improvement.

Chemical coal demand remained at high levels. As of August 29, 2025 coal-to-PVC, coal-to-ethylene glycol, and coal-to-methanol increased 2.8%, 12.4%, and 14.4% year-over-year respectively. From January to August, synthetic ammonia cumulative production increased 9.8% year-over-year, with August production up 14.3% year-over-year.

Steel mills maintained decent profitability with high production enthusiasm, weekly average daily pig iron production staying above 2.4 million tons; steel export volumes increased 25.7% year-over-year. Downstream demand remained weak, with July cement production down 5.6% year-over-year, continuing to decline.

**Inventory: Inventory Declining Across All Segments, Port Inventory Below Last Year's Levels**

Inventory declined across all segments, with port inventory below last year's levels. Low port inventory may provide support for coal prices; attention should be paid to future inventory recovery. Major port inventory fell significantly, 6.3% below last year's levels; coal enterprise sales improved, with July domestic six major regional state-owned key coal mine inventory down 8.63% month-over-month but up 15.04% year-over-year; power plant inventory slightly higher than the same period.

Pig iron production maintained high levels with good downstream demand, coking coal inventory significantly higher than last year's levels, with port inventory fluctuating downward.

**Prices: Supply Contraction Expectations & Golden September Silver October Non-Coal Demand Support, Coal Price Rebound Expected**

For thermal coal, under the influence of peak season high demand, over-production inspections, and frequent heavy rainfall, coal prices rebounded beyond expectations by nearly 100 yuan/ton. Currently, as daily consumption declines, coal prices have retreated from highs. Considering the support from golden September silver October non-electricity demand peak season, the downside from this round is expected to be limited.

For coking coal, with peak season approaching, attention should be paid to domestic over-production inspections, Mongolian coal customs clearance, and downstream production recovery after major events. Coal prices are expected to remain volatile.

**Risk Warnings:** Overseas economic slowdown; large-scale capacity releases; new energy substitution; safety accident impacts.