Zheshang Securities Co.,Ltd. released a research report stating that Mongolian coal import volumes bottomed out and rebounded in the third quarter, with supply chain trading profits also achieving a bottom rebound alongside price recovery. Under the domestic "anti-involution" environment, molten iron production remains at high levels. If the coal industry continues to advance "checking overproduction," it is expected to maintain a tight balance in coking coal supply and demand, providing support for coking coal prices and enabling profit margin recovery for Mongolian coal trading enterprises. The firm recommends Jiayou International (603871.SH) and suggests monitoring E-COMMODITIES (01733).
Zheshang Securities Co.,Ltd.'s main viewpoints are as follows:
**Q3 Coking Coal Price Rebound, Trading Enterprise Profit Margins Recover**
Mongolian coal supply chain trading enterprises completed business volume and performance stress tests for the Mongolian coal segment in the first half of 2025. During 25H1, profit margins for Mongolian coal import trading enterprises continued to be squeezed or even experienced profit inversion. Jiayou International's coking coal supply chain trading gross profit was approximately 58 yuan per ton, which is expected to be mainly contributed by logistics services, while trading segment profits were essentially "squeezed dry." Supported by long-term trading agreements, Jiayou International completed 3.4 million tons of Mongolian coal sales in 25H1, growing over 15% year-on-year, with its share at Ganqimaodu port increasing to 20%. E-COMMODITIES completed 4.83 million tons of Mongolian coal sales through joint ventures in 25H1, down 1% year-on-year, with its share at Ganqimaodu port rising to 28%.
Third-quarter Mongolian coking coal prices rebounded, with coking coal supply chain trading gross profit per ton improving quarter-on-quarter. In 25Q3 (as of September 29), the average yard price of Mongolian Grade 5 raw coal at Ganqimaodu port was approximately 920 yuan per ton, up 134 yuan per ton quarter-on-quarter. Based on second-quarter coking coal price indices, Mysteel expects Mongolian coal third-quarter pithead long-term contract prices to decline over 10% quarter-on-quarter. The price spread between Mongolian coal terminal prices and long-term contract prices continued to widen in the third quarter, and the firm expects coking coal traders' supply chain trading gross profit per ton to improve significantly quarter-on-quarter in Q3.
**Coking Coal Supply-Demand Expected to Maintain Tight Balance, Supporting Prices**
Coking coal supply and demand are expected to maintain a tight balance, potentially providing support for coking coal prices. Under the domestic "anti-involution" background, on the demand side, domestic molten iron production remains at high levels. Daily average molten iron production among 247 sample steel mills nationwide was approximately 2.42 million tons during September 20-26, up 8% year-on-year. Coal inventory at Ganqimaodu port was approximately 2.88 million tons on September 25, down 1.12 million tons from the end of Q2. On the supply side, it depends on subsequent policies and implementation of "checking overproduction" in the domestic coal industry.
Looking ahead to the fourth quarter, coal and coke supply-demand are expected to maintain a tight balance, potentially supporting coking coal prices. However, considering that Mongolian coal pithead long-term contract prices will be adjusted based on third-quarter market price indices, trading segment price spreads are expected to decline somewhat quarter-on-quarter.
**Mongolian Coal Import Volumes Bottom Out and Rebound**
Third-quarter Mongolian coking coal import volumes turned positive year-on-year. Coal import volumes at Ganqimaodu port turned positive year-on-year in August, with September showing significant month-on-month increases in vehicle traffic at Ganqimaodu port. Monthly average quantities of Mongolian coking coal imported by China in Q1 and Q2 2025 were 3.62 million tons and 4.63 million tons respectively, down 20% and 13% year-on-year. As market sentiment warmed, Q3 (July-August) monthly average quantity of Mongolian coking coal imported by China was 5.5 million tons, up 13% year-on-year.
At Ganqimaodu port, cumulative coal imports from January to August 2025 were approximately 23.83 million tons, down 13% year-on-year, with August coal import volumes growing 1% year-on-year, achieving positive growth. Daily average vehicle traffic at Ganqimaodu port in September was approximately 1,293 vehicles per day, up 20% month-on-month and 85% year-on-year, with coal import volumes expected to show high year-on-year growth.
Short-haul freight rates accelerated upward at the end of September, with third-quarter averages slightly higher quarter-on-quarter. According to Mongolia Coal Network, short-haul freight rates were 80 yuan per ton on September 29, up 20 yuan per ton from the end of 25Q2. Third-quarter average short-haul freight rates were approximately 64 yuan per ton, up about 4 yuan per ton quarter-on-quarter from Q2.
**Investment Recommendations**
Third-quarter Mongolian coal import volumes bottomed out and rebounded, with supply chain trading profits also achieving a bottom rebound alongside price recovery. Under the domestic "anti-involution" environment, molten iron production remains at high levels. If the coal industry continues to advance "checking overproduction," it is expected to maintain a tight balance in coking coal supply-demand patterns, providing support for coking coal prices and enabling profit margin recovery for Mongolian coal trading enterprises. The firm recommends Jiayou International and suggests monitoring E-COMMODITIES.
**Risk Warnings**
Significant fluctuations in coking coal prices, substantial volatility in short-haul freight rates, and Mongolian coal import volumes falling short of expectations.
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