GTHT: Coal Prices Peak Short-Term, Await Winter Demand

Coal prices continued rising this week, surpassing RMB 830/ton, but the short-term surge may be nearing its end. In October, large-scale industrial coal output reached 410 million tons, down 2.3% YoY but flat MoM. The core driver of the recent rally stems from a fundamental supply-demand reversal since May, which supports a sustained mid-term uptrend. The sector’s cyclical bottom was confirmed in Q2 2025, with risks largely priced in.

**Supply**: Coal output contraction leads industries amid anti-overcapacity measures. After regulators intervened in July, national production from July–October totaled 380M/390M/410M/410M tons, posting consecutive YoY declines. Q4 output is expected to dip slightly due to stricter oversight, with November–December likely maintaining 410M tons monthly. Full-year output may stabilize at ~4.79B tons, matching 2024 levels.

**Demand**: Power consumption growth rebounded to 4.6% YoY (Jan–Sep) from Q1’s 2.5%, with annual growth projected above 5%. Despite the traditional off-season (Sep–Oct), demand exceeded expectations—post-holiday daily consumption in East China hit a 5-year high, while inventories tightened versus 2023–24.

**Thermal Coal**: Prices rose off-season. As of Nov 14, 2025, Huanghua Port’s Q5500 spot price hit RMB 837/ton (+2.3% WoW). Supply remains stable domestically but weakens in imports, while resilient demand may lift Q3 earnings.

**Coking Coal**: Futures and spot prices rebounded. Jingtang Port’s hard coking coal rose 1.7% WoW to RMB 1,830/ton, with port inventories down 1.9%. Australian Q5500 FOB gained 5.8% WoW, while coking coal CFR dipped 0.6% to $211/ton.

**Top Picks**: Dividend plays like CHINA SHENHUA (601088.SH, 01088), Shaanxi Coal (601225.SH), and China Coal Energy (601898.SH); also Yanzhou Coal (600188.SH) and Jinneng Holding Coal (601001.SH).

**Risks**: Slower macro growth; surging imports; supply surprises.