--- title: "Debon Securities: The China Coal Transportation and Marketing Association advocates for the introduction of measures, and profits from high-quality production capacity are expected to improve" type: "News" locale: "en" url: "https://longbridge.com/en/news/230174777.md" description: "Debon Securities released a research report stating that the China Coal Transportation and Marketing Association advocates for strict enforcement of thermal coal contracts to reduce the risk of irrational fluctuations in coal prices and alleviate market concerns about falling coal prices. The proposal outlines five measures aimed at promoting the healthy development of the coal industry. It is expected that the fundamentals of the coal sector will improve in 2024, and the dividend value of coal stocks will become more prominent" datetime: "2025-03-01T08:56:03.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/230174777.md) - [en](https://longbridge.com/en/news/230174777.md) - [zh-HK](https://longbridge.com/zh-HK/news/230174777.md) generator: "portal-rs" --- # Debon Securities: The China Coal Transportation and Marketing Association advocates for the introduction of measures, and profits from high-quality production capacity are expected to improve According to the Zhitong Finance APP, Debang Securities released a research report stating that the Politburo meeting in September 2024 will open a new chapter in economic support. Combined with the continuous weakening of supply over the past two years, the fundamentals of the coal sector have been reconfirmed at the bottom, and market concerns about EPS are expected to gradually dissipate. With the State-owned Assets Supervision and Administration Commission fully promoting the market value management of state-owned enterprises in 2024, the China Securities Regulatory Commission encouraging listed companies to provide high-quality dividends, and the central bank guiding banks to provide loan support for stock repurchases and increases for listed companies and major shareholders, the dividend value of coal stocks is expected to be further highlighted. **Event:** On February 8, 2025, the China Coal Industry Association and the China Coal Transportation and Marketing Association issued a proposal. In response to the rapid decline in coal market prices and the continuous decline in industry efficiency, the proposal puts forward initiatives for the development of the coal industry from five dimensions: "strictly implement electricity coal contracts," "promote coal production control," "promote all raw coal to be washed," "control the import of inferior coal," and "strengthen industry self-discipline." ## **Debang Securities' main viewpoints are as follows:** **Strictly implement long-term contracts for electricity coal to reduce irrational fluctuations in coal prices** Previously, the market was affected by strong supply and weak demand, leading to a decline in coal prices, reaching a four-year low, with some coal types' settlement prices falling below annual long-term contracts. The proposal states that it is essential to fulfill the primary responsibility for energy supply security, strictly adhere to the performance of medium and long-term electricity coal contracts, and solidify the basic supply and demand of coal. The mandatory fulfillment of contracts may help reduce the risk of "coal price decline → power plants turning to spot procurement → insufficient fulfillment rate of long-term contracts → irrational fluctuations in coal prices," alleviating market concerns about a deep decline in coal prices and effectively playing the role of electricity coal as a "ballast" in energy security. **Adhere to the concept of safe production and orderly control of coal supply** From the inventory level, the current mainstream port inventory is about 74.99 million tons, and the power plant inventory is about 106 million tons, both at near three-year highs. In the face of insufficient effective demand downstream and high inventory levels in society, the proposal suggests that coal enterprises should adhere to the concept of safe production, lead the adjustment of production rhythm, and prevent a serious market situation of oversupply. By reinforcing the principle of prioritizing safe production, the risk of over-extraction can be avoided, and coal supply is expected to be controlled in an orderly manner, thereby achieving a balance between supply and demand in the industry. **Strengthen control over the import of inferior coal, and profits from high-quality capacity are expected to improve** In 2024, China imported 540 million tons of coal, a year-on-year increase of 14.4%, setting a historical high, of which the import volume of lignite was about 190 million tons, accounting for about 35% of imported coal. Lignite, as the least carbonized type of coal, has high moisture and low calorific value, and is considered low-calorie inferior coal. Currently, the prices of imported inferior coal (calculated based on Indonesian lignite) are inverted. By strengthening the control of low-priced inferior coal imports and usage through the proposal, it will alleviate domestic supply surplus pressure to a certain extent, support domestic thermal coal prices, and improve profits from high-quality capacity. Meanwhile, by coordinating with domestic green mining efforts to promote the washing of all raw coal, it is expected to achieve high-quality development in the coal industry. **Investment recommendations: Focus on three directions** 1. Coking coal elasticity. Recommended stocks include PINGMEI COAL, HuaiBei Mining, Lu'an EED, and China Xuyang Group, with suggestions to pay attention to Shanxi Coking Coal and JZEG 2. High-quality dividends. Recommended: SHCI, China Coal Energy, Yanzhou Coal Mining, Shanxi Coal International, suggested to pay attention to: China Shenhua Energy, etc.; 3. Long-term increment. Recommended: Guanghui Energy, XINJI ENERGY, Gansu Energy and Chemical, Electric Power Investment Energy, Haohua Energy, WTECL, suggested to pay attention to: Panjiang Coal and Electricity, Shaanxi Energy, Sunan Shares, etc. **Risk Warning:** The domestic economic recovery progress is less than expected; overseas import volume exceeds expectations, and infrastructure investment is less than expected ### Related Stocks - [600157.CN](https://longbridge.com/en/quote/600157.CN.md) - [601225.CN](https://longbridge.com/en/quote/601225.CN.md) - [601666.CN](https://longbridge.com/en/quote/601666.CN.md) - [601699.CN](https://longbridge.com/en/quote/601699.CN.md) - [601918.CN](https://longbridge.com/en/quote/601918.CN.md) - [000937.CN](https://longbridge.com/en/quote/000937.CN.md) - [600256.CN](https://longbridge.com/en/quote/600256.CN.md) - [01088.HK](https://longbridge.com/en/quote/01088.HK.md) - [600546.CN](https://longbridge.com/en/quote/600546.CN.md) - [000983.CN](https://longbridge.com/en/quote/000983.CN.md) - [601101.CN](https://longbridge.com/en/quote/601101.CN.md) - [600395.CN](https://longbridge.com/en/quote/600395.CN.md) - [600985.CN](https://longbridge.com/en/quote/600985.CN.md) - [01907.HK](https://longbridge.com/en/quote/01907.HK.md) - [01898.HK](https://longbridge.com/en/quote/01898.HK.md) ## Related News & Research - [China Shenhua unit Hangjin Energy Husiliang coal mine project enters Erdos 15th five-year plan](https://longbridge.com/en/news/296040709.md) - [CHINA COAL 1H26 Net Profit Up 11.8% YoY to RMB8.19B; Div. 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