Zhongtai Securities: Coal prices have risen back above 700 yuan/ton, seizing coal allocation opportunities

According to the Zhitong Finance APP, Zhongtai Securities released a research report stating that the impact of overproduction verification in major producing areas is expected to continue, and there are proactive production reduction expectations for coal mines before the National Day holiday, reinforcing both short-term and long-term supply contraction expectations. On the inventory side, according to railway department news, the autumn concentrated maintenance of the Daqin Line will begin on October 7th and last for 20 days. Once maintenance begins, with the decrease in transportation volume, it is expected that coal inventories at Qinhuangdao Port will also decrease, making the high-quality, tradable market coal resources in port storage even tighter. This week, port coal prices have rebounded significantly, standing back above 700 yuan/ton. Looking ahead to late September and early October, it is expected that under the "weak balance" pattern, the structural shortage of port resources will dominate coal prices, which will stabilize and rise.

The main viewpoints of Zhongtai Securities are as follows:

Supply Side: The impact of overproduction verification in major producing areas is expected to continue, and there are proactive production reduction expectations for coal mines before the National Day holiday, reinforcing both short-term and long-term supply contraction expectations.

Strict checks on overproduction in major producing areas may have a lasting impact on subsequent coal mine capacity release. Recently, the Energy Bureau of Inner Mongolia Autonomous Region conducted inspections on 299 coal mines in the region and found that there are 93 coal mines with overproduction issues from 2024 to June 2025, with an overproduction rate of 31%. The problem is particularly prominent in Ordos City, where 82 coal mines are overproducing. Fifteen coal mines that overproduced by more than 10% in any month from January to June 2025 (all located in Ordos City) have been ordered to suspend production for rectification, and subsequent production arrangements will be verified by experts. Production can only resume after comprehensive rectification and qualification. Coal mines that repeatedly overproduce will face stricter penalties, and relevant leagues and cities within the autonomous region need to establish a dynamic supervision mechanism to strictly implement the capacity announcement system to prevent overcapacity production behaviors from the source and ensure the safe production order of coal mines.

There are proactive production reduction expectations for coal mines before the National Day holiday. Previously, the Office of the State Council's Work Safety Committee issued a notice requiring all regions, relevant departments, and central enterprises to deeply implement General Secretary Xi Jinping's important instructions on production safety, learn profound lessons from accidents, and effectively strengthen safety production work during the Mid-Autumn Festival, National Day holiday, and the fourth quarter. As the National Day holiday approaches, some private mines in production areas may reduce or suspend production for safety reasons. At the same time, as the end of the month approaches, some coal mines that have completed their monthly production tasks will suspend production.

Demand Side: There is an expectation of gradual improvement in coal demand from non-electric industry enterprises during the "Golden September and Silver October" period.

In the non-electric off-season of 2025 (July-August), pig iron production remains stable at a high level of 2.4 million tons (the lowest in the same period of 2024 was 2.2 million tons), showing a "not-so-slow off-season" characteristic. With the arrival of "Golden September and Silver October," steel consumption is expected to gradually increase, and non-electric coal demand is expected to increase in tandem. Since early September, coal consumption in the steel industry has significantly increased: According to CCTD statistics, in early September 2025, key steel enterprises had an average daily pig iron output of 1.9 million tons, a week-on-week increase of 3.8% and a year-on-year increase of 6.3%; the average daily crude steel output was 2.09 million tons, a week-on-week increase of 7.2% and a year-on-year increase of 7.8%; the average daily steel output was 1.96 million tons, a week-on-week decrease of 8.5% and a year-on-year increase of 4.9%. In terms of average daily pig iron output, this week, 247 steel enterprises maintained a high average daily pig iron output (average daily output of 2.4102 million tons, a week-on-week increase of 0.20% and a year-on-year increase of 7.68%) Inventory Side: Structural Shortage of Port Resources Expected to Continue

Significant inventory reduction at North Port, structural resource shortages reappear. Among the ports in the Bohai Rim, the coal inventories at Caofeidian Four Port and Jingtang Three Port are at low levels, while the inventory at Qinhuangdao Port has significantly decreased week-on-week (as of September 19, the coal inventory at Qinhuangdao Port was 5.9 million tons, down 510,000 tons from last week, a week-on-week decrease of 7.96%). The structural shortage of port resources has reappeared, driving the continuous rise in prices of high-quality coal at the ports.

The autumn maintenance of the Daqin Line is about to start. According to railway department news, the autumn maintenance of the Daqin Line will begin on October 7 and last for 20 days. As a major artery for "west coal east transport," the volume on the Daqin Line is expected to drop to 1 million tons per day during this period, as is customary. Once maintenance begins, with the decrease in volume, it is anticipated that the coal inventory at Qinhuangdao Port will also decrease, making the high-quality, tradable market coal resources at the port even tighter. The "anti-involution" policy, combined with strengthened safety supervision, has reduced overproduction in coal mines, and expectations for tighter supply remain strong; coupled with the increase in non-electric coal demand and the release of thermal coal stocking demand, along with the structural supply shortage at the ports, coal prices are expected to stabilize and rise.

In terms of thermal coal, the price of thermal coal at Jingtang Port increased by 24 yuan/ton week-on-week.

In terms of supply, as of September 19, 2025, the average daily production of thermal coal from 462 sample mines was 5.621 million tons, a week-on-week increase of 1.72%, and a year-on-year decrease of 2.99%. In terms of demand, as of September 18, 2025, the comprehensive daily coal consumption of 25 provinces was 5.619 million tons, an increase of 48,000 tons from last week, a week-on-week increase of 0.86%, and a year-on-year decrease of 5.94%. In terms of port prices, as of September 19, the price of thermal coal (Q5500) from Shanxi at Jingtang Port was 709 yuan/ton, an increase of 24 yuan/ton from last week, a week-on-week increase of 3.50%, and a decrease of 163 yuan/ton compared to the same period last year, a year-on-year decrease of 18.69%.

In terms of coking coal and coke, the price of premium coking coal at Jingtang Port increased by 130 yuan/ton week-on-week.

In terms of supply, as of September 19, 2025, the daily production of premium coal from 523 sample coal mines and 314 sample washing plants was 760,900 tons and 268,000 tons, respectively, with week-on-week increases of 4.46% and 4.65%, and year-on-year decreases of 4.12% and 4.69%. In terms of demand, as of September 19, 2025, the daily pig iron production from 247 steel companies was 2.4102 million tons, a week-on-week increase of 0.20%, and a year-on-year increase of 7.68%.

In terms of origin prices, as of September 19, the price index for high-sulfur/low-sulfur premium coking coal in Liulin (including tax) was 1,230 and 1,460 yuan/ton, respectively, an increase of 40 yuan/ton and 60 yuan/ton from last week, with week-on-week increases of 3.36% and 4.29%, and year-on-year decreases of 200 and 120 yuan/ton, respectively, with year-on-year decreases of 13.99% and 7.59%.

In terms of port prices, as of September 19, the price of premium coking coal from Shanxi at Jingtang Port was 1,670 yuan/ton (including tax), an increase of 130 yuan/ton from last week, a week-on-week increase of 8.44%, and a decrease of 100 yuan/ton compared to the same period last year, a year-on-year decrease of 5.65% Investment Advice: Reiterate Allocation Opportunities, Focus on Flexible Targets

On one hand, the coal sector has seen a significant cumulative decline this year, with institutional holdings hovering at low levels, a healthy chip structure, and trading not being crowded; on the other hand, the seasonal decline in coal prices has basically come to an end, and the demand release for non-electric coal during the peak winter season is expected to catalyze further upward movement in coal prices. Therefore, the resonance between trading and fundamentals is likely to drive the coal sector upward.

For thermal coal, we recommend high-flexibility targets Yancoal Energy (600188.SH), Shanxi Coal International (600546.SH), Jinkong Coal Industry (601001.SH), Shaanxi Coal and Energy (601225.SH), Guanghui Energy (600256.SH), China Coal Energy (601898.SH), Xinji Energy (601918.SH), China Shenhua Energy (601088.SH), and Huaihe Energy (600575.SH) as they are expected to benefit.

For coking coal, we recommend Lu'an EED (601699.SH), Pingmei Shenma Energy (601666.SH), Huaibei Mining (600985.SH), Shanxi Coking Coal (000983.SZ), Shanghai Energy (600508.SH), Shenhuo Co., Ltd. (000933.SZ), Lanhua Sci-Tech (600123.SH), and WTECL (600157.SH) as they are expected to benefit.

Risk Warning

Policy price limit risk; coal import volume increase; significant slowdown in macroeconomic conditions; credibility risk of third-party data due to factors such as data acquisition methods and processing methods; risk of untimely updates of information used in research reports