Shenwan Hongyuan: Coal prices rebound, optimistic about further recovery of coal companies' performance in the fourth quarter
Shenwan Hongyuan released a research report indicating that from January to August 2025, the national raw coal production reached 3.165 billion tons, an increase of 2.8% year-on-year. It is expected that production will not be released on a large scale in the fourth quarter. The prices of thermal coal and coking coal have rebounded month-on-month, recommending undervalued stocks Shanxi Coking Coal and high-dividend stock China Shenhua, while paying attention to JHSCIC. On the supply side, raw coal production has increased, but coal imports have decreased by 11.1% year-on-year. It is expected that the performance of key companies in the coal industry will exceed expectations in the third quarter report of 2025
According to the Zhitong Finance APP, Shenwan Hongyuan released a research report stating that according to statistics bureau data, the cumulative national raw coal production from January to August 2025 reached 3.165 billion tons, an increase of 2.8% year-on-year. Due to the impact of capacity verification documents and stricter safety supervision, it is expected that production will not be released on a large scale in the fourth quarter. In Q3 2025, the prices of thermal coal and coking coal both rebounded month-on-month. In terms of targets, it is recommended to focus on undervalued elastic targets such as Shanxi Coking Coal (000983.SZ); optimistic about the rebound in thermal coal prices driven by seasonal demand recovery, recommending stable operation high dividend targets such as China Shenhua (601088.SH); in addition, it is suggested to pay attention to elastic targets for thermal coal such as JHSCIC (601001.SH).
Shenwan Hongyuan's main viewpoints are as follows:
Supply side: Domestic raw coal production increases, but coal imports decrease year-on-year
According to statistics bureau data, the cumulative national raw coal production from January to August 2025 reached 3.165 billion tons, an increase of 2.8% year-on-year. According to data from the General Administration of Customs, the cumulative coal imports from January to September 2025 reached 350 million tons, a decrease of 11.1% year-on-year. Due to the impact of capacity verification documents and stricter safety supervision, it is expected that production will not be released on a large scale in the fourth quarter.
In Q3 2025, the prices of thermal coal and coking coal both rebounded month-on-month
According to data from the China Coal Market Network, the average spot price of 5500 kcal thermal coal at ports in Q3 2025 was approximately 673 yuan/ton, a decrease of about 20.66% compared to 848 yuan/ton in Q3 2024, and an increase of about 6.75% compared to 630 yuan/ton in Q2 2025. The average price of Shanxi-produced coking coal at Jing Tang Port in Q3 2025 was 1564 yuan/ton, a decrease of 17.23% year-on-year compared to Q3 2024, and an increase of 19.09% compared to Q2 2025.
Expected performance of key companies in the coal industry for Q3 2025 is as follows
There are 4 companies with performance exceeding expectations: China Shenhua (2025Q1-3 eps 1.97, YOY -15.01%; coal production and sales growth in Q3), Shaanxi Coal and Chemical Industry (1.29, -21.46%; coal production increased year-on-year, coal prices rose), Shanxi Coal International (0.64, -38.99%; both volume and price increased in Q3); Electric Power Investment Energy (1.91, -2.39%, the company's long-term coal contracts account for a high proportion, with stable prices, and benefiting from the rise in electrolytic aluminum prices).
There are 9 companies with performance basically in line with expectations: China Coal Energy (0.89, -18.92%, coal prices rebounded in Q3, good cost control); Yanzhou Coal Mining (2025Q1-3 eps 0.70, YOY -48.67%; rebound in domestic and international coal prices in Q3, increased sales inventory); Lu'an Environmental Energy (0.68, -27.33%; coal prices fell, but good cost control); Shanxi Coking Coal (0.25, -49.45%; coking coal prices fell); Huaibei Mining (0.51, -68%; production and sales decreased, coking coal prices fell); Huayang Co., Ltd. (0.28, -43.36%, coal prices fell at the production site, but the Qiyuan mine was put into production, and Yushupo's reserves increased, so the company's production increased in 2025); JHSCIC (0.74, -42.84%; coal prices fell at the production site); Pingmei Shenma Group (0.15, -82.28%; coking coal prices fell); Xinji Energy (0.51, -26.52%); Cost control has led to a smaller decline in coal gross profit, with an increase in electricity sales.
There is one company that fell short of expectations: Shaanxi Black Cat (2025Q1-3 EPS is -0.32, YOY -3.82%; coking coal prices are under pressure in stages).
Target Aspects
We strongly recommend undervalued elastic targets Shanxi Coking Coal (000983.SZ), Huaibei Mining (600985.SH), Lu'an Environmental Energy (601699.SH), and Yanzhou Coal Mining (600188.SH); we are optimistic about the rebound in demand during the peak season driving a continuous rebound in thermal coal prices, and recommend stable operation high dividend high yield targets China Shenhua (601088.SH), Shaanxi Coal and Chemical Industry (601225.SH), and China Coal Energy (601898.SH); in addition, we suggest paying attention to elastic thermal coal targets JHSCIC (601001.SH), Huayang Co., Ltd. (600348.SH), TBEA Co., Ltd. (600089.SH), and Shanxi Coal International (600546.SH).
Risk Warning
Macroeconomic downturn exceeds expectations, coal demand is lower than expected; international coal prices fall below expectations
