HK Stock Market Move | China Shenhua Energy (01088) falls nearly 5% as the coal and steel industry chain operation at the beginning of the new year lacks improvement and there is limited growth in coal demand.

China Shenhua Energy (01088) fell nearly 5%, dropping 4.95% to HK$30.75 as of press time, with a turnover of HK$674 million. On the news front, on January 8, the China Coal Transportation and Distribution Association released a bi-weekly report on the operation monitoring of the coking coal market, stating that after entering 2025, there has been no improvement in the operation of the coal-steel-coke industry chain, with confidence in the future market still lacking in various aspects. Players in the market are cautious in their raw material procurement, with a decrease in willingness to stock up on resources in winter compared to previous years, further exacerbating the market competition between upstream and downstream sectors, with weaker varieties facing heavier pressure. Looking at the supply and demand situation of coking coal, under the dual pressure of strengthening safety supervision and a downward market, state-owned large mines actively controlling production during the holidays has become a reality. Subsequent coking coal production will enter a phase of temporary supply contraction, and the market pressure of oversupply is expected to no longer increase. Bank of America Securities released a research report, taking a bearish view on the coal industry in 2025 and China Shenhua Energy, due to limited growth in demand for thermal coal, high historical inventories, and the need to face continuous import threats. The bank expects the price of thermal coal this year to be RMB 720 per ton (a 16% year-on-year decrease), with spot prices expected to be lower than contract prices from the second quarter to the third quarter, and the price of coking coal to be RMB 1,400 per ton.