Hong Kong stock concept tracking | Coal "anti-inner wrapping" takes the lead, with overnight coke futures prices soaring (attached concept stocks)

Overnight main coke futures night trading rose by 10%, now reported at 1135.00 yuan/ton. Yesterday, the policy document from the National Energy Administration on "Check on Coal Mine Production" was released, with expectations of some production cuts later. 1) The notification states that the scope of this check includes coal mines in 8 provinces (regions) such as Shanxi, Inner Mongolia, Anhui, Henan, Guizhou, Shaanxi, Ningxia, Xinjiang. The focus of the check is on whether the annual coal production in 2024 exceeds the announced capacity, and if the monthly coal production from January to June 2025 exceeds the announced capacity by 10%. It also mentions that the investigation will be detailed to company groups. 2) This notification is not "news", but a "reiteration". The standards for determining coal mine production capacity were already issued in 2021 and can be verified on the National Energy Administration's official website. 3) Based on the statistics on coal production and coking coal mining operation rates, there hasn't been widespread overproduction on a provincial level in the first half of this year, influenced by prices and profits. 4) It is noteworthy that this investigation will be strictly implemented at the enterprise level. While there hasn't been a serious overproduction issue in the first half of this year based on provincial data, it may be a result of a balance between certain overproducing and underproducing companies. 5) This reiteration of the investigation is not only to support the "anti-output squeezing" but also to show a strong stance on regulating overproduction and enhancing subsequent supervision. 6) The Energy Administration began preparing this document in June with the aim to curb the rapid decline in coal prices. 7) Enterprises are required to conduct self-inspections and report by August 15 (in the past, due to the penalty for overproduction, coal companies may not accurately report their actual production). 8) The enforcement actions in the future are subject to observation (overproduction is mainly under the jurisdiction of the safety supervision bureau with stricter enforcement). Production impact: Trends of high-level mines falling back, policies being implemented will accelerate expectations of decline 1) Based on current estimates of production and capacity, the combined overproduction of Shanxi, Shaanxi, Inner Mongolia, and Xinjiang is around 200 million tons. Excluding Xinjiang, the impact of overproduction is about 100 million tons (smaller if allowing for a 10% overproduction). 2) Coal production has increased significantly in the past year, with growth rates reaching 4.8% from July 24 to June 25, second only to the 9% in the strongest year for supply guarantee in 2022. Even without considering overproduction management, production has reached a relatively high level. Price: Improvements in supply and demand since June, bottom-up recovery of thermal coal and coking coal prices, focus on expected changes Since June, prices of thermal coal and coking coal have been recovering from the bottom, increasing by about 35 yuan/ton or 6% and 210 yuan/ton or 17% respectively. The reasons for the increase are: peak summer demand, steel coking restocking demand, significant decrease in imports, and slowing production growth. Supply and demand are gradually shifting from loose to balanced tightness in the second half of the year. Key companies: High elasticity + undervaluation, with potential for valuation recovery due to expected changes, there is still room for sector valuation repair. Guotai Haitong released a research report stating that unlike the supply-side reforms in 2016, the current "anti-output squeezing" will have a more targeted approach, opting for a "time for space" strategy. The impact on the coal industry will focus more on practical aspects, as the sector is currently at a turning point in its fundamentals. Hong Kong-listed companies related to the coal industry chain: China Coal Energy(01898), YANCOAL AUS(03668), Yankuang Energy Group(01171), China Shenhua Energy(01088), CHINA QINFA(00866), etc.