Tianfeng: Thermal coal price exceeded expectations and rose significantly. We have revised our target price for the year to 750-800 yuan.

Tianfeng releases research report saying that as of October 17, 2025, the price of Q5500 power coal at Qinhuangdao Port was 748 yuan/ton, a week-on-week increase of 43 yuan/ton. Prices at the production sites rose even more in the past week, with prices of Q5500 coal in Datong, Shanxi/Yulin, Shaanxi/ and Dongsheng, Inner Mongolia increasing by 75/120/36 yuan/ton respectively. The recent impact of rainfall on production sites has gradually weakened, but safety inspections and overproduction checks still limit supply increases. In addition, maintenance work on the Daqin Line continues, limiting the amount of coal entering the port and making it difficult for port inventories to accumulate significantly in the short term. Although the weather in the south has been cooling down recently, the heating season in the north may start earlier. Combined with the potential occurrence of a "double La Nia" event and support from winter storage expectations, coal prices have upward momentum, leading to an increase in the target price of power coal to 750-800 yuan/ton for the year. Key points from Tianfeng: Recent domestic power coal prices have risen significantly higher than expected. As of October 17, 2025, the price of Q5500 power coal at Qinhuangdao Port was 748 yuan/ton, a week-on-week increase of 43 yuan/ton. Prices at the production sites rose even more in the past week, with prices of Q5500 coal in Datong, Shanxi/Yulin, Shaanxi/ and Dongsheng, Inner Mongolia increasing by 75/120/36 yuan/ton respectively. Production has been disrupted by temporary factors, combined with the continued impact of overproduction checks, limiting supply. Since the holidays, core production areas in Shanxi, Shaanxi, and Inner Mongolia have been disrupted by frequent rainfall, affecting normal coal production, transportation, and sales. Combined with maintenance work on the Daqin Line, coal supply has been disrupted by short-term factors. Since overproduction checks in July and August, domestic raw coal production has decreased, and the output of sample mines in the three provinces of Shanxi, Shaanxi, and Inner Mongolia still decreased by 4% compared to the same period last week. The ongoing production restrictions from Q4 capacity checks will continue to affect production from production sites, and it is expected that coal supply will be tight overall. Although September's import volume has increased compared to the previous month, recent increases in shipping costs and adjustments to prices from foreign mines may make it difficult for import volumes in October to significantly exceed those in September. In September 2025, due to the narrowing of domestic coal supply and the impact of coal consumption, imported coal still has an advantage, leading to an increase in import volume compared to the previous month. With recent increases in shipping costs and adjustments to prices from foreign mines, the landed cost of imported power coal has increased, which may partly inhibit the enthusiasm of end-users and traders for procurement, making it difficult for October's import volume to reach the highs of September. According to Mysteel data, the amount of coal shipped globally to China in the first two weeks of October 2025 was 9.8539 million tons, a 14.4% decrease compared to the same period last month. In October of the previous year, the total shipment was 17.4932 million tons, a 43.7% decrease compared to the same period last year. Although it is currently the off-peak season for electricity consumption, with the warming effect in some southern regions affecting downstream power plant daily consumption, and with colder weather approaching, many regions in the north have already started winter heating in the first half of October, with further expansion expected in the second half. In addition, according to recent ocean and atmospheric monitoring, the National Marine Environmental Forecasting Center predicts that some offshore areas of China will have slightly higher sea temperatures this winter, while the equatorial eastern Pacific will be in a neutral to cool La Nia state, possibly leading to a weak La Nia event. According to statistical data, after a La Nia event occurs, the probability of a colder winter in China increases, and the potential expectation of a cold winter will support the sentiment of power coal winter storage. Due to continuous heavy rainfall in the primary production areas, the tightening of supply caused by safety inspections, and the impact of the warming trend in some southern regions on power plant daily consumption, domestic power plant and port inventories have continued to decrease in the off-peak season, slightly lower than the levels in the same period in 2024. As of October 16, 2025, power plant inventories in 25 provinces totaled 5.188 million tons, compared to 5.202 million tons in the same period in 2024. As of October 17, 2025, port inventories in the Bohai Sea region totaled 23.82 million tons, compared to 24.56 million tons in the same period in 2024. Adjusting the year's target price for power coal to 750-800 yuan/ton. Although the impact of recent rainfall on production sites has gradually weakened, safety inspections and overproduction checks continue to limit supply increases. In addition, maintenance work on the Daqin Line continues, limiting the amount of coal entering the port and making it difficult for port inventories to accumulate significantly in the short term. Although the weather in the south has been cooling down recently, the heating season in the north may start earlier. Combined with the potential occurrence of a "double La Nia" event and support from winter storage expectations, coal prices have upward momentum, leading to an increase in the target price of power coal to 750-800 yuan/ton for the year. Risk factors include maintenance of high operating rates at production sites due to quantity-based pricing, the possibility of exceeding expectations in coal import volumes, and the impact of a warm winter on coal and power demand.