Guolian Minsheng Securities: Stable port coal prices in need of demand release, future price momentum will continue to rise.

Guolian Minsheng Securities released a research report stating that this week, coal prices at ports remained stable, while prices at production sites continued to rise. From a fundamental perspective, even with the onset of the peak season, the possibility of a significant increase in production from the source under strict supervision is low, and the supply side remains constrained. Daily coal consumption at power plants continues to rise, and with the cooling weather ahead and industrial production entering the final sprint phase of the year, the peak season demand for electricity and coal will gradually materialize. This week, port inventories have accumulated somewhat due to shipping restrictions, but with improving weather, inventories will gradually decrease. At the same time, under the limitation of railway transportation capacity, port circulation of goods remains tight, coupled with strong support for shipping costs. After demand is fully released, the momentum for coal price increases will continue, reaching a peak at the end of the year and possibly surging to 1,000 yuan/ton momentarily. The core viewpoints are as follows: Port coal prices remain stable, waiting for demand release, with continuous upward momentum in future price increases. This week, port coal prices remained stable, while prices at production sites continued to rise. Safety inspections will continue until the end of November, and in December, central safety inspection teams will conduct on-site inspections of 40 members of the State Council Safety Commission. Therefore, even with the onset of the peak season, the likelihood of a significant increase in production from the source under strict supervision is low, and the supply side remains constrained. Daily coal consumption at power plants continues to rise, and with the cooling weather ahead and industrial production entering the final sprint phase of the year, the peak season demand for electricity and coal will gradually materialize. This week, port inventories have accumulated somewhat due to shipping restrictions, but with improving weather, inventories will gradually decrease. At the same time, under the limitation of railway transportation capacity, port circulation of goods remains tight, coupled with strong support for shipping costs. After demand is fully released, the momentum for coal price increases will continue, reaching a peak at the end of the year and possibly surging to 1,000 yuan/ton momentarily. In terms of sectors, with improved supply and demand, the rebound in coal prices, high spot proportion targets show more flexibility. Additionally, Shanxi Province has completed overproduction control measures ahead of schedule, making it less affected by the current "production control limits," which is worth monitoring. International uncertainty is increasing, and the value of stable high-dividend stocks is on the rise. Trade tensions continue, and international uncertainty is increasing. In addition to weak demand and declining bond yields, the coal sector is less affected by the trade conflict between China and the U.S., and the investment value reflected in stable high-dividend stocks has increased. Leading enterprises with stable profitability, low debt, high cash, and high dividends demonstrate defensive value. Utilizing ample cash for low-cost expansion while maintaining shareholder returns, or ensuring resource continuity through primary market auctions under the rigid supply of coal resources, shows both mid- and long-term growth potential. Several state-owned coal enterprises have initiated plans to increase their holdings of control of listed companies and inject assets, which will help boost market confidence, optimize asset structure, improve long-term growth prospects and market competitiveness of listed companies, enhancing sector valuations. Port coal prices remain stable, while production site coal prices return to an upward trend. According to data from Coal Resource Network, as of November 21, the market price of Q5500 power coal at Qinhuangdao Port has stabilized at 827 yuan/ton, unchanged from the previous week. In terms of production sites, in the Datong area of Shanxi Province, the price of Q5500 coal closed at 690 yuan/ton, up 10 yuan/ton week-on-week; in Yulin, Shaanxi, the Q5800 index closed at 668 yuan/ton, up 3 yuan/ton week-on-week; in Inner Mongolia, ERDOS Resources, the Q5500 coal closed at 621 yuan/ton, up 4 yuan/ton week-on-week. The daily transportation volume of the Daqin Line increased slightly week-on-week, while inventory at northern ports increased. This week, the average daily transportation volume on the Daqin Line increased by 1.6% to 1.246 million tons, while the Tanghu Line saw a 0.4% decline to 322,000 tons. As of November 21, the inventory at northern ports reached 24.58 million tons, an increase of 1.45 million tons (+6.3%) compared to the previous week and a decrease of 2.505 million tons (-9.2%) year-on-year. Daily coal consumption at power plants improved week-on-week, with fewer available days, and increased demand from the chemical industry. According to CCTD data, on November 20, the daily coal consumption at power plants in 25 provinces was 5.382 million tons, up by 222,000 tons week-on-week and down by 447,000 tons year-on-year; the average daily consumption for the week was 5.234 million tons, an increase of 121,000 tons week-on-week and a decrease of 306,000 tons year-on-year; there were 25.1 available days, a decrease of 0.9 days week-on-week and an increase of 1.7 days year-on-year. As of November 21, the total coal consumption in the chemical industry for the week was 7.166 million tons, up by 9.4% year-on-year and up by 1.2% week-on-week. Supply remains limited, with marginal decline in demand, leading to short-term price fluctuations. This week, coking coal prices showed a weak trend, with some production mines resuming production after earlier closures, while recent safety inspections have led to the cessation of operations at some mines, keeping overall supply limited. On the demand side, with market sentiment cooling down, purchases of raw materials by coking companies and steel plants have decreased, leading to anticipated price reductions for coking coal. In the short term, coking coal prices may fluctuate weakly, with the possibility of price strengthening as supply reduction intensifies. Port coking coal prices have fallen, while prices at production sites fluctuate. According to data from Coal Resource Network, as of November 21, the main coking coal price at Jing Tang Port was 1,780 yuan/ton, down by 80 yuan/ton week-on-week. As of November 20, the Australian Peak Downs hard coking coal spot index was $214.20 per ton, up by $3.25 per ton week-on-week. In terms of production sites, low-sulfur coal in Shanxi fell by 34 yuan/ton week-on-week, low-sulfur coal in Liulin fell by 40 yuan/ton, while coal in Lingshi rose by 30 yuan/ton, and high-sulfur coal in Shanxi, Qinjing gas coal, and Changzhi blowing coal remained stable week-on-week. Expectations for the off-season strengthen, and coking coal prices remain stable/weaker. This week, coking coal prices remained stable after four rounds of price increases. On the supply side, the downward movement of raw material coal prices has led to increased production enthusiasm among coking companies, but with an increase in maintenance activities, the supply is relatively stable. On the demand side, molten iron production has slightly decreased week-on-week but remains relatively high. However, due to pressure on steel prices in the off-season and poor steel mill profits, as well as increased maintenance activities, the pressure may gradually pass upstream, combined with reduced cost support, leading to stable/weaker coking coal prices in the short term. The four rounds of coking coal price increases have been implemented. According to Wind data, as of November 21, the price of secondary metallurgical coke in Tangshan closed at 1,530 yuan/ton, up by 50 yuan/ton week-on-week; in Linfen, the price of secondary metallurgical coke closed at 1,365 yuan/ton, up by 50 yuan/ton week-on-week. At the ports, on November 21, the price of primary metallurgical coke at Tianjin Port was 1,760 yuan/ton, up by 50 yuan/ton week-on-week. Investment recommendations: In terms of investment targets, we recommend the following investment themes: 1) High spot proportion and flexible targets, focusing on Shanxi Coal International Energy Group, Shanxi Lu'an Environmental Energy Dev.Co., Ltd, Yankuang Energy Group. 2) Strong performance and growth-oriented targets, focusing on Jinneng Holding Shanxi Coal Industry, Shanxi Huayang Group New Energy. 3) Leading companies with strong industry performance, focusing on China Shenhua Energy, China Coal Energy, Shaanxi Coal Industry. 4) Benefiting from nuclear power growth, strong alpha rare uranium targets, focusing on CGN MINING.