Huafu Securities: Daily coal consumption at power plants has rebounded significantly, and coal prices have resumed their upward trend.

Huafu Securities released a research report stating that as of September 24, the Qinhuangdao 5500K thermal coal free-on-board price was 988 yuan/ton, up 17 yuan/ton week-on-week. This week, daily coal consumption at power plants rose sharply, and power plant inventories rose slightly; major safety accidents strengthened expectations of supply contraction, and combined with sustained high temperatures, coal prices are more likely to rise than fall in the short term, with coal prices in a new round of upward cycle. Coal companies' balance sheets are generally relatively healthy, and coupled with an overall improvement in dividend payout ratios, coal stocks still have comparative advantages. It is recommended to seize targets with excellent resource endowments, stable operating performance and high dividend payout ratios or the possibility of increasing dividends, as well as targets with production increase potential and benefiting from coal prices bottoming out in the cycle. The main views of Huafu Securities are as follows: Thermal coal As of September 24, the Qinhuangdao 5500K thermal coal free-on-board price was 988 yuan/ton, up 17 yuan/ton week-on-week. The 5500K price in Inner Mongolia rose sharply, the 5500K price in Shanxi rose slightly, and the 5500K price in Shaanxi was flat. As of September 25, the average daily output of 462 sample thermal coal mines was 5.272 million tons, up 28,000 tons week-on-week, down 6.7% year-on-year. This week, daily coal consumption at power plants rose sharply, power plant inventories rose slightly, the thermal coal inventory index rose slightly, and Qinhuangdao port inventory fell slightly. As of September 21, the thermal coal inventory index was 186.5 (+0.8 points). On the non-power side, the operating rates of methanol and urea were 83.8% (+0.9pct) and 82% (+1pct), respectively, still at relatively high levels for the same period in history. Coking coal As of September 24, the ex-warehouse price of main coking coal at Jingtang Port was 2,640 yuan/ton, flat week-on-week. Shanxi prices fell slightly, Henan prices were flat, and Anhui prices were flat. As of September 25, the average daily output of clean coal from 523 sample mines was 659,000 tons (down 2,000 tons week-on-week), down 14.5% year-on-year. Clean coal inventories at 523 sample mines were 1.707 million tons (+400,000 tons), down 19.1% year-on-year; as of September 25, China's average daily molten iron production was 2.357 million tons (-20,000 tons), down 0.83% year-on-year. On September 19, the customs clearance volume at the Ganqimaodu port for Mongolian coal was 72,000 tons (-20,000 tons), down 58% year-on-year. Year-to-date, the total was 34.228 million tons, up 30.5% year-on-year. This week, rebar prices rose slightly, and the operating rate of large coking plants rose slightly. As of September 18, the operating rate of coking plants with capacity (>2 million tons) was 71.7%, up 1.3pct week-on-week. Core view Major safety accidents strengthened expectations of supply contraction, and combined with sustained high temperatures, coal prices are more likely to rise than fall in the short term. At the macro level, geopolitical conflicts have strengthened energy attention among countries, and high inventories may be a response measure. At the same time, with policies such as rectifying involutionary competition and expanding domestic demand taking effect, the policy bottom for coal prices has been explored in 2025. On the demand side, the pull from AI development on energy is an incremental source of demand, while China's supply chain and energy lowland advantages are a solid guarantee for electricity consumption. Coal prices are in a new round of upward cycle. The bank is in an era of major energy transformation. Under the policy orientation of establishing the new before abolishing the old and the demand for energy security, coal may still be in a golden age. Coal supply elasticity is limited: first, under the dual carbon background, capacity control is strict, while stricter safety supervision and environmental protection policies squeeze out excess production; second, supply shows regional differentiation. As resources in the eastern region decrease and Shanxi enters a "stable production" era, mining difficulty may gradually increase, and domestic capacity will further concentrate in the west, increasing supply costs; third, after mining goes deeper and safety standards improve, coking coal mining difficulty increases, and underproduction may become the new normal, with the scarcity of resources becoming more obvious. Coal's position as a major energy source is difficult to change in the short term. Although a weak macroeconomy has temporarily affected coal demand, relatively rigid supply and rising costs effectively support the bottom of coal prices, and coal prices are still expected to maintain a volatile pattern. Coal companies' balance sheets are generally relatively healthy, and coupled with an overall improvement in dividend payout ratios, coal stocks still have comparative advantages. Investment recommendations The bank recommends grasping coal investment opportunities from the following dimensions: (1) targets with excellent resource endowments, stable operating performance and high dividend payout ratios or the possibility of increasing dividends. Recommendations: China Shenhua Energy, China Coal Energy, Shaanxi Coal Industry; (2) targets with production increase potential and benefiting from coal prices bottoming out in the cycle. Recommendations: Yankuang Energy Group, Shan Xi Hua Yang Group New Energy, Guanghui Energy, Jinneng Holding Shanxi Coal Industry, Gansu Energy Chemical; (3) targets benefiting from long-cycle tight supply and possessing globally scarce resource attributes. Recommendations: Huaibei Mining Holdings, Pingdingshan Tianan Coal. MiningCo.,Ltd., Shanxi Coking Coal Energy Group, Shanxi Luan Environmental Energy Dev.Co.,Ltd, Shanxi Coal International Energy Group; (4) targets with coal-power joint operation or integration models that smooth cyclical fluctuations. Recommendations: Shaanxi Energy Investment, China Coal Xinji Energy, Huaihe Energy. Risk warnings Domestic coal capacity release exceeding expectations, imported coal exceeding expectations, substitute power generation exceeding expectations, macroeconomy falling short of expectations.