According to Securities Times, Citic Securities published a research report stating that the recent thermal coal prices have been slightly volatile, and the prices of 'coking coal and coke' have been continuously rising with the recovery of the black industry chain. The sector has experienced significant fluctuations recently, mainly influenced by style rotation, but the medium to long-term coal price expectation is supported by macro policies and is expected to further improve. Fundamentally, the bottom of this year's coal prices has been basically clarified, and the full-year profit and dividend expectations of listed companies will gradually become clearer; the continuous overlay of macro policies will help stabilize the medium to long-term coal price expectations. In addition, actively guiding long-term funds into the market and strengthening the sustainability of dividend styles will favor the sector's market outlook.

Short-term fundamentals of thermal coal: Prices are showing a weak but stable trend, with some support.

This week, the supply at the source maintained stability, benefiting from the start of winter storage in the north on the demand side, while the demand from non-power and station traders also remained stable. However, compared to the pre-holiday stocking intensity, it has slightly weakened, leading to a slight decline in quotes from some coal mines. It is expected that the source prices will run weakly and steadily in the short term. In terms of ports, this week, the daily terminal consumption has significantly decreased, downstream procurement demands have reduced, transactions are sluggish, market sentiment has weakened, but traders have a strong willingness to support prices under cost pressure, coupled with winter storage expectations, it is expected that coal prices in the short term will remain stable.

Short-term fundamentals of 'coking coal and coke': Coke prices have steadily risen as the fifth round of increases landed.

Regarding coke, this week, the fifth round of price increases has landed, with an accumulated increase of 250-275 yuan/ton since the end of September. Encouraged by macro policy expectations, the profits of the black industry sector have significantly recovered, pig iron production has increased significantly, coke demand has improved, coupled with active trader purchases, the sixth round of price increases for coke has started, with a high probability of implementation. It is expected that after the implementation, coke prices will mainly stabilize. As for coking coal, although this week's steel price adjustments have affected market sentiment, the increase in steel production rates, high downstream procurement enthusiasm, and no sales pressure on coal mines, it is expected that the short-term coking coal prices will run steadily with a slight strength bias.

Focus on high-frequency data: Port thermal coal prices have slightly dropped, and pig iron production continues to rise.

On Saturday (October 12th), the market price of 5500 kcal thermal coal at Qinhuangdao Port was 866 yuan per ton, down 5 yuan compared to the previous period. The spot price of coking coal at Jingtang Port (Shanxi origin) was 1950 yuan per ton, up 100 yuan, and the spot price of secondary metallurgical coke (Tangshan origin) was 1750 yuan per ton, up 100 yuan. As of the week ending on October 12th, the daily railway inflow volume at Caojing, Qingang, Jingjiu, and Huanghua Ports was 1.284 million tons, down 10.9% compared to the previous period. The daily throughput at Qinhuangdao Port was 0.474 million tons, down 12.51%, with an average of 13 vessels at anchor, down 6 vessels. The port inventory at Qinhuangdao was 5.16 million tons, down 4.09% compared to the previous period. The total coal inventory at the three northern ports (Caojing, Qingang, Jingtang) was 11.91 million tons, down 2.7% compared to the previous period. The daily electricity consumption of coastal power plants in eight provinces decreased by 3.41% compared to the previous period but increased by 2.79% year-on-year. The inventory increased by 1.73% compared to the previous period but decreased by 2.16% year-on-year. The blast furnace operating rate at sample steel mills nationwide was 80.81%, up by 1.22 percentage points. The molten iron production was 2.3308 million tons, up 2.22%, and the spot price of rebar (HRB400/20mm) was 3865 yuan per ton, up 3865 yuan per ton.

Market performance: The sectors experienced volatile adjustments underperforming the large cap, with significant price drops in 'double coke' futures.

This week, citic sec coal industry index had a return of -5.73%, underperforming the csi 300 index by -2.48 percentage points, mainly due to market style rotation and the overall weak performance of dividend stocks. The top 3 performing stocks were zhengzhou coal industry & electric power (+3.01%), yunnan coal & energy (+2.49%), and baotailong new materials (+0.93%). The main contract for coking coal futures JM2501 closed at 1484 yuan per ton, down 4.01% from the previous week, and the main contract for coke futures J2501 closed at 2139 yuan per ton, down 5.23% from the previous week.

Investment strategy:

Macro-economic fluctuations impact coal demand and prices; a slight relaxation in safety supervision leads to increased supply; systemic decline in overseas energy prices suppresses domestic coal prices.

Investment strategy:

Macro policies reversing market expectations, sectors are expected to follow the large cap in further gains. Pre-holiday sector gains were weaker than the large cap, mainly influenced by market style rotation. Fundamentally, the bottom of coal prices for the year has become clearer, and the full-year profit and dividend expectations of listed companies will gradually become clear; continuous macro policies help stabilize medium to long-term coal price expectations. Furthermore, actively guiding long-term funds into the market through policies also help strengthen the sustainability of dividend-style, bullish sector trends.