From January to October 2024, the cumulative output of raw coal reached 3.892 billion tons, a year-on-year increase of 1.20%, with a slower growth rate compared to the same period in 2023.

In October, the monthly output of raw coal reached 0.412 billion tons, a year-on-year increase of 4.60%, with a slight supply rebound but a slight decrease on a month-on-month basis.

In terms of supply, coal mining safety supervision tends to normalize, leading to an increase in coal production supply, while Shanxi has been resuming production recently, resulting in a month-on-month increase but a slight decrease compared to the previous month in October.

In terms of demand, the growth rate of thermal power in October declined, with coal demand for winter heating still to be released due to rising temperatures, while domestic port thermal coal prices remained weakly stable.

Jiayin International released a research report stating that driven by the seasonal increase in heating demand and the reduction of inventory days of China Power Company, the bank expects thermal coal prices in the fourth quarter to gradually recover by the end of the year. For next year, based on improved economic conditions and nationwide coal production control, the bank expects thermal coal prices to moderately rise by 5%, reaching RMB 905 per ton. Assuming that restrictions on coal production in China remain in place, the bank expects Chinese thermal coal supply to increase by 3.4% year-on-year, mainly driven by a 10% year-on-year increase in imports. Given the current mismatch between supply and demand for thermal coal, a supply gap of about 0.14 billion tons is calculated, which is higher than the 77 million ton gap in 2024.

Choicetoutiao Financial APP has learned that CICC released a research report stating that looking ahead to 2025, the bank expects coal demand to grow steadily, with a year-on-year increase of +2.3%. The reason is that, from a structural perspective, the bank believes that the structural transition between new and old energy is not overnight, and in the short term, coal will still play a role in ensuring energy security. In terms of overall quantity, the market expects that under the slowdown in demand from traditional high-energy-consuming industries such as steel and cement, energy demand may be greatly affected. However, the bank believes that the elasticity coefficient of energy demand may remain relatively high in the short term, mainly due to the rapid development of new quality productivity such as new energy, which also has a considerable demand for energy. At the same time, the increasing level of electrification in end-use energy is also promoting demand growth. Therefore, coal demand is expected to maintain strong growth momentum.

Shanxi Securities indicates that with the continuous implementation of buybacks, increased shareholdings, and the landing of monetary tools such as SFISF, there is the potential for further deepening the value of coal dividends in carry trade transactions. It is recommended to focus on high-yield and stable dividend-paying varieties.

Related Hong Kong stocks in the coal sector:

China Coal Energy (01898), China Shenhua Energy (01088), Yancoal Aus (03668), SouthGobi (01878), Yankuang Energy (01171), etc.