Zheshang: Coal companies face performance pressure in the first quarter, pay attention to high-dividend, dynamic coal companies.

Zheshang released a research report stating that in the first quarter, demand was weak due to factors such as holidays and higher temperatures, leading to a decrease in coal prices. However, due to the long-term contract price system, the performance of thermal coal companies remained stable overall in the first quarter. In terms of policies, the coal association has proposed to control production and improve quality. In the market, high-frequency data shows that both coal sales and inventories have decreased. The bottoming of thermal coal prices is fluctuating, coking coal prices are falling, demand for chemical coal is high, and weekly production of pig iron is continuously increasing. It is expected that with changes in expectations, policies will gradually strengthen, and downstream stocking of thermal coal is expected to start. It is expected that current demand is at the bottom for the whole year, supply is declining, and coal prices are expected to rebound in the peak season. It is recommended to invest in high dividend thermal coal companies at low points. Zheshang's main points are as follows: Coal supply: In the first quarter of 2025, the sales volume of the top 20 coal groups showed a slight decline, while the national coal production and import volume increased slightly. In terms of the sales volume of the top 20 coal groups, from January to March, the average daily sales volume was 6.801 million tons, a year-on-year decrease of 3.6%; in March, the daily average sales volume was 7.132 million tons, a year-on-year decrease of 3.3%. As for national coal production, from January to March, the production was 770 million tons, a year-on-year increase of 7.7%. In terms of coal imports, from January to March, imports were 80 million tons, a year-on-year increase of 2.1%; in February, imports were 34.36 million tons, a year-on-year increase of 1.8%. Coal demand: The cumulative coal consumption in China in the first two months of 2025 was slightly lower, with a 3.3% increase in February compared to the previous month. In terms of commodity coal consumption, from January to February, the cumulative coal consumption was 8.5 billion tons, a cumulative year-on-year decrease of 0.5%; in February, coal consumption was 3.9 billion tons, a year-on-year increase of 3.3%. In February, the power industry consumed 5 billion tons of coal, a cumulative year-on-year increase of 2.4%; in February, coal consumption was 2.3 billion tons, a year-on-year increase of 10.43%. In the chemical industry, coal consumption in February was 700 million tons, a year-on-year increase of 20%; in February, coal consumption was 320 million tons, a year-on-year increase of 6.7%. In the building materials industry, coal consumption in February was 540 million tons, a year-on-year increase of 8%; in February, coal consumption was 240 million tons, a year-on-year increase of 20%. In the steel industry, coal consumption in February was 1.1 billion tons, a year-on-year increase of 1.7%; in February, coal consumption was 500 million tons, a year-on-year increase of 3.8%. Coal prices: Overall, coal prices in the first quarter showed varying degrees of decline. The average price of thermal coal (Guangzhou Port) in March was 724.8 yuan/ton, a year-on-year decrease of 183.3 yuan/ton, a decrease of 20.2%; the average price of coking coal (Jingtang Port) in March was 1382.9 yuan/ton, a year-on-year decrease of 718.1 yuan/ton, a decrease of 34.2%; the average price of anthracite coal (Yangquan) in March was 850 yuan/ton, a year-on-year decrease of 110 yuan/ton, a decrease of 11.5%. The average price of long-term contracted thermal coal in March was 686 yuan/ton, a year-on-year decrease of 22 yuan/ton, a decrease of 3.1%. Outlook for the first quarter performance of the coal industry: Based on the sales data of the top 20 coal groups in the first quarter, as well as national coal production, operating data from listed companies, and coal price trends, it is expected that the overall performance of coal companies will decline in the first quarter of 2025. The performance of the thermal coal sector is expected to decrease by around 20%; the performance of the coking coal sector is expected to decrease more, and the performance of the anthracite coal sector is expected to decrease by around 20%. Targets to watch: Focus on thermal coal companies such as China Shenhua Energy (601088.SH), Shaanxi Coal Industry (601225.SH), and China Coal Energy (601898.SH). Risk factors: Overseas economic slowdown; large-scale release of production capacity; substitution by new energy sources; impact of safety incidents.