Domestic coking coal output remains constrained, supporting coking coal prices in the short term

Overview

This report is Morgan Stanley's weekly tracking of China's coal sector, focusing on thermal coal and coking coal prices, port inventories, and the pace of coal mine production resumption in Shanxi. The report believes that domestic coking coal output continues to weaken due to safety inspections and delays in production resumption, and that low output combined with low mine-side inventories will support coking coal prices in the short term; in contrast, thermal coal and overseas coal prices have pulled back.

Core views

The report's core view is that supply-side constraints in domestic coking coal remain the main source of short-term price support. Production resumption in Shanxi has been slow, with more mines shut in places such as Lvliang, Lingshi, and Gujiao, and only one mine in Qinyuan has resumed production so far, leading sample coking coal output to fall 1.3% last week to 4.97mmt. On the price side, domestic coking coal prices were clearly stronger than thermal coal and overseas coal prices, with Liulin No.4 mine-mouth and FOR prices flat week over week, while NEWC thermal coal prices fell sharply.

Analysis framework

The report uses a weekly high-frequency tracking approach, combining domestic and overseas coal prices, mine-mouth prices, port inventories, sample output, and coal mine production resumption progress to assess marginal changes in coal supply and demand. Key indicators include NEWC thermal coal, QLD coking coal, QHD 5500, CCI 5500, BSPI, Liulin No.4 mine-mouth/FOR prices, and Qinhuangdao inventories.

Methodology notes

• Supply-Demand and Price TrackingWeekly Coal Indicator Monitoring

  Track marginal changes in coal supply and demand using prices, inventories, output, and production resumption progress.

  The report compares domestic and overseas thermal coal and coking coal prices as well as Qinhuangdao inventories, and combines this with Shanxi safety inspections, mine shutdowns, and production resumption conditions to assess short-term price support.

• Relative Rating SystemMorgan Stanley Equity Ratings and Industry View

  Use Overweight, Equal-weight, Underweight, and industry view to express judgments on relative performance over the next 12-18 months.

  The disclosure section explains that Overweight, Equal-weight, and Underweight represent expected risk-adjusted returns relative to the industry coverage universe over the next 12-18 months; the Cautious industry view indicates a cautious stance relative to the benchmark.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Domestic coking coal and coking coal producers

  Supply contraction and low mine-side inventories provide short-term price support.

  Strengths

  Production resumption in Shanxi is slow, and more mines in Lvliang, Lingshi, and Gujiao have suspended production due to strict safety inspections; sample coking coal output fell 1.3% week over week to 4.97mmt.

  Weaknesses

  The timing of production resumption is uncertain and evidence on the demand side is limited, so price support mainly comes from supply disruptions.

  Comparison

  Domestic coking coal prices are more resilient than thermal coal; Liulin No.4 mine-mouth and FOR prices were flat week over week, while NEWC thermal coal fell 10.4% week over week.

  Risks

  If safety inspections are relaxed, suspended mines resume production in a concentrated way, downstream steel and coke demand weakens, or coal imports increase, coking coal prices may decline.

• Thermal coal and related coal companies

  Price tracking shows marginal weakening in thermal coal, putting pressure on earnings elasticity for related coal companies.

  Strengths

  QHD 5500 fell only slightly by 0.1%, and BSPI was flat week over week, indicating that some domestic price indicators remain relatively stable.

  Weaknesses

  NEWC thermal coal fell 10.4% week over week, and CCI 5500 fell 1.6% week over week, showing pressure on thermal coal prices.

  Comparison

  Thermal coal price performance is weaker than coking coal, and the pullback in overseas NEWC is larger than in domestic QHD and BSPI.

  Risks

  If power demand is insufficient, port inventories continue to accumulate, or overseas prices keep falling, thermal coal prices may face further pressure.

• Covered China coal stocks (China Coal Energy Co., Ltd., China Shenhua Energy, Shaanxi Coal Industry, Yankuang Energy Group Co Ltd, etc.)

  Coal prices, inventories, and the industry view affect expectations for the relative performance of covered coal stocks.

  Strengths

  Some covered companies maintained Overweight ratings in the disclosure table, and resilient coking coal prices provide marginal support for related companies.

  Weaknesses

  The industry view remains Cautious, and some A-shares or related companies maintain Equal-weight ratings; the report provides no new evidence of target price increases.

  Comparison

  The same company may have different ratings across listing venues; for example, China Coal Energy Co., Ltd. is rated Equal-weight for A-shares and Overweight for H-shares.

  Risks

  Commodity price volatility, policy regulation, safety inspections, the pace of production resumption, and potential conflicts of interest disclosed by the research institution may all affect investment judgments.

Key data

• Report Date2026-06-29Weekly coal tracking report.
• Industry ViewCautiousThe view on the Asia Pacific China coal sector is cautious.
• Sample Coking Coal Output4.97mmtDown 1.3% week over week last week, mainly due to slow production resumption in Shanxi and tighter safety inspections.
• NEWC Thermal CoalUS$129/tAs of June 26, -10.4% week over week and +18.3% year to date.
• QLD Coking CoalUS$241/tAs of June 26, -0.8% week over week and +10.6% year to date.
• QHD 5500 kcal/kgRmb726/t-0.1% week over week and +4.5% year to date.
• CCI 5500 kcal/kgRmb851/t-1.6% week over week and +24.8% year to date.
• BSPIRmb714/tFlat week over week and +2.7% year to date.
• Liulin No.4 Mine-Mouth PriceRmb865/tFlat week over week and +29.1% year to date.
• Liulin No.4 FOR PriceRmb2,040/tFlat week over week and +29.1% year to date.
• Qinhuangdao Inventory6.77mt+2.6% week over week and -2.9% year to date.

Impact & implications

In the short term, support for coking coal prices mainly comes from supply disruptions rather than demand improvement. If production resumption in Shanxi continues to be delayed and mine-side inventories remain low, coking coal prices may stay more resilient than thermal coal; however, the overall industry view remains cautious, indicating that the relative performance of coal stocks is still constrained by demand, overseas coal prices, and regulatory policy variables.

Risks

• A faster-than-expected resumption of coal mine production in Shanxi could weaken coking coal supply constraints and price support.
• Steel and coke demand, power demand, or macro industrial activity coming in weaker than expected could suppress coal prices and coal stock performance.
• Further declines in overseas thermal coal or coking coal prices could be transmitted to the domestic market through import arbitrage and market sentiment.
• Rising port or mine-side inventories could alter the low-inventory support logic.
• The research institution has disclosed potential conflicts of interest related to investment banking, shareholdings, or market making with some covered companies, and investors should make independent judgments in conjunction with other information.

What to watch

• Production resumption plans and safety inspection intensity for coal mines in Shanxi's Lvliang, Lingshi, Gujiao, and Qinyuan.
• Whether sample coking coal output, mine-side inventories, and coking coal prices continue to show resilience.
• Weekly price changes in QHD 5500, CCI 5500, BSPI, NEWC, and QLD coking coal.
• Whether Qinhuangdao inventories continue to rise and affect thermal coal prices.
• Changes in procurement by downstream steel mills and coking plants, as well as power demand.
• Morgan Stanley's subsequent updates to ratings, target prices, or industry views on covered China coal stocks.