Morgan Stanley Fund released a document stating that since late September, various departments of the country have introduced a series of measures to expand currency, stabilize the stock market, and support the real estate market, which has greatly boosted market confidence. Among them, the interest rate cuts and reserve requirement reductions are expected to increase the money supply, promote investment to drive coal consumption, and lower interest rates on existing housing loans to stimulate real estate consumption and boost demand for black commodities. Currently, the prices of thermal coal and coking coal are relatively low, and with the improvement of macroeconomic expectations, gradual implementation of future policies, and improved demand, coal prices have significant upward elasticity. In addition, the central bank's new securities, funds, and insurance companies' swap facilities, as well as special refinancing tools to guide listed companies to repurchase and major shareholders to increase their holdings of stocks, are expected to continue to attract funding to the coal sector due to its stable and high dividend characteristics. In summary, we believe that the coal sector has both cyclical elasticity and stable dividends, and it has now received resonance from both fundamental and policy factors, so attention should be paid to the sector's layout opportunities. Morgan Stanley Fund stated that when reviewing the performance of the coal sector since the beginning of this year, the China Coal Index rose by about 20% from the beginning of the year to early March. The main driving force behind the rise was the low market confidence, with coal and other high-dividend assets being sought after. From mid-March to the end of June, coal was in the off-season with no significant conflicts, and the index showed narrow fluctuations. From July to early September, the index fell, almost erasing the gains for the year, mainly due to the weak performance of coal prices in the peak season. The high point of the Qinhuangdao Q5500 thermal coal price in June and July did not break through 900 yuan per tonne, leading some investors to further bearish future coal prices, but in September, coal prices once again withstood pressure and did not fall below 830 yuan per tonne, driving the index to a strong rebound of 15% from the bottom. In terms of industry operations, the supply and demand for thermal coal were relatively balanced in the first three quarters, with prices fluctuating narrowly. In terms of demand, from January to August 2024, total electricity consumption in society increased by 7.9%, with a growth rate of 2.9% compared to the same period last year. New energy vehicles, electronic and communication equipment, photovoltaic equipment, and other emerging industries have become the main contributors to the growth of electricity consumption in China. However, due to the good output of hydropower this year, thermal power generation in May to July saw a year-on-year decline, with cumulative thermal power generation from January to August growing by only 1.0%, a decrease of 5.1% compared to the same period last year. In terms of non-electricity demand, overall growth was maintained, but downstream sectors showed differentiation. Benefiting from the high price difference between oil and coal and the release of new capacity, coal consumption in the chemical industry increased by 19.4% year-on-year from January to August, while building materials and metallurgy were dragged down by the real estate sector, with coal consumption decreasing by 9.3% and 4.2% respectively. Supply side, national raw coal production from January to August reached 3.05 billion tonnes, a year-on-year decrease of 0.3%, with Xinjiang growing by 15.2%, Shaanxi and Inner Mongolia growing by 1.8% and 4.2% respectively, and Shanxi reducing production by 84.8 million tonnes due to safety production assistance at the beginning of the year, a year-on-year decrease of 9.6%. In terms of imports, cumulative imports from January to August reached 260 million tonnes, an 8% increase year-on-year. Morgan Stanley Fund believes that the coking coal sector showed a weak supply-demand situation in the first three quarters, and coal prices fluctuated widely, with the overall price center moving down. On the demand side, crude steel production in China decreased by 3.6% year-on-year from January to August, with the production of molten iron in sample enterprises decreasing by 4.7%. On the supply side, the weekly production of sample coking coal enterprises decreased by 3% year-on-year, while imports increased by 27%. In July and August, downstream black commodities saw weak demand combined with factors such as the switch to the national standard for rebar, accelerating the decline in steel prices and transmitting to the upstream, resulting in corresponding adjustments in coking coal prices.