Shaanxi, or Shanxi? Non-Mandarin speakers picking over China’s reopened domestic market for initial public offerings had best pack an atlas along with their cheque books. Both are coal-producing provinces with eponymous miners. But Shaanxi Coal Industry is the one that just halved its planned listing. Shaanxi has not said why, but it probably has as much to do with the outlook for China’s coal industry as with the Shanghai market.

Yanzhou Coal and China Coal Energy were the two worst-performing Hong Kong-listed Chinese companies in the past year, as coal prices reached six-year lows. Both fell more than 50 per cent. Add in China Shenhua Energy’s one-third fall, and the three lost $47bn in market capitalisation – as much as the value of the world’s next five biggest coal stocks combined. That fall has improved valuations, with China Coal and Shenhua trading at 9 and 8 times forward earnings – at least a fifth below their average. The problem is finding a reason for coal prices to rally given overcapacity and a gradual policy shift away from coal. Coking coal prices have suffered as China has slowed. Thermal coal – four-fifths of China’s production – is trading at Rmb590 per metric ton, off last year’s Rmb510 low but still down a quarter from its 2011 peak. Producers’ break-even is roughly between Rmb550-600.

The factors that had boosted prices – limited supply, infrastructure bottlenecks, China’s own breakneck growth – have faded. Prices are unlikely to collapse but nor are they likely to gain much. Overcapacity from new projects tempts miners to lift output whenever prices rise.