In Heilongjiang Province, 1999, the dismembered parts of a human body appear in shipments of coal in different cities. Detective Zhang (Liao Fan) is assigned to investigate. The dead man is identified as a coal worker named Liang Zhijun, according to an identification badge next to some of the remains. Zhang and his partners (including Wang) go to interview a potential suspect and his brother. The suspect kills two of Zhang's partners before being shot by Zhang. Zhang is then shot by the suspect's brother. Zhang survives. Wang and Zhang return the ashes of Liang to his widow Wu (Gwei Lun-mei), an employee at Rong Rong Laundry. Wu buries the ashes at the base of a tree just outside Rong Rong Laundry.
By 2004, Zhang has quit the police force and become a drunken security guard, having been traumatized by the prior events. During a chance encounter with Wang, Zhang learns that two additional murders have happened with the same modus operandi. The common thread is that both of these men had dated Wu at some point. Both men were wearing ice skates when they were killed. Zhang feels intrigued and begins to investigate. He becomes a frequent customer of Rong Rong Laundry and tries to follow Wu at night, but she easily detects him. One day, the owner of the store, Rong Rong (Wang Jingchun), explains to Zhang that he employs Wu out of sympathy, even though she doesn't do her job properly. In fact, five years before, Wu had damaged a highly expensive jacket, although a few days later the jacket's owner stopped complaining and disappeared.
Zhang tries to make friends with Wu, and eventually invite her to go ice-skating together at an outdoor rink. Wang is secretly following the pair when he notices that a truck driver is also following them. He follows the truck driver, but while arresting him, the truck driver kills him using the blades of a pair of ice-skates as a weapon. The murder of his former partner makes Zhang even more determined. He follows up on a license plate written down on a pad of paper (presumedly by Wang). While on the bus Zhang is followed by a man with a pair of skates. He goes into a restaurant and notices the man following him. He loses the man at a dance hall. The next day he follows the truck and sees the man dispose of paper wrapped bags from a overpass onto passing coal trains. He then follows the man to the same outdoor ice skating rink. To test his new theory of the case Zhang asks for Liang Zhijun to be paged (the 1st murder victim from 1999). The man Zhang was following reacts by immediately leaving the rink.
The police confronts Wu regarding the murders. She insists on speaking to Zhang. She tells him that Liang is alive and had killed someone during a robbery. She tells Zhang that Liang switched identities with the man and that Liang is alive and following her since 1999 and killing any man with which she's involved.
Zhang gets Wu to help the police catch Liang. She reveals his location and arranges to meet with him. They meet and decide sometime later to go out to buy cigarettes. Liang notices the police and runs. Liang is armed with a gun, the police give chase and eventually kill Liang.
The police ask Wu for the ashes from 1999. She says that she threw the ashes in a river, which makes Zhang suspicious (he saw her bury the ashes under a tree outside the laundry). He returns to Rong Rong and offers the owner a sum of money to purchase the damaged jacket that the customer abandoned. After a search for the jacket's owner, Zhang arrives at the Daylight Fireworks Club (The name of the club is the Chinese title of the film). He meets the owner of the club and asks if she recognizes the jacket. She says that her husband owned a similar jacket. She also says that he went with another woman and she hasn't seen him since. Zhang asks the owner whether she would recognize the woman her husband left with and she adamantly says yes. She offers Zhang any sum for the woman's whereabouts. Zhang says he is only here to delivery the jacket.
Zhang goes back to Rong Rong to invite her out to a performance at an amusement park. The pair meet the next evening on a Ferris wheel. Zhang asks Wu to look over to the city. The neon lighting of Daylight Fireworks Club is visible. Zhang asks her what she sees and she admits seeing the club. Zhang wants Wu to tell him the truth before the police finds out. Wu instead kisses Zhang and they end up having (awkward) sex while still on the Ferris wheel.
Police then question Wu and confronts her with the jacket. Wu admits she killed the owner of the jacket. When she couldn't afford to pay the value of the jacket, the owner of the jacket forced her into an ongoing sexual relationship with him. To make this stop Wu killed the owner of the jacket. Wu said Liang was not involved and he sacrificed everything for her and became a living dead person. She admits betraying Liang.
Zhang returns to his former life. Wu is arrested and is walked through the scene where the murder took place by the police. When she is transported from the scene fireworks starts going off everywhere. the fireworks are shot from a rooftop nearby. The daylight fireworks is an allusion to the Daylight Fireworks Club (and the title of the film). The film ends as police and firefighters scale the building to stop the person responsible for the fireworks.Liao Fan as Zhang Zili
Gwei Lun-mei as Wu Zhizhen
Wang Xuebing as Liang Zhijun
Wang Jingchun as Rong Rong
Yu Ailei as captain Wang
Ni Jingyang as Su Lijuan
The project started from Diao Yinan's idea to film a detective story. Diao spent eight years in total to write the screenplay; the final version that was filmed was the third draft. The film was then laid out into a detective film noir.
Liao Fan gained 44 pounds of weight to play the film's protagonist of an alcoholic and suspended police officer.
The film's English title Black Coal, Thin Ice is different from its Chinese title Bai Ri Yan Huo, which translates literally as Daylight Fireworks. Diao Yinan came across this phrase from a friend of his. Diao further clarified the meaning of "daylight fireworks" as a state of sentiment or a state of condition. For him, the Chinese and English names together helped to construct the difference between reality and fantasy. In an interview he explained, "Coal and ice both belong to the realm of reality, but fireworks in daylight is something fantastic; they are the two sides of the same coin." The English name refers to the two visual clues in the film: coal as "where the body parts were found" and ice as "where the murder was committed". He further explained, "when the two are combined, the reality of this murder is constructed ... while daytime fireworks is a fantasy, it is what we use to coat ourselves from the cruel side of this real world."
The film was shown in competition at the 64th Berlin International Film Festival, and went on to win the Golden Bear prize for Diao. The film's leading actor Liao Fan also won the Silver Bear for Best Actor. The film received critical praises at the Berlin Film Festival, but audience reaction was more divided.