This week, the rising trend of coal prices in producing areas continued. As of January 28, the pithead price of Shaanxi Yulin power lump coal (q6000) was 1135.0 yuan / ton, up 5.0 yuan / ton on a weekly basis and 525 yuan / ton on a year-on-year basis; The pit mouth price of sticky coal (including tax) (q5500) in the southern suburb of Datong was 935.0 yuan / ton, up 120.0 yuan / ton week on week, up 330 yuan / ton compared with the same period last year; Inner Mongolia Dongsheng large clean coal truck sector price (q5500) was 928.0 yuan / ton, unchanged on a weekly basis, up 413 yuan / ton compared with the same period last year. Coal mines in producing areas have been shut down for holidays, and the overall supply is tight. There is still a demand for replenishment of some power plants and chemicals before the Spring Festival and Winter Olympic Games. In addition, the price of ports has increased, and the platform and long-distance transportation have been active. The supply of coal mines in production is tight, and the price has risen steadily.
The inventory at the port decreased and the supply of goods available for sale was tight. 4591 trains arrived from Qinhuangdao Port Railway this week, 1383 fewer than last week, and the weekly ring ratio decreased by 23.15%; Qinhuangdao Port handled 367000 tons, a decrease of 117000 tons compared with last week, and a decrease of 24.17% on a weekly basis. As of January 28, the inventory of the four major ports around the Bohai Sea (Qinhuangdao port, Huanghua port, Caofeidian port and east port of Jingtang Port) was 9.43 million tons (down 740000 tons on a weekly basis), the number of anchorage ships was 120.0 (down 28.00 on a weekly basis), and the cargo ship ratio (inventory to ship ratio) was 7.9 (up 0.99 on a weekly basis).
Port prices remained high. As of January 27, the coal inventory of the eight coastal provinces was 31.651 million tons, with a decrease of 79000 tons on a weekly basis (a decrease of 2.44%), the daily consumption was 1.831 million tons, a decrease of 259000 tons / day on a weekly basis (a decrease of 12.39%), the number of available days was 17.3 days, and a rise of 1.80 days on a weekly basis. As of January 28, the market price of Qinhuangdao port thermal coal (q5500) produced in Shanxi was 1070.0 yuan / ton, up 70.0 yuan / ton on a weekly basis. International coal price: as of January 27, the spot price of power coal in Newcastle port was US $262.6/ton, up US $35.42/ton on a weekly basis. As of January 28, the active contract of thermal coal futures fell by 11.0 yuan / ton to 756.2 yuan / ton compared with the same period last week, and the futures discount was 313.8 yuan / ton. As the Spring Festival approaches, traders’ willingness to ship goods has increased, and some downstream operations have been suspended to wait for the commencement after the festival. It is difficult to deal with high-priced goods, and market participants have different expectations for the future market. At the same time, the national development and Reform Commission held a special meeting on the 28th to arrange the work of ensuring the supply and price of coal during the Spring Festival, strengthen the wait-and-see mood, and the market activity decreased; However, under the initiative of “on-site Chinese New Year”, the demand for power and coal in the downstream fell or was relatively flat, and the southern region suffered rain and snow, and the heating load increased, supporting the high operation of coal prices.
Coke: the price gradually weakened. As of January 28, 2022, Fenwei CCI Luliang quasi primary metallurgical coke reported 2960 yuan / ton, unchanged on a week-on-week basis, with a year-on-year increase of 310 yuan / ton. Port index: CCI Rizhao quasi primary metallurgical coke reported 3050 yuan / ton, down 100 yuan / ton on a weekly basis and up 70 yuan / ton on a year-on-year basis. With the Winter Olympic Games approaching, the production restriction of steel mills is significantly stronger than that of the supply side. Considering that the current coke enterprises have accumulated a large amount of reserves, the supply and demand of coke is gradually relaxed, coupled with the slowdown of steel mills’ procurement, the future market of coke may gradually weaken.
Coking coal: the short-term price has decreased steadily, and the medium and long-term scarcity is expected to gradually highlight. As of January 27, CCI Shanxi low sulfur index was 2755 yuan / ton, unchanged on a weekly basis, up 335 yuan / ton on a monthly basis and 1189 yuan / ton on a year-on-year basis; CCI Shanxi high sulfur index was 2323 yuan / ton, unchanged on a weekly basis, with a month on month increase of 347 yuan / ton and a year-on-year increase of 1148 yuan / ton; Lingshi fat coal index was 2350 yuan / ton, unchanged on a weekly basis, with a month on month increase of 450 yuan / ton and a year-on-year increase of 1200 yuan / ton; Puxian 1 / 3 coke index was 2300 yuan / ton, unchanged on a weekly basis, with a month on month increase of 400 yuan / ton and a year-on-year increase of 1070 yuan / ton. This week, the coking coal market has two weak supply and demand: on the supply side, at present, some coal mines in Shanxi, Shaanxi and Inner Mongolia have stopped production and holidays, and the supply has been reduced; On the demand side, with the completion of replenishment by downstream coke enterprises and the expected increase in production restriction in February, most have stopped purchasing. At the same time, near the Spring Festival, most traders leave the market. The demand side is weak as a whole, the market wait-and-see mood is getting stronger and the price is stable. In the medium and long term, the newly-built coking coal mines are insufficient, the depletion of resources is becoming more and more prominent, and the supply side will shrink significantly, supporting that the price of coking coal is easy to rise but difficult to fall; With the change of demand structure for coking coal due to the large-scale blast furnace and coke oven, high-quality coking coal (main coke, fat coal, etc.) resources are more scarce.
We believe that at present, we are in the early stage of a new round of upward cycle of coal economy, and the fundamentals, policies and companies resonate. At this stage, the allocation of coal sector is at the right time. With the adjustment of industrial structure and the rapid growth of residents’ domestic energy consumption, the demand for energy in current social development is becoming more and more rigid, rather than the limited output of fossil energy, and the demand for coal is expected to gradually increase with economic growth; At present, the new capital expenditure on the coal supply side is weak, and the depletion of resources in old mining areas is accelerating. Considering the decline of coal enterprises’ willingness and ability to build mines and the construction cycle of more than 5 years, the coal supply may be difficult to respond to the demand growth during the 14th Five Year Plan period, and the price will remain high. Under the general cost reduction, efficiency increase and endogenous extension growth of the industry, the enterprise profit is expected to rise. At the same time, the coal related policies tend to be loose. On November 17, 2021, the national standing committee decided to establish a 200 billion refinance to support the clean and efficient utilization of coal; Subsequently, the central economic work conference in December reiterated that “based on the basic national conditions dominated by coal, we should pay attention to the clean and efficient utilization of coal, increase the consumption capacity of new energy, and promote the optimal combination of coal and new energy.” In the upward trend of the industry boom, the leading coal enterprises rely on their own resources / capital / technology endowment advantages to promote the energy revolution, layout transformation and upgrading, new growth poles or repay shareholders, and can improve the income level of investors in the long term. At this stage, the industry fundamentals, the underlying logic of the policy and the direct effect are favorable for the repair and improvement of the valuation of the sector. Considering the certainty of the high growth of performance in the first half of this year, it is the best stage for bargain hunting to allocate the coal sector.
Investment rating: we continue to look at the coal sector in an all-round way and continue to suggest paying attention to the historic allocation opportunities of coal. It is suggested to pay attention to three main investment lines: first, Yankuang energy, Shaanxi Coal Industry Company Limited(601225) , China Shenhua Energy Company Limited(601088) , which is the leader of low value and high dividend power coal; Second, Pingdingshan Tianan Coal Mining Co.Ltd(601666) , Guizhou Panjiang Refined Coal Co.Ltd(600395) with both scarcity of resources and significant growth; Third, the Shanxi Coking Coal Energy Group Co.Ltd(000983) and Jinneng Holding Shanxi Coal Industry Co.Ltd(601001) with great extension expansion potential brought by the improvement of asset securitization rate of state-owned coal group.
Risk factors: coal mine safety production accidents in key companies; The macro economy has fallen sharply.
