Market review this week:
CITIC coal index closed at 2839 points, up 1.91%, outperforming the Shanghai and Shenzhen 300 index by 0.83pct, ranking 15th in the list of gains and losses of CITIC primary sector.
Analysis of key areas:
Power coal: it is difficult to solve the low inventory in the port, and the coal price is easy to rise but difficult to fall. As of Friday, the mainstream quotation of port q5500 was about 1000 yuan / ton, down 10 yuan / ton on a weekly basis. In terms of producing areas, the impact of the Spring Festival holiday on the supply side has basically ended, and the coal mines in producing areas generally resume normal production. Under the situation of ensuring supply, the coal output will continue to maintain a high level; Due to policy pressure, coal mining enterprises began to reduce coal prices to near the price limit requirements on Thursday. In terms of ports, under the policy pressure, the coal price of ports has been lowered, the market wait-and-see mood has gradually risen, and the transaction willingness is low. Although the downstream demand is strong, the transfer out has only increased slightly. The overall transaction is not much, the transfer out is less than the transfer in, and the inventory in Beigang has increased slightly, but the inventory is still at an absolute low level. Downstream, daily consumption is still expected to grow, and passive destocking may continue. Steady growth and full resilience of industrial power demand; With the end of the Winter Olympics, industrial production in the area around Beijing has recovered in stages, supporting the strong demand for industrial power. In addition, the cold air process affecting China in the next 10 days is still frequent, and there are many cloudy and rainy weather in the south. The demand for coal and electricity for heating is still large, and the daily consumption is expected to rebound strongly. In terms of import, the international demand for thermal coal in winter is still supported, and the coal price in Indonesia continues to rise; Considering that China’s port coal is lowered by policy pressure and the imported coal hangs upside down again, it will affect the subsequent coal import quantity to a certain extent. On the whole, this round of policies has a strong determination to regulate coal prices. Under the background of no particularly prominent contradiction between supply and demand, coal prices are under pressure. At present, the main contradiction in the power coal market is still along the coast. On the surface, it is profitable to send coal to the port, but the policy risk is large (the price limit is required to be 900 yuan / ton), the railway shipment volume and the coal transfer in volume of ports around the Bohai Sea are low, and the coal transfer in volume of ports in the short term may be difficult to increase substantially (especially the market coal). At present, the storage of power coal in the port is at a low level in recent years, and the function of reservoir is weakened; At the same time, the cost of imported coal is high. When China’s coal price faces policy risks at any time, the imported coal hangs upside down again, or the import quantity may be reduced, which will affect the supply of coastal power coal. If the problem of low inventory in the coastal area cannot be solved, the coal price will rise again after the periodic decline. 700-800 yuan / ton in the medium and short term should be the bottom area of the coastal coal price.
Coking coal: the demand has improved and the price inflection point has arrived. Coking coal prices still fell mainly this week. The falling coal types were mainly coking coal and skeleton coal with slow price adjustment, but some regions took the lead in stopping the decline and rising on Friday. In terms of regions, medium and low sulfur main coking coal in Liulin area decreased by 300-330 yuan / ton, Lingshi fat coal decreased by 300 yuan / ton, Hejin lean coal decreased by 300 yuan / ton, and Xingxian and Zichang gas coal decreased by 98-150 yuan / ton. As of Friday, the Shanxi main coke of Jingtang Port had closed at 2500 yuan / ton, down 330 yuan / ton on a weekly basis. This week, after the Spring Festival, except for the slow resumption of production due to heavy pollution weather warning in Wuhai area, the coal mines in the producing area have basically resumed normal production, and the supply continues to increase. In terms of importing Mongolian coal, affected by the epidemic, the customs clearance at Ganqi Maodu port remained low. According to sxcoal data, the customs clearance this week (2.14-2.17) lasted for 4 days, with an average of 104 vehicles per day, an increase of 28 vehicles per day compared with the same period of the week before the festival. At present, the mainstream quotation of Mongolian 5 raw coal is about 2000-2050 yuan / ton, and the main quotation of Mongolian 5 clean coal is about 2250-2300 yuan / ton. On the demand side, some low inventory coke enterprises began to purchase appropriately, mainly small orders, and some traders began to store goods appropriately with small orders. The demand has shown signs of improvement. When the Winter Olympics is over, the policy restrictions on production of steel mills and coking plants are expected to be lifted. At that time, there will be a demand for active replenishment (especially considering that the current inventory is at an absolute low in the same period), and the price of coking coal will soon open a rising channel.
Coke: supply and demand improved, and coke enterprises in some regions started the first round of increase. This week, the coke market temporarily operated stably. On the supply side, the Winter Olympics has not yet ended, and coke enterprises have implemented relevant production restriction policies. Affected by environmental protection inspection in Inner Mongolia, local coke enterprises still have large production restrictions; At the same time, the current coke enterprises have low profits and low production enthusiasm. On the demand side, the current production restriction policies are relatively strict, the overall operating rate of steel mills is low, and the blast furnaces of steel mills in some areas have been shut down. However, the Winter Olympics is coming to an end, the resumption of production of steel mills is expected to be strong, and the existing inventory is still low. There is an increasing demand for coke replenishment, and the enthusiasm for procurement has been improved. With the recovery of downstream demand and traders’ purchase in the market, the shipment of coke enterprises has improved, and the inventory pressure in the plant has been effectively relieved. Overall, the downstream demand has just increased, and the marginal supply and demand of coke has improved. This week, some coke enterprises in Ningxia have started the first round of increase (200 yuan / ton). After the Winter Olympic Games and the lifting of the production restriction policy of steel mills, the coke price may rise in an all-round way.
Investment strategy. This week, the marginal relaxation of real estate, combined with the force of steady growth, catalysed the rise of the market. Considering that China’s output has basically reached the limit, and the import supply function is limited under the upside down import, and the short-term demand is slightly released, the coal price is easy to rise but difficult to fall. Only after entering the off-season of demand in March will coal prices show a seasonal downward trend. However, if the problem of low coastal inventory cannot be effectively solved, the coal price may rise again after the periodic decline. In addition, China will still be based on the basic national conditions dominated by coal, and traditional energy will not withdraw too soon. Under the background of limited space for tapping the potential of new production capacity and stock, the rise of coal price center will contribute to the stable release of performance and valuation repair of coal enterprises. In addition, the increase of Hong Kong coal stocks in this round is much higher than that of a shares, which also reflects that under the macro environment of the Federal Reserve’s interest rate hike, foreign capital pursues the target of high dividend, and the subsequent A shares are expected to catch up. Stick to the core assets and be optimistic about the valuation repair of high long-term association and high score red coal enterprises. Key recommendations: China Shenhua Energy Company Limited(601088) , China Coal Energy Company Limited(601898) , Shaanxi Coal Industry Company Limited(601225) , Pingdingshan Tianan Coal Mining Co.Ltd(601666) . In addition, the transformation of traditional energy enterprises under the goal of “double carbon” is worth looking forward to. The key recommendations are power investment energy (green power), Shan Xi Hua Yang Group New Energy Co.Ltd(600348) (energy storage), Huaibei Mining Holdings Co.Ltd(600985) (new materials, green power), Yankuang energy (new materials, green power), Shanxi Meijin Energy Co.Ltd(000723) (hydrogen energy) and China Xuyang group (hydrogen energy). Actively layout the national reform in Shanxi, focusing on Jinneng Holding Shanxi Coal Industry Co.Ltd(601001) , Shanxi Coking Coal Energy Group Co.Ltd(000983) with expected asset injection.
Risk tip: China’s output release exceeded expectations, the downstream demand was less than expected, and the on grid electricity price was significantly reduced.
