The price limit policy of origin is implemented, but the supply and demand fundamentals support that coal prices are easy to rise but difficult to fall. As of February 18, the pithead price of Shaanxi Yulin power lump coal (q6000) was 1000.0 yuan / ton, down 110.0 yuan / ton on a weekly basis, up 460.0 yuan / ton over the same period last year; The pit mouth price of sticky coal (including tax) (q5500) in the southern suburb of Datong was 880.0 yuan / ton, down 40.0 yuan / ton on a weekly basis, up 380.0 yuan / ton over the same period last year; Inner Mongolia Dongsheng large clean coal truck sector price (q5500) was 901.0 yuan / ton, down 9.0 yuan / ton on a weekly basis, up 464.0 yuan / ton over the same period last year. The production of small and medium-sized coal mines in the producing area has gradually resumed, and the supply continues to increase, but it has not reached the normal high level; At the same time, the regulation of price limit policy is gradually implemented. Most coal mines at the pit mouth are implemented according to the price limit requirements. In the early stage, the purchasing enthusiasm of users will be improved. At the same time, the resumption of work and production of downstream industries will continue to drive the increase of demand, good platform shipping and low inventory. It is expected that the demand side support will strengthen and the coal price will operate steadily.
The policy price limit caused falling expectations, and the terminals generally delayed procurement. This week, 6329 trains arrived from Qinhuangdao Port Railway, 620 fewer than last week and 8.92% lower than that of the previous week; Qinhuangdao Port handled 501000 tons, an increase of 59000 tons compared with last week, and the weekly ring ratio increased by 13.35%. As of February 18, the inventory of Qinhuangdao port, Caofeidian port and east port of Jingtang Port in the Bohai Rim region was 8.57 million tons (down 40000 tons), the number of anchorage ships was 74 (up 5.00), and the cargo ship ratio (inventory to ship ratio) was 11.58 (up 3.75).
It is difficult to hide the resonance of coal prices outside China. As of the 8th week, the consumption of coal in the province was 3.675 million tons, down 2.66 million tons, compared with the available days in the 8th week, down from 3.75 million tons in the 8th week. As of February 18, the market price of Qinhuangdao port thermal coal (q5500) produced in Shanxi was 1000.0 yuan / ton, down 10.0 yuan / ton on a weekly basis. International coal prices, as of February 17, the spot price of power coal in Newcastle port was US $233.7/ton, down US $13.53/ton on a weekly basis. As of February 18, the active contract of thermal coal futures fell by 10.6 yuan / ton to 812.0 yuan / ton compared with the same period last week, and the futures discount was 188.0 yuan / ton. The delayed procurement in the downstream and the large number of imported coal flow standards lead to the decline of coastal terminal inventory. It is expected that the downstream procurement demand will increase with the continuous improvement of coal consumption demand. Due to the fact that most of the coal mine goods flow to the long-term supply guarantee association and local sales, the port flow cost is high and the supply of goods is relatively small, the shortage of spot resources in the market and the cost still support the coal price, and the coal price is expected to be strong.
Coke: the expectation of downstream resumption of production is strengthened, and the coke is basically oriented well. As of February 17, 2022, Fenwei CCI Luliang quasi primary metallurgical coke reported 2560 yuan / ton, which was flat on a weekly basis, with a month on month decrease of 13.51% and a year-on-year decrease of 3.4%. Port index: CCI Rizhao quasi primary metallurgical coke reported 2900 yuan / ton, with a weekly increase of 0.69%, a monthly decrease of 7.9% and a year-on-year increase of 0.69%. This week, the coke market operated stably temporarily. With traders actively entering the market to purchase and some low inventory steel mills increasing stock replenishment efforts, the shipment of coke enterprises was good, the coke inventory in the plant continued to decline, and a few coke enterprises even shipped at a premium. Considering that the current coke price gradually stabilized and coke enterprises were generally in a state of loss, the phenomenon of reluctant sale and waiting for rise of coke enterprises increased; At the same time, the expectation of the resumption of production of the downstream steel plant is constantly strengthened, the just need is increased, and the coke is basically oriented well.
Coking coal: the short-term supply and demand will gradually improve, and the medium and long-term scarcity is expected to gradually highlight. As of February 17, CCI Shanxi low sulfur index was 2418 yuan / ton, down 127 yuan / ton on a weekly basis and 337 yuan / ton on a monthly basis, up 852 yuan / ton on a year-on-year basis; CCI Shanxi high sulfur index was 2056 yuan / ton, down 152 yuan / ton on a weekly basis and 252 yuan / ton on a monthly basis, up 881 yuan / ton on a year-on-year basis; Lingshi fat coal index was 2350 yuan / ton, down 400 yuan / ton on a weekly basis and 400 yuan / ton on a monthly basis, up 1200 yuan / ton on a year-on-year basis; Puxian 1 / 3 coke index was 1900 yuan / ton, down 100 yuan / ton on a weekly basis and 400 yuan / ton on a monthly basis, up 670 yuan / ton on a year-on-year basis. After the Spring Festival, the coal mines in the producing area basically resumed normal production, and the increment of supply side continued; At the same time, with the improvement of the coke market, the stock consumption of raw coal in some coke enterprises reached a low level, and began to purchase and replenish the stock in a small amount. The shipment of coal mines was better than that in the early stage, the inventory began to decline, and the demand showed signs of improvement. 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.” At the same time, relaxing the dual control of energy consumption of raw coal and delaying the carbon peak time of iron and steel industry are beneficial to the long, medium and short-term demand for coal. In addition, 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.
