Event: on February 24, 2022, the national development and Reform Commission issued a notice to further improve the coal market price formation mechanism. The notice specifies three key policies and measures: first, guide coal prices to operate within a reasonable range. From the market operation for many years, the medium and long-term transaction price of underground coal (5500kcal) in Qinhuangdao port is 570 ~ 770 yuan per ton (including tax) in the near future, and the upstream and downstream can achieve better coordinated development. Considering the reasonable circulation cost, production cost and other factors, the reasonable range of medium and long-term transaction price in the ore extraction link of key coal transfer out areas (Shanxi, Shaanxi and Inner Mongolia) is defined accordingly. The national development and Reform Commission has taken comprehensive measures with relevant parties to guide coal prices to operate within a reasonable range. Second, improve the price transmission mechanism of coal and electricity. Third, improve the coal price regulation mechanism.
The price of the long-term association is expected to rise. According to the latest phase of Bohai Rim thermal coal index is 740 yuan / ton (February 23), cctdq5500 index is 786 yuan / ton (February 18), the purchase price of coastal power coal is 883 yuan / ton (February 17), and the comprehensive price index of national coal trading center is 770 yuan / ton (February 18). If the benchmark price falls below 670 yuan / ton (the reasonable price center of the notice), the annual long-term agreement price is 732 yuan / ton, which is higher than the long-term agreement price of 725 yuan / ton continuously implemented from December 2021 to February 2022. Since the signing of the contract of the elderly association in 2017, the benchmark price of the elderly association has been 535 yuan / ton, which will last until 2021. The benchmark price of the elderly association in 2022 is expected to increase to 670 yuan / ton, an increase of 25% over the previous year. Later, with the adjustment of the index, the long-term association price is expected to move up.
The price fluctuation range of Changxie was further weakened, and the profit stability of gaochangxie company was further enhanced. The notice specifies that the medium and long-term transaction price of underground coal (5500kcal) in Qinhuangdao port is 570 ~ 770 yuan per ton (including tax). The price difference between the high and low points of the price range is 200 yuan / ton; The price range given in the previous work plan for signing and performing medium and long-term coal contracts in 2022 (Exposure Draft) is 550-850 yuan / ton (including tax), and the price difference between high and low points is 300 yuan / ton. It can be seen that the fluctuation range of the long-term association has further decreased and the price stability has further enhanced.
The spot fluctuation of thermal coal is weakened, and the characteristics of public utilities are prominent. Zhou peixue, deputy director of the price department of the national development and Reform Commission, said at the press conference of the national development and Reform Commission held on February 24 that although there is no reasonable range for the spot price of coal, the spot price cannot deviate significantly from the reasonable range of medium and long-term transaction price. In the long run, the spot price center will also fall in the range of 570 ~ 770 yuan / ton (including tax), which means that the price fluctuation of thermal coal will be weakened, the profit stability of thermal coal will be improved, and the sector is expected to highlight the attribute of public utilities in the future.
Investment suggestion: To sum up, the further narrowing of the price range of the long-term association means that the price fluctuation is weakened and the stability is enhanced. For companies with a high sales proportion of the long-term association, the stability of their performance is enhanced. We mainly recommend China Shenhua Energy Company Limited(601088) , China Coal Energy Company Limited(601898) , power investment energy, and power coal leaders Jinneng Holding Shanxi Coal Industry Co.Ltd(601001) , Shaanxi Coal Industry Company Limited(601225) .
Risk tip: the risk of economic slowdown; Risk of sharp decline in coal prices; Risk of policy change.
