Core view
The national development and Reform Commission guided the coal long-term association to return to a reasonable price. On February 24, the national development and Reform Commission issued the notice on further improving the coal market price formation mechanism. The notice specifies that the medium and long-term transaction price of underground coal (5500 kcal) in Qinhuangdao port is 570770 yuan per ton (including tax). At the same time, the notice emphasizes the need to improve the price transmission mechanism of coal and electricity, and encourages the medium and long-term power contract to set the on Grid price to be linked with the medium and long-term price of coal; In addition, we should improve the coal price regulation mechanism, mainly by improving the supply and demand regulation capacity of the coal market, strengthening the expected management of the coal market and strengthening the supervision measures of the coal power market. The main purpose of this notice of the national development and Reform Commission is to control the price of thermal coal, maintain a reasonable range, curb speculation and malicious capital speculation, prevent sharp fluctuations in coal prices, ensure the safety of energy supply and stabilize the coal cost of downstream enterprises.
After the completion of safety and maintenance, the coal supply will gradually increase, the resumption of work and production will speed up, and the coal output will pick up. According to the national development and Reform Commission, after the Spring Festival holiday, especially since the Lantern Festival, through the efforts of all parties, the national daily coal output has rebounded to more than 12 million tons. With the warmer weather, the production and supply of the main coal producing areas in Shanxi, Shaanxi and Inner Mongolia will tend to be stable. During the Spring Festival, the investigation and rectification of hidden dangers in production safety of some coal enterprises and the maintenance of machinery and equipment will be completed, the safety production capacity will be enhanced, the high-quality coal production capacity will be further released, and the coal supply level is expected to continue to improve. According to the information of coal resources network, the number of coal mines in production in Inner Mongolia Eerduosi Resources Co.Ltd(600295) area has increased to 225 recently, 42 more than during the Spring Festival, and the daily coal output in the area has exceeded 2.6 million tons / day, an increase of more than 90% compared with the lowest point during the Spring Festival. In late February, the high-quality production capacity of coal mines in producing areas will be further released, and China’s coal supply level will continue to improve, which will further drive the increase of output.
The policy continues to make efforts to ensure price stability, and is optimistic about the long-term investment value under undervalued value. Since late January, the coal price has risen too fast due to tight supply and the impact of international coal prices. The implementation of the signing of the long-term association for coal has not reached the expected level. At the same time, the operating pressure of the power plant is huge. The national development and Reform Commission has intensively issued policies to prevent the coal price from rising too fast and control the coal price to operate within a reasonable range The pit mouth and port prices of Changxie coal have conducted price guidance respectively. The core is to control the rapid rise of coal prices and transmit them to the downstream. The market has panic about the policy adjustment of coal prices this week. We believe that the combination of policies is mainly to correct the deviation that the prices rise too fast and exceed a reasonable level. The main reason for the price rise is that the short-term constraints on the supply side still exist, In particular, the international coal price is rising due to the superposition of changes in the external international situation. Under the strong regulation of the policy, we expect the coal price to remain at a high level within the reasonable price range. The prices of pits and ports in the first quarter are higher than those in the same period of the last three years. The coal enterprises still have sufficient profit space, and the valuation of high-quality thermal coal is still low, Continue to be optimistic about the long-term investment value of the industry.
Risk tips: downside risk of economic growth, mismatch risk of supply and demand, impact of extreme weather and change of coal policy.
