Core view
The national development and Reform Commission issued the notice on further improving the coal market price formation mechanism. In order to strengthen the regulation and supervision of coal market price, guide the operation of coal price in a reasonable range, promote the coordinated development of upstream and downstream of coal and electricity, and ensure the safe and stable supply of energy, the national development and Reform Commission recently issued the notice on further improving the coal market price formation mechanism (hereinafter referred to as the “notice”).
Based on the basic national conditions dominated by coal, improve the coal market price formation mechanism. The circular points out that coal is an important primary product related to the national economy and the people’s livelihood, and power supply and security are related to the overall economic and social development. For some time to come, China’s energy consumption still needs to be based on the basic national conditions of coal. To further improve the coal market price formation mechanism, we should not only give full play to the decisive role of the market in allocating resources, but also give better play to the role of the government. On the basis of insisting that the coal price is formed by the market, we should put forward a reasonable range of coal price, improve the regulation mechanism, strengthen interval regulation and control, and guide the operation of coal price in a reasonable range.
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.
It is emphasized to improve the price transmission mechanism of coal and electricity. The notice points out that it is necessary to guide the formation of coal and electricity prices mainly through medium and long-term transactions. When the medium and long-term transaction prices of coal operate within a reasonable range, coal-fired power generation enterprises can fully transmit the changes of fuel costs through market-oriented means under the current mechanism, and encourage the reasonable setting of terms linking the on grid price to the medium and long-term transaction price of coal in the medium and long-term electricity transaction contracts, Effectively realize the price transmission of coal and electricity.
Improve the coal price regulation mechanism. First of all, we should improve the ability of supply and demand regulation. Ensure reasonable and sufficient coal production capacity, improve the medium and long-term coal contract system, further enhance the government’s dispatchable coal storage capacity, and improve the reserve regulation mechanism. Secondly, strengthen market expectation management. Improve the cost investigation and price monitoring system, and standardize the compilation and release of coal price index. When the coal price exceeds a reasonable range, make full use of the means and measures stipulated in the price law and other laws and regulations to guide the return of coal price. Third, strengthen market supervision. It is strictly prohibited to interfere improperly with the prices of coal and electricity operating within a reasonable range, strengthen the supervision of the performance of medium and long-term contracts of coal and electricity, strengthen the linkage supervision and antitrust supervision of the futures and spot market, and investigate and deal with price violations in a timely manner.
Further improving the coal market price formation mechanism is conducive to stabilizing market expectations, preventing coal prices from ups and downs, straightening out the price relationship between coal and electricity, and promoting the coordinated and high-quality development of upstream and downstream industries. It is expected that in the future, the coal price will be high and “coal power will top the bull”, the phenomenon that the profits of coal-fired power generation enterprises are highly squeezed by costs will be difficult to reproduce, and coal-fired power generation enterprises will end their losses and enter a new profit cycle. We maintain the “optimistic” investment rating of the industry and continue to recommend Huaneng Power International Inc(600011) (A / h), Huaneng Lancang River Hydropower Inc(600025) , Sichuan Chuantou Energy Co.Ltd(600674) , China Yangtze Power Co.Ltd(600900) , Datang new energy and other companies.
Risk tip: the coal price regulation mechanism is not as expected; Power market reform is not as expected;
