Coal mining: not afraid of floating clouds to cover your eyes

Supply continued to rise, superimposed with the expectation of the end of the heating season, and the coal price of origin fell month on month. As of February 25, the pithead price of Shaanxi Yulin power lump coal (q6000) was 920.0 yuan / ton, down 80.0 yuan / ton on a weekly basis, an increase of 425 yuan / ton over the same period last year; The price of Datong Huanjiao coal (including 550000 yuan / ton of coal in the same period last year) (including 550000 yuan / week in Datong Huanjiao coal price); Inner Mongolia Dongsheng large clean coal truck sector price (q5500) was 808.0 yuan / ton, down 93.0 yuan / ton on a weekly basis, up 408 yuan / ton over the same period last year. The utilization rate of production capacity continues to rise, but the successive underground safety accidents in Guizhou, Henan and other places may increase the implementation of safety production in coal mining enterprises and delay the recovery rate of supply; The growth rate of coal consumption in the whole year is expected to maintain a high level year-on-year in 2021-february, which is strongly supported by the year-on-year growth of coal consumption.

The price policy was implemented, and the port transportation picked up slightly. This week, there were 5928 railway arrivals from Qinhuangdao port, a decrease of 401 vehicles compared with last week, and a decrease of 6.34% on a weekly basis; Qinhuangdao Port handled 465000 tons, a decrease of 36000 tons compared with last week and a decrease of 7.19% on a weekly basis. As of February 24, the inventory of Qinhuangdao port, Caofeidian port and east port of Jingtang Port in the Bohai Rim region was 8.745 million tons (an increase of 160000 tons), the number of anchorage ships was 80.0 (an increase of 3.00), and the cargo ship ratio (inventory to ship ratio) was 10.9 (a decrease of 0.65).

The cold wave in the South drives the rise of daily coal consumption, and the conflict between Russia and Ukraine stimulates the rise of global energy prices. As of February 24, the coal inventory of the eight coastal provinces was 28.343 million tons, with a decrease of 2.922 million tons on a weekly basis (a decrease of 9.35%), the daily consumption was 1.877 million tons, a rise of 208000 tons / day on a weekly basis (12.46%), and the available days were 15.1 days and a decrease of 3.60 days on a weekly basis. As of February 25, the market price of Qinhuangdao port power coal (q5500) produced in Shanxi was 940.0 yuan / ton, down 60.0 yuan / ton on a weekly basis. As of February 24, the spot price of Newcastle port power coal was 248.4 dollars / ton, up 14.66 dollars / ton on a weekly basis. As of February 25, the active contract of thermal coal futures fell by 67.0 yuan / ton to 745.0 yuan / ton compared with the same period last week, and the futures discount was 195.0 yuan / ton. The conflict between Russia and Ukraine has stimulated the rise of global energy commodity prices. The essential logic of this round of energy inflation cycle is the decline of supply cycle caused by insufficient investment in the past 3-5 years. Geopolitical factors are not its fundamental driving force. Driven by the logic of production capacity cycle, the sustainability of this round of energy inflation cycle will far exceed expectations.

Coke: mainstream steel mills adjusted the purchase price of coke, and the first round of coke rise fell to the ground. As of February 25, 2022, Fenwei CCI Luliang quasi primary metallurgical coke reported 2760 yuan / ton, with a weekly increase of 200 yuan / ton, a monthly decrease of 6.76% and a year-on-year increase of 9.52%. Port index: CCI Rizhao quasi primary metallurgical coke reported 3120 yuan / ton, up 220 yuan / ton on a weekly basis, 2.30% on a monthly basis and 14.29% on a year-on-year basis. This week, the coke market was stable, medium and strong, and the mainstream steel mills in Shandong, Hebei and other places raised the purchase price of coke. At the supply level, coke enterprises shipped smoothly and inventory fell; On the demand side, the Winter Olympic Games will be successfully concluded, the rhythm of steel plant resumption will be improved, and the relationship between coke supply and demand will continue to improve.

Coking coal: the change of market sentiment has driven the rapid rise of prices. As of February 24, CCI Shanxi low sulfur index was 2530 yuan / ton, down 112 yuan / ton on a weekly basis and 227 yuan / ton on a monthly basis, up 1012 yuan / ton on a year-on-year basis; CCI Shanxi high sulfur index was 2056 yuan / ton, with a weekly increase of 207 yuan / ton and a monthly decrease of 60 yuan / ton, with a year-on-year increase of 881 yuan / ton; Lingshi fat coal index was 2300 yuan / ton, with a weekly increase of 350 yuan / ton and a monthly decrease of 50 yuan / ton, with a year-on-year increase of 1150 yuan / ton; Puxian 1 / 3 coke index was 1900 yuan / ton, flat on a weekly basis, down 400 yuan / ton on a monthly basis, up 670 yuan / ton year-on-year. This week, except for the decline in the price of lean coal in Changye area, all kinds of coal rose sharply, and the improvement of demand was confirmed. 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. The coal supply may be difficult to respond to the demand growth during the 14th Five Year Plan period, and the price remains high. Recently, the national development and Reform Commission issued the notice on further improving the price formation mechanism of the coal market, which gives a reasonable price range of 570770 yuan / ton for the medium and long-term transaction price of port thermal coal (including tax of 5500 kcal in Qinhuangdao). On this basis, combined with the arrival freight of Shaanxi, Shanxi and Inner Mongolia, it gives the corresponding price range for the thermal coal of origin. The concept of reasonable operation range of power coal long-term association price has been put forward since the coal supply side reform in 2017. From 2017 to 2021, the reasonable range is 500570 yuan / ton (the benchmark price of long-term association is 535 yuan / ton), and the actual long-term association price range of the port is 500600 yuan / ton for a long time. The new price reasonable operation range realizes the overall upward movement of the price center and boundary of the range, and confirms the upward trend of thermal coal price. In addition, compared with the average long-term association price of 5500 kcal port thermal coal of 700 yuan / ton at the end of 21, there is still room for thermal coal price rise. In combination with the [1439] document issued by the national development and Reform Commission in 2021, the floating range of power price operation is further opened. The main direction of the reform of coal and power marketization has not changed. Straightening out the contradiction of coal and power price with the market mechanism is still the basic direction of the reform of coal and power price mechanism. At the same time, non Changxie power coal and coking coal are still priced according to the market mechanism. In the future, they will continue to benefit from the policy logic of "clean and efficient utilization of coal", "energy consumption of raw materials is not included in the assessment index of total energy consumption" and "steady growth". 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, the leader of low value and high dividend power coal, Shaanxi Coal Industry Company Limited(601225) , China Shenhua Energy Company Limited(601088) ; Second, Pingdingshan Tianan Coal Mining Co.Ltd(601666) , Guizhou Panjiang Refined Coal Co.Ltd(600395) , which are both resource scarcity and significant growth; Third, Shanxi Coking Coal Energy Group Co.Ltd(000983) and Jinneng Holding Shanxi Coal Industry Co.Ltd(601001) , which have great potential for extensive expansion brought by the increase 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.

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