Overview of coal industry
1. Coal varieties and resource distribution
1) classification of coal varieties. According to the quality, it can be divided into anthracite, bituminous coal and lignite according to the degree of coalification. Anthracite has the highest degree of coalification and is difficult to burn; According to the caking index, bituminous coal can be further divided into 12 kinds of coal, such as lean coal, lean coal and coking coal. The higher the caking index is, the stronger the caking property is. According to the purpose, it can be divided into power coal, coking coal, chemical coal and others. Power coal and chemical coal include lignite, anthracite and some bituminous coal, and coking coal mainly includes coking coal, fat coal, etc. 2) Distribution of coal resources. Lignite, anthracite and other power coal are the main types of coal, and coking coal is scarce, accounting for about 28% of the reserves; Regionally, it shows the characteristics of “more in the West and less in the East, more in the north and less in the South”. Shanxi, Shaanxi and Inner Mongolia are rich in coal reserves. 3) Coal quality indicators mainly focus on moisture, ash and total sulfur. The smaller the indicators are, the higher the coal quality is. Power coal focuses on calorific value, and coking coal focuses on caking index.
2. Coal transportation and price system
1) coal transportation system. The regional separation of supply and demand has led to the “north to South Coal Transportation and west to east coal transfer” of China’s coal. The transportation is mainly railway and waterway, supplemented by highway. The railway transportation mainly focuses on the outward transportation of coal in Shanxi, Shaanxi, Inner Mongolia, Yunnan and Guizhou, forming a “seven vertical and five horizontal” railway transportation channel, of which Beitong road bears the main transportation capacity, Daqin Railway Co.Ltd(601006) is the main transportation force, and the coal railway transportation volume will be 2.36 billion tons in 2020. Waterway transportation includes sea transportation and inland waterway transportation. Sea transportation is usually sent from the northern launching port to the southern receiving port. In 2021, the coal throughput of coastal ports will be 1.79 billion tons; Inland waterway transportation includes the Yangtze River and the Beijing Hangzhou canal. In 2021, the coal throughput of inland ports will be 1 billion tons. Highway transportation is generally short-distance transportation with small transportation capacity. 2) Coal price system. ① The price caliber, transportation mode and delivery place are different, and the price caliber of coal is also different. Focus on pit price, vehicle sector price and closing price. ② Price index: the calorific value of power coal is taken as the reference benchmark. The higher the calorific value, the higher the price of power coal. The price of power coal with low sulfur, low ash and high volatile content will be relatively higher. The price of power coal can be tracked by observing the q5500 closing price of power coal in Qinhuangdao port. The price of coking coal is based on the binding index and the maximum thickness of colloidal layer. The price of coking coal, fat coal and 1 / 3 coking coal is higher than that of gas coal, gas fat coal and lean coal as a whole. The price of coking coal can be tracked by raising the price of Shanxi main coking coal warehouse in Jingtang Port. ③ Pricing mechanism: at present, the coal is a long-term association pricing mechanism. The national development and Reform Commission sets benchmark prices and floating reference standards, and establishes an early warning mechanism for abnormal price fluctuations. In principle, coal enterprises with an annual production capacity of more than 300000 tons in 2022 should sign long-term association contracts. At present, the price range of underground coal is 570770 yuan / ton.
3. Coal mining, processing and washing
1) coal mining. China is dominated by underground coal mining, with open-pit coal mining accounting for less than 12%, concentrated in Inner Mongolia, Yunnan, Shanxi and other places. 2) Coal processing and washing can improve coal quality. After 2000, the coal washing capacity has been rapidly improved. The raw coal selection rate by the end of 2020 is 74.1%, nearly 50% higher than that in 2000. It is expected that the raw coal selection rate will reach 95% in 2025.
Coal supply, demand and inventory
1. Coal supply
1) coal output. The coal output in 2021 is 4.07 billion tons, and the coal type is mainly steam coal. The output in 2021 is 3.4 billion tons, accounting for 83.5%, and the output of coking coal is 490 million tons, accounting for 12%. The region is concentrated in Shanxi, Shaanxi and Inner Mongolia, and the total output in 2021 accounts for 72% of the country. The coal production industry is highly concentrated. In 2021, there were 15 coal enterprises with an output of more than 50 million tons, accounting for 60.5% of the country’s total output.
2) coal import. In 2021, coal imports accounted for 7.4% of China’s total supply. The coal type is mainly steam coal. In 2021, the import volume of steam coal and coking coal accounted for 80.3% and 16.9%. In terms of importing countries, the import of thermal coal depends on Indonesia and Russia, and the import source countries of coking coal are Mongolia, Australia, the United States, Canada and the Philippines.
2. Coal inventory
According to different inventory enterprises, it can be divided into: 1) coal mine inventory. The coal storage capacity should reach the mine design output of 3-7 days. The coal mine inventory can be concerned by tracking the inventory of key coal enterprises. At present, the coal mine inventory in North China, Northeast China, Central South and Northwest China is at a low level since 2016. 2) Port inventory is an important indicator to measure the supply and demand of coal market and the trend of coal price. It can be tracked by tracking the coal inventory of Qinhuangdao port and the coal inventory of cctd mainstream ports, which are currently at the low and medium level since 2016. 3) Terminal inventory, including the coal inventory of electric power, building materials and other enterprises. The coal inventory of power coal in the main coal producing areas such as Shanxi, Shaanxi and Inner Mongolia shall not be less than 15 days, and that in other areas shall not be less than 20 days. Attention can be paid to the available days of coal inventory of national key power plants. For the coal inventory of coking plant and steel plant, the coking coal inventory of sample enterprises can be tracked.
3. Coal demand
1) consumption. Although the proportion of coal in energy consumption has decreased, it still occupies a dominant position. In 2020, coal consumption was 2.83 billion tons of standard coal, accounting for 56.8% of energy consumption. 2) Power coal. In 2021, the consumption is 3.66 billion tons, and the gap between supply and demand is 110 million tons. More than 60% of power coal is used for power generation in power plants. Coal power generation is still the main force of current power production, and more than 60% of power generation comes from coal-fired power generation. In addition to electricity, heating and building materials are also the main coal consuming industries. The consumption in 2021 is 320 million tons and 310 million tons. Power coal heating is mainly used for heating, which has a strong seasonality; Coal for building materials is mainly used to produce cement, which accounts for about 70% of the coal consumption of building materials, followed by fuel for the production of glass and lime. 3) Coking coal. The annual consumption is basically equal to 2021.5 billion tons. Coking coal is mainly used to produce coke, and more than 90% of coke is used for metallurgical steelmaking.
Risk tips: incomplete information collection, coal prices falling more than expected, geopolitical risks, etc.
