Summary of this issue:
The reduction of purchase price by large groups affects the loosening of coal price in the market. As of December 24, The pit mouth price of power lump coal (q6000) in Yulin, Shaanxi Province was 1190.0 yuan / ton, down 20.0 yuan / ton on a weekly basis, 590 yuan / ton higher than that in the same period last year; the pit mouth price of sticky coal (including tax) (q5500) in the southern suburb of Datong was 780.0 yuan / ton, down 90.0 yuan / ton on a weekly basis, 240 yuan / ton higher than that in the same period last year; the truck plate price of large clean coal in Dongsheng, Inner Mongolia (q5500) 937.0 yuan / ton, unchanged on a week-on-week basis, 464 yuan / ton higher than the same period last year. This week, affected by the sharp decline in the purchase price of large groups (to guide the spot price to move closer to the price limit range of the long-term association), the demand of traders and terminal procurement is poor, the number of coal haulers in coal mines decreases, the price decreases with the purchase price, and the sales of some coal improves after the price reduction.
Port inventory fell and the cargo ship ratio remained low. This week, there were 6848 arrival trains of Qinhuangdao Port Railway, with a decrease of 6.63% over the previous week; Qinhuangdao Port handled 415000 tons, down 22.57% from the previous week. The average weekly inventory level of China’s major ports (Qinhuangdao, Caofeidian and SDIC Jingtang Port) was 10.87875 million tons, down 194000 tons from 11.0729 million tons last week and 1.75% week on week. As of December 22, the cargo ship ratio (inventory to ship ratio) of the four major ports around the Bohai Sea (Qinhuangdao port, Huanghua port, Caofeidian port and east port of Jingtang Port) was 8.8, (the circumferential ratio increased by 0.01).
Downstream destocking superposition sentiment is pessimistic, coal prices still have room for correction, and it is expected to have strong support at the upper limit of the price limit range of the long-term association. As of December 23, the coal inventory in the eight coastal provinces was 34.844 million tons, down 310000 tons (down 0.88%) on a weekly basis, the daily consumption was 2.144 million tons, up 38000 tons / day (1.80%) on a weekly basis, the number of available days was 16.3 days, down 0.40 days on a weekly basis. As of December 24, the market price of Shanxi production of Qinhuangdao port power coal (q5500) was 940.0 yuan / ton, down 140.0 yuan / ton on a weekly basis, 197.5 yuan / ton higher than the same period last year. International coal price, as of December 23, the spot price of power coal in Newcastle port was 187.4 US dollars / ton, up 9.24 US dollars / ton on a weekly basis. According to cctd data, as of December 24, the CIF price of 5500 kcal thermal coal in South China port Indonesia was 1003 yuan / ton, and the CIF price of Chinese coal was 940 yuan / ton. As of December 24, the active contract of thermal coal futures fell by 32.8 yuan / ton to 707.8 yuan / ton compared with the same period last week, and the futures discount was 232.2 yuan / ton. Under the influence of the cold wave, the daily consumption of the power plant has further increased, which has a certain support for the downstream just needed procurement. However, under the condition of sufficient downstream inventory and strong market bearish sentiment, the end users mainly wait and see, and the procurement slows down; At the same time, the market risk is large, and it is difficult for traders to improve their procurement enthusiasm. The long-term association is about to be implemented in the new year, and its price is expected to be lower than the current spot coal price. Based on this, it is difficult to boost the downstream purchasing sentiment and maintain the normal rhythm of going to the warehouse. Under the market pessimism, traders reduce prices and ship goods actively. Before the market sentiment is repaired, the coal price still has room to fall. It is expected to have strong support in the upper limit of the price limit range of the long-term association.
Coke: the signs of stronger supply and demand are becoming more and more obvious. As of December 23, 2021, Fenwei CCI, Luliang Zhun and metallurgical coke reported 2460 yuan / ton, unchanged on a weekly basis; CCI Rizhao quasi primary metallurgical coke reported 2830 yuan / ton, unchanged on a week-on-week basis. This week, individual coke enterprises asked for an increase, but the mainstream steel enterprises did not accept it. Under the pressure of environmental protection, the commencement of steel coke continued to fall this week. At present, northern steel enterprises have the expectation of limited production in the Winter Olympic Games and are not enthusiastic about coke procurement; However, with the continuous decline in the start-up of steel enterprises, the steel inventory continues to decline. The southern steel enterprises are highly profitable and have high enthusiasm for start-up. The purchase of coke is also concentrated in the southern steel enterprises, and the coke inventory is gradually transferred to the port and downstream. When the inventory structure is improved and the profit of coke enterprises is meager, the market’s willingness to increase is stronger.
Coking coal: the price is strong, and the medium and long-term scarcity is expected to gradually highlight. As of December 23, CCI Shanxi low sulfur index was 2420 yuan / ton, up 115 yuan / ton on a weekly basis and down 60 yuan / ton on a monthly basis; Shanxi’s high sulfur index was 1976 yuan / ton, up 136 yuan / ton on a weekly basis and down 87 yuan / ton on a monthly basis; Lingshi fat coal index reported 1900 yuan / ton, up 150 yuan / ton on a weekly basis and down 100 yuan / ton on a monthly basis; Puxian 1 / 3 coke index was 1900 yuan / ton, up 250 yuan / ton on a weekly basis and 100 yuan / ton on a monthly basis. Recently, due to the stricter environmental protection and security inspection in the production area, and with the completion of the annual task, some coal mines began to take the initiative to limit the shutdown, superimposed with the restrictions on the customs clearance of Mongolian coking coal, China’s coking coal supply continued to tighten; At the same time, due to the replenishment of storage in winter, the purchasing enthusiasm of downstream steel coke enterprises has increased, which supports the rise of coking coal prices this week to a certain extent. In the medium and long term, the newly-built coking coal mines are insufficient, the depletion of resources is becoming more and more prominent, the supply side will shrink significantly, and the price of supporting 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 at the initial 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 plate is at the right time. At present, the legalization of China’s coal off balance sheet capacity is coming to an end: the space for nuclear increase / approval capacity converges rapidly and the threshold for nuclear increase is raised, limiting the short-term production potential of coal enterprises; Considering the decline of coal enterprises’ willingness and ability to build mines and the construction cycle of more than 3 years, coal supply may be difficult to respond to demand growth during the 14th Five Year Plan period, and the price will remain high. Under the general cost reduction, efficiency increase and endogenous epitaxial growth of the industry, corporate profits are expected to rise. At the same time, on November 17, the national standing committee decided to set up a 200 billion refinance to support the clean and efficient utilization of coal; In December, the central economic work conference reiterated that “based on the basic national conditions dominated by coal, we should pay attention to the clean and efficient utilization of coal, increase the consumption capacity of new energy, and promote the optimal combination of coal and new energy.” In the upward trend of the industry boom, the leading coal enterprises rely on their own resource / capital / technology endowment advantages to promote the energy revolution, layout transformation and upgrading, new growth poles or repay shareholders, and can improve the income level of investors in the long term. 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 the industry’s performance in the fourth quarter and the first half of next 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, Shaanxi Coal Industry Company Limited(601225) , China Shenhua Energy Company Limited(601088) , the leader of low value and high dividend power coal; Second, Pingdingshan Tianan Coal Mining Co.Ltd(601666) , Guizhou Panjiang Refined Coal Co.Ltd(600395) with both scarcity of resources and significant growth; Third, the Shanxi Coking Coal Energy Group Co.Ltd(000983) and Jinneng Holding Shanxi Coal Industry Co.Ltd(601001) with great extension expansion potential brought by the improvement of asset securitization rate of state-owned coal group.
Risk factors: coal mine safety production accidents in key companies; The macro economy has stalled and declined sharply.
