Market review this week:
CITIC coal index closed at 2658.2 points, up 0.01%, outperforming the Shanghai and Shenzhen 300 index by 0.68pct, ranking 15th among the 30 CITIC primary sectors.
Focus area analysis:
Power coal: both supply and demand are weak, and coal prices are still under downward pressure. As of Friday, the mainstream quotation of port q5500 was about 940 yuan / ton, down 140 yuan / ton on a weekly basis. In terms of origin, Inner Mongolia has deployed anti-corruption investigation for 20 years again. Shanxi Province has carried out a large-scale investigation and rectification of potential risks in the field of work safety and a special action to severely crack down on the illegal mining of mineral resources. With the addition of lack of tickets at the end of the month and the reduction of production and maintenance of some coal mines, the overall coal mine construction has dropped compared with the previous period, and the supply is limited. Considering that the supply guarantee task of coal enterprises will be gradually completed in the fourth quarter, the export of coal mines will be gradually restored, and the coal volume in the market will begin to increase; In order to move the long-term association price of 5500 calories of thermal coal closer to the long-term association price as soon as possible, the main coal enterprises cut prices sharply. In terms of ports, railway transportation is dominated by long-distance coal transportation, and the transfer in volume fluctuates in a narrow range and remains high as a whole; The port coal price is still expected to go down, the market wait-and-see is obvious, the transfer out volume continues to decline slightly, the power plant inventory is at a relatively high level, and the cold winter expectation is deviated. In addition, the port coal price goes down, the downstream wait-and-see mood rises again, and the transfer out volume decreases; Overall, the inventory of Beigang port has increased slightly, but the structural shortage of ports around the Bohai Sea still exists, and high calorie coal is expected to become the support point of future coal price. Downstream, the daily consumption of the power plant continues to increase, and the power plant slowly goes to the warehouse. At present, the inventory of the power plant is higher than that in the same period of previous years, coupled with the concentration of wait-and-see mood in the downstream, the acceptance of the quotation is low, and the transaction is cold. Overall, the supply is expected to tighten in the short term, but the inventory of ports and power plants has increased significantly, and the downstream demand is lower than expected, and the coal price may operate weakly and stably.
Coking coal: tight supply and improved demand support the continuous rise of prices. This week, the coking coal market was stable and strong, the storage of main coking coal fell to a low level and the price increased slightly. As of Friday, the Shanxi main coke of Jingtang Port had closed at 2450 yuan / ton, up 100 yuan / ton on a weekly basis. This week, the safety and environmental protection inspection of the main producing areas remained stricter. Some coal mines in many places gradually began to stop production due to the completion of the tasks of the whole year. At the end of the year, some coal mines in Shanxi automatically reduced production and maintenance to ensure safe production, and the overall supply fell. In terms of imported Mongolian coal, the winter storage and replenishment in China’s downstream market have increased, and the demand has improved, which supports the good price of some imported coal. However, the quotation of individual coal types is still adjusted due to the strong wait-and-see mood in the market. The number of daily customs clearance vehicles at major ports has rebounded to more than 100 vehicles, but it is still at a relatively low level. The available resources are still limited, which supports the bullish expectation of the market, The mainstream price of Mongolian 5 raw coal is 1750-1800 yuan / ton, and the mainstream price of Mongolian 5 clean coal is about 1950-2000 yuan / ton. On the demand side, the storage of raw coal in the plant of coking steel enterprises is low in many places. Some enterprises have a shortage of raw coal storage, which has improved their enthusiasm for raw coal procurement, and some enterprises still have a high demand for replenishment due to the impact of winter storage and Spring Festival. On the whole, the demand for coking coal has improved, the efforts to replenish storage in winter have increased, and the supply is expected to tighten, and the price of coking coal still has the power to rise.
Coke: the fundamentals continue to improve, and coke enterprises are willing to support the price under the support of cost. This week, the fundamentals of coke continued to improve, and the willingness of coke enterprises to raise prices is still strong. On the supply side, the impact of environmental protection inspection continued, some coke enterprises limited production slightly, and the coke supply remained low. On the demand side, the steel mills have good profits, some steel mills have the behavior of preparing the warehouse in advance, and the steel mills continue to maintain a steady state of increasing the warehouse; With the expected resumption of blast furnace production and profit restoration, the pace of replenishing storage in winter is accelerated in southern steel plant, while the rigid demand needs to be gradually restored in northern steel enterprises considering the subsequent production restriction factors. On the whole, the low inventory & winter storage has been strengthened, the downstream demand has improved, the purchasing enthusiasm has improved, the shipment of coke enterprises has improved, and the coke supply and demand situation has improved; Superimposed coking coal prices stabilized and rebounded, cost support appeared, and the short-term coke fundamentals continued to improve. It is expected that the mainstream of the coke market will be stable, medium and strong in the short term.
Investment strategy. The transformation of coal enterprises also has the following advantages: (1) high profits and abundant cash flow. In 2022, the price guidance range of the association is 550 ~ 850, and the benchmark price is raised from 535 to 700, which is also that the relevant departments give coal enterprises certain “reasonable” profits in the short term in consideration of the needs of the transformation and development of coal enterprises; (2) most coal enterprises have the operation experience of thermal power and chemical industry “New energy + new materials” has no great obstacles. As early as 2016, in order to straighten out the relationship between coal and electricity, the national development and Reform Commission encouraged coal enterprises to layout power business. At present, about 1 / 3 of the listed coal enterprises are involved in thermal power operation and have rich experience in power operation. In addition, under the background of “clean and efficient utilization of coal” strongly encouraged by the state, coal enterprises may extend the current chemical industry chain and vigorously transform to new chemical materials in accordance with the development direction of high-end green and low-carbon. (3) Logarithmic coal enterprises are large state-owned enterprises in the province and have unique advantages in policy, capital and resource support. The transformation of traditional energy enterprises under the goal of “double carbon” is worth looking forward to, focusing on Power Investment energy (scenery), Shan Xi Hua Yang Group New Energy Co.Ltd(600348) (energy storage), Yanzhou Coal Mining Company Limited(600188) (Modern coal chemical industry), Shanxi Meijin Energy Co.Ltd(000723) (hydrogen energy) and China Xuyang group (hydrogen energy). Stick to the core assets, be optimistic about the valuation and repair of high long-term association and high score red coal enterprises, and focus on the following recommendations: China Shenhua Energy Company Limited(601088) , China Coal Energy Company Limited(601898) , Shaanxi Coal Industry Company Limited(601225) , Yanzhou Coal Mining Company Limited(600188) , Pingdingshan Tianan Coal Mining Co.Ltd(601666) . Actively layout Shanxi national reform, and focus on Jinneng Holding Shanxi Coal Industry Co.Ltd(601001) , Shanxi Coking Coal Energy Group Co.Ltd(000983) with expected asset injection.
Risk tip: China’s output release exceeded expectations, the downstream demand was less than expected, and the on grid electricity price was significantly reduced.
