Market review this week:
CITIC coal index closed at 2547.6 points, down 4.2%, underperforming the CSI 300 index by 4.55pct, ranking 29th in the list of 30 CITIC primary sectors, mainly due to the large decline in coal prices this week and market concerns about the reduction of the benchmark price of the long-term association.
Focus area analysis:
Power coal: the supply of coal outside China is double compressed, and the coal price is expected to stabilize in the short term. As of Friday, the mainstream quotation of port q5500 was about 800 yuan / ton, down 140 yuan / ton on a weekly basis. In terms of producing areas, the production tasks of coal mines have been completed, the production of coal mines has been stopped and reduced, the number of mines has increased, and the coal output has fallen; Among them, Inner Mongolia once again deployed the backward investigation in the field of coal resources for 20 years, superimposed the lack of tickets at the end of the month, and released the pressure on the output. The purchase price of long-term association of large coal enterprises has decreased, the downstream terminal demand is weak, the superimposed market is more on the sidelines, the new round of long-term association pricing scheme has a strong wait-and-see mood, and the coal price of Shanxi, Shaanxi and Inner Mongolia has mostly fallen in response to the trend. In terms of ports, traders’ enthusiasm for shipping is not high due to price upside down, and the situation of superimposed railway freezing has increased, affecting vehicle transportation, and the transfer in volume has decreased month on month; The market is mostly waiting for a new round of long-term cooperative pricing scheme, and the inventory of coastal power plants is higher than that in the same period of previous years, the purchasing sentiment is weak, and the transfer out volume continues to decline; Overall, the transfer in is less than the transfer out, and the inventory in Beigang is declining; In addition, the structural shortage of Bohai Rim ports still exists, and high calorie coal is expected to become the support point of future coal prices. In the downstream, the cold wave hit, the daily consumption increased year-on-year, and the power plant went to the warehouse slowly. At present, the inventory of the power plant is higher than that in the same period of previous years. In addition, the downstream wait-and-see mood is strong, the acceptance of the quotation is low, and the transaction is cold. In terms of import, the Indonesian government decided to ban coal export in January. If the Indonesian export ban continues for a long time, it will affect China’s effective supply by 5.3%, or cause the China Shipbuilding Industry Group Power Co.Ltd(600482) coal market to return to the balance of supply and demand or even slightly tight; In addition, due to the recent large decline in China’s coal price, the imported coal price began to hang upside down slightly, which will greatly limit the purchase enthusiasm of Chinese end users and traders for imported coal, and the reduction of the amount of imported coal will form a strong support for China’s coal market. On the whole, the supply outside China is expected to tighten in the short term, and the daily consumption of power plants is expected to remain high under the cold wave. The purchase of medium and low calorific value coal by small and medium-sized power plants will increase, which will stop the decline and stabilize the port coal price, and some coal types may rebound; With the approach of the Spring Festival and the arrival of the off-season of industrial power consumption, the daily consumption of power plants will fall. Based on the high inventory of ports and power plants, the coal market will be under pressure in late January. And the downstream demand is less than expected, and the coal price may operate weakly and stably.
Coking coal: the fundamentals have improved and the price has risen steadily. The coking coal market operated strongly this week, and the price rose steadily. The prices of all kinds of coal increased to varying degrees, and the auction transaction price continued to explore. As of Friday, the Shanxi main coke of Jingtang Port had closed at 2450 yuan / ton, unchanged on a week-on-week basis. This week, the safety and environmental protection inspection of the main producing areas was still stricter, and some coal mines in many places stopped and limited production to varying degrees due to the completion of the annual tasks. According to Fenwei statistics, the weight of sample coal mines started this week fell to the low point after July 1 this year. In terms of importing Mongolian coal, the recent customs clearance at Ganqi Maodu port is still low. According to sxcoal data, Ganqi Maodu port has been cleared for 4 days, with an average of 87 vehicles per day, a decrease of 13 vehicles compared with the same period last week; Due to the limited trading resources at the port and the stable, medium and strong operation of the Mongolian coal market, the mainstream quotation of Mongolian 5 raw coal is 1750-1800 yuan / ton and the mainstream quotation of Mongolian 5 clean coal is about 2180-2260 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 efforts to replenish the storage in winter have been strengthened. Coke enterprises mainly focus on active procurement. The demand for coking coal is improving, while the supply continues to tighten. It is still difficult to replenish the storage in the downstream, and the price of coking coal has the power to rise. In the later stage, we will focus on the impact of the epidemic on the customs clearance of Mongolian coal.
Coke: the game of coke steel continued, and the first round of increase was successively implemented. This week, the coke fundamentals continued to improve, and the landing range of the first round of coke rise was expanded. On the supply side, some steel mills accepted the first round of coke price increase, the coke market sentiment improved slightly, and the raw coal storage in the plant of coke steel enterprises was low. The production enthusiasm of some coke enterprises increased, but the coke supply remained low. On the demand side, near the end of the year, the horizontal control of crude steel and the dual control of energy consumption have basically ended, and the secondary early warning of environmental protection has been lifted in Tangshan. The start-up of steel plant and hot metal production have rebounded slightly; Moreover, the profits of steel mills are good, and some steel mills have the behavior of preparing the warehouse in advance. In addition, the expectation of resumption of production of steel mills in the near future is enhanced, and the purchase of coke is increased. 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. In the context of Indonesia’s ban on exports, Yankuang energy, which has overseas coal resources and is sold to Japan and South Korea, is particularly favorable. Stick to the core assets and be optimistic about the valuation repair of high long-term association and high score red coal enterprises. Key recommendations: China Shenhua Energy Company Limited(601088) , China Coal Energy Company Limited(601898) , Shaanxi Coal Industry Company Limited(601225) , Pingdingshan Tianan Coal Mining Co.Ltd(601666) . In addition, it is worth looking forward to the transformation of traditional energy enterprises under the goal of “double carbon”, focusing on Power Investment energy (green power), Shan Xi Hua Yang Group New Energy Co.Ltd(600348) (energy storage), Huaibei Mining Holdings Co.Ltd(600985) (new materials, green power), Yankuang energy (new materials, green power), Shanxi Meijin Energy Co.Ltd(000723) (hydrogen energy) and China Xuyang group (hydrogen energy). Actively layout the national reform in Shanxi, focusing 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.
