Event: on December 31, according to the notice issued by the Indonesian Ministry of energy and mineral resources (esdm), due to the shortage of coal supply for Chinese power plants from January to February this year, in order to avoid the power crisis caused by coal shortage, the government decided to ban all coal exports from January 1 to 31 and supply all coal to Chinese power plants.
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The strong international coal price drives Indonesia's coal export, and Indonesia's power plants go to the warehouse passively, or cause a power crisis. Due to the global energy shortage in 2021, the international coal price has risen sharply. As of December 30, 2021, the three major international coal indexes (ARA, Rb and NEWC) rose 116.61%, 35.15% and 103.76% respectively during the year. The rise of international coal prices drives Indonesia's coal exports. In order to ensure Indonesia's coal supply to China, the Indonesian government implements the China market obligation (DMO) policy for coal enterprises, that is, it requires coal producers to supply 25% of their annual output to China, and the price ceiling shall not exceed US $70 / ton. Considering the large gap between the policy price limit level and the market price level (the price of Guangzhou Port Company Limited(601228) warehouse will be increased by 1025 yuan / ton on December 31, 2021), there is a shortage of coal supply in Indonesia and China. Passive de warehousing of Indonesian power plants may lead to power crisis. According to Ridwan djamaluddin, director general of the Ministry of energy and mineral resources of Indonesia, in order to maintain the 20 days of coal storage availability of the local power plant, Indonesia and China designated to supply 5.1 million tons of coal to the power plant, but the actual supply accounted for less than 1% as of January 1, 2022. If the export ban is not implemented, nearly 20 power plants with a total installed capacity of 10900 MW in Indonesia and China will face shutdown.
Indonesia and China have different views on banning exports, and there is uncertainty in the follow-up. Indonesia is a large exporter of thermal coal. According to the data of the Ministry of energy and mineral resources of Indonesia, as of December 10, 2021, the total coal output of Indonesia is 560 million tons, and the annual output is expected to reach 609 million tons; From January to October 2021, Indonesia exported 360 million tons of coal, mainly to China, India, Japan and South Korea. In the first October, the export volume of thermal coal (including lignite) reached 337 million tons. Considering the high proportion of Indonesian coal exports, "one size fits all" may damage relevant economic interests of Indonesia. On January 1, 2022, the Ministry of energy and mineral resources of Indonesia held a video conference. Officials of the Ministry of energy and Mineral Resources said that they would make further decisions after reassessing the relevant situation as early as January 5.
Indonesia is a major importer of China's coal. The ban on export materials will have a short-term impact on China's coal supply, and the medium and long-term impact needs to be observed. Due to the restricted import of Australian coal, Indonesia became the largest coal importer in China in 2021. According to Chinese customs data, from January to November 2021, China imported 293 million tons of coal, including 178 million tons of Indonesian coal, accounting for 60.75% of the total import; In November, China imported 19.5 million tons of Indonesian coal, accounting for 55.95% of the total import. Although Australian coal has begun to be imported gradually, it is expected that it will be difficult to make up for the gap of Indonesian coal in the short term. Considering that China's coal demand is relatively low from January to February, and China's coal inventory has exceeded the level of previous years after guaranteed supply, the short-term impact is relatively controllable, but it is necessary to continuously track the changes of Indonesia's coal export ban in the medium and long term.
Investment suggestion: Indonesia's coal export ban will impact China's coal supply in the short term, and the price is expected to stabilize or recover, which is good for the improvement of market expectations. In addition, under the expected stable scenario, the transformation may bring listed companies more imagination space. We are optimistic about Yankuang energy (high elasticity + new energy + modern coal chemical industry), Shaanxi Coal Industry Company Limited(601225) (high elasticity + photovoltaic), power investment energy (wind power and photovoltaic), Shan Xi Hua Yang Group New Energy Co.Ltd(600348) (energy storage), Shanxi Meijin Energy Co.Ltd(000723) (hydrogen energy), Gansu Jingyuan Coal Industry And Electricity Power Co.Ltd(000552) (photovoltaic), Huaibei Mining Holdings Co.Ltd(600985) (new materials and new energy).
Risk tip: Indonesia's coal export returned to normal, Australia's coal import increased significantly, and the demand side exceeded expectations
