Coking coal is a very important resource-based and energy-based product in the iron and steel industry chain. Coking coal is a relatively scarce resource, mainly including lean coal, lean coal, main coking coal, fat coal, 1 / 3 coke, gas fat coal, gas coal, etc. it is located at the most upstream of the coal coke steel industry chain. Almost all of China's coking coal is used to produce coke (about 1.35 tons of coking coal is consumed for one ton of coke), and coke is mainly used to smelt pig iron. China has become the world's largest producer and consumer of coking coal. In 2021, China's output of coking coal and refined coal was about 490 million tons and its consumption was about 550 million tons.
Supply: China's new production capacity is limited, foreign imports are limited, and the tightening expectation on the supply side is strong. China's coking coal resources are unevenly distributed, mainly concentrated in North and East China. Shanxi accounts for about 56% of the total reserves, and the output in 2021 is about 53% of the total output. One third of China's coking coal and gas coal account for a relatively large proportion (46%), while the main coking coal, lean coal, fat coal and other coking coal account for a relatively small proportion. Under the background of carbon neutralization, the new production capacity in the future is only 30 million tons (accounting for less than 3% of the current total production capacity). At the same time, with the tightening of safety supervision and other policies, there are exit expectations for a number of declining mines. In addition, under the power coal supply guarantee policy, some cross-border coal types used for supply guarantee also occupy coking coal production. Therefore, China's output increment is limited. Coking coal is highly dependent on foreign countries (10% - 13%), and its imports mainly come from Australia, Mongolia, Russia and other countries. Australian coal imports have stopped, and Mongolian coal has hovered at a low level disturbed by the epidemic. Russia has some potential increments, but it is difficult to make up for the Australian coal gap. Superimposed on the high international coking coal price, it is expected that coking coal imports will continue to shrink. Overall, the tightening expectation of coking coal supply side is strong.
Demand: the continuous net growth of coking capacity drives the slight growth of coking coal demand. There are great regional differences in coke production in the downstream. Resource provinces such as Shanxi, Shaanxi and Inner Mongolia and main iron and steel production areas such as Hebei, Shandong and Liaoning are major coke production provinces. Looking forward to 2022, under the background of steady growth, the margins of real estate and other industries will be relaxed, the pressure of production restriction policies in coke, steel and other industries will be reduced, and the launch of new coking capacity (the net added capacity is expected to be nearly 20 million tons in 2022) will promote the steady increase of coking coal demand; Overseas prices remain high and coke exports may continue to increase. Overall, the marginal improvement expectation of coking coal demand side is strong.
Supply and demand measurement: the gap will expand in 2022, and the supply and demand pattern may be more tense. According to the forecast, the annual total supply in 2022 will be 546.26 million tons (+ 0.3%), the total demand will reach 556.33 million tons (+ 2%), and the supply-demand gap will reach about 10 million tons, which is significantly larger than that in 2021, and the supply will remain in short supply.
Price: China's coal price is still rising, and the international coal price continues to set a record high. At present, the inventory of coking coal in all links is at a low level. After the stable recovery of production of coking enterprises and steel mills, the problem of insufficient supply may become more prominent. At present, China's price is running high and strong, and there is still upward momentum; International prices have risen continuously and kept breaking new records. It is estimated that the price of main coking coal is upside down above 1000 yuan / ton.
Investment strategy: combined with the above analysis, in terms of supply, China's new coking coal production capacity is limited, the import may decline significantly, and the tightening expectation on the supply side is strong; In terms of demand, under the background of steady growth, there is marginal relaxation in real estate and other industries. At the same time, the pressure of production restriction policies in coke, steel and other industries has been reduced. The launch of new coking capacity will promote the steady increase of coking coal demand. According to our calculation, there may be a gap of about 10 million tons of coking coal in China this year, which will further expand. At present, the inventory of coking coal is at a low level. When the downstream production gradually recovers, the short-term shortage of supply will become more prominent. In the medium and long term, due to the lack of planning and investment in the early stage of the industry, the industry has entered the supply shortage cycle, and it is difficult to realize the increment at the import end. In the future, the supply and demand may maintain a tight balance, and the coal price is expected to remain high. The stock capacity is a high profit, and the asset value revaluation is just at that time. We continue to be optimistic about the investment opportunities of the coking coal industry. It is suggested to focus on the following targets: 1, Shanxi Coking Coal Energy Group Co.Ltd(000983) (leading enterprise in coking coal industry, with obvious advantages of coal type); 2. Pingdingshan Tianan Coal Mining Co.Ltd(601666) (the largest supplier of main coking coal in China, with large space for staff reduction and efficiency increase); 3. Shanxi Lu'An Environmental Energydev.Co.Ltd(601699) (leading in coal injection industry, with high performance flexibility); 4. Huaibei Mining Holdings Co.Ltd(600985) (the proportion of scarce coal is high, and the capacity increment can be expected); 5. Jizhong Energy Resources Co.Ltd(000937) (steady growth of coal sector and increment brought by new material business); 6. Guizhou Panjiang Refined Coal Co.Ltd(600395) (the leader of coking coal in Southwest China, incrementally releasing the high-quality capacity of coking coal); 7. Shanxi Coking Co.Ltd(600740) (with the acquisition of China Coal Huajin, coking coal has great asset flexibility and significant contribution to net profit).
Risk tips: (1) risk of economic slowdown; (2) Uncertainty risk of administrative intervention means; (3) Coal mine safety production and other risks; (4) The calculation of supply and demand pattern of coking coal industry is based on certain assumptions, and the conclusion may have limitations and deviations; (5) The public materials used in the research report may have the risk of information lag or untimely update
