Core view:
1. Supply side: there is a bottleneck in production capacity, and the supply expansion is on the ceiling
Since coal accounts for nearly 60% of China’s primary energy consumption structure and more than 70% of carbon emission energy source structure, the peak of China’s carbon emission may depend on the peak of coal consumption. Only by developing clean energy to replace coal consumption can we control the continuous growth of carbon emission. Therefore, we see that the formulation of the “2030 peak” strategy may provide us with guidance on the temporal and spatial position of the peak of China’s absolute coal consumption. Then, before this strong strategy and clear objectives are realized, the energy dilemma may be broken mainly by accelerating the development speed of clean energy and improving coal utilization efficiency, which may be the contradiction between short-term difficulties and the realization of long-term strategy, The orientation of contradiction may be based on long-term strategy. This is the logical background that the coal industry will not significantly expand production capacity under the current energy dilemma.
2. Demand side: steady economic growth and guaranteed power coal consumption
In 2021, under the circumstances of economic recovery and export driven, the energy demand reached a record amount. The lack of supply elasticity led to the significant de stocking of power coal, the decline of energy reserve safety cushion, and the coal price reached a record high. With the introduction of the strong supply guarantee policy in the fourth quarter, the market gap was gradually made up, the social inventory began to accumulate, and the problem of “coal shortage” was alleviated. However, the problem of energy supply has not been alleviated. China’s capacity increment is limited, and overexploitation is bound to overdraft the future production increment; Overseas geopolitical conflicts have continued, the international energy trade system has further deteriorated, and the relationship between supply and demand continues to be unbalanced. Under domestic and foreign troubles, it is also a last resort to give priority to ensuring the energy stability of power coal terminal, and the expansion of spot price elasticity is also an inevitable logical result. Therefore, we expect that under the premise of full guarantee of the long-term association for power coal, the spot purchase price center of non power coal will rise from 1000 yuan / ton in 2021 to 1400 yuan / ton in 2022, and the highest price is still possible to reach a new high.
3. Industry Outlook: high profit, strong cash and reconstruction of black gold value
When market investors think that the development of new energy has entered the fast lane, they actually realize that the development cycle of traditional fossil energy is coming to an end. The energy transformation brought about by “carbon peak and carbon neutralization” benefits not only the new energy equipment industry, but also the traditional fossil energy mining industry. However, the investment return of the new energy equipment industry comes from the rapid expansion of demand elasticity, which is an explicit factor supported by policies, while the investment return of the traditional fossil energy mining industry comes from the continuous downturn of supply elasticity. We believe that the next 10 years of carbon peak may also be the last glorious 10 years for traditional fossil energy enterprises. The vast majority of China’s fossil energy mining enterprises are coal mining enterprises. The continuous tight balance between coal energy supply and demand will bring about the continuous high level of coal price and enterprise profit rate. With high profits and strong cash flow, the profit cycle of the coal industry is longer and the return after capital investment is more stable.
Risk tip: economic growth is less than expected ‘housing construction recovery is less than expected; Production capacity under construction exceeded expectations
