Market review this week:
CITIC coal index closed at 2557.4 points, up 0.39%, outperforming the CSI 300 index by 2.77 PCT, ranking 13th in the list of 30 CITIC primary sectors. Due to the news of Indonesia’s restrictions on coal export, some downstream users in China began to purchase, and power coal rose slightly.
Focus area analysis:
Power coal: coal prices rose slightly under emotional disturbance. As of Friday, the mainstream quotation of port q5500 was about 830 yuan / ton, up 30 yuan / ton on a weekly basis. In terms of origin, the maintenance was completed at the end of the year, the new annual task was opened, the coal management ticket was abundant at the beginning of the month, and the coal mine production returned to normal. Affected by the news of Indonesia’s restrictions on coal export, some downstream users in China began to purchase, coal mine sales improved, coal mine hauling vehicles increased, and the prices of some coal mines with low quotations increased slightly. In terms of ports, the spot resources of ports are still tight. Some traders believe that the market risk is high, suspend operation and start to wait and see, and the transfer in volume decreases month on month; Affected by the news that Indonesia restricts coal export, some downstream users in China began to purchase, and the transfer out volume rebounded month on month. Overall, the transfer in was less than the transfer out, and the inventory in Beigang fell. Downstream, the temperature in East China rebounded, the daily consumption decreased month on month, and the inventory of power plants remained high. Near the Spring Festival, some industrial enterprises in East and South China will stop production and have holidays one after another. The off-season of industrial power consumption is coming, and there is still room for decline in daily consumption. In terms of imports, more than half of winter, the off-season of coal mines is approaching, and the price of imported coal continues to decline; In addition, the recent poor profit of imported coal and sufficient inventory of Chinese power plants limit the enthusiasm of Chinese end users and traders to purchase imported coal. The reduction of the amount of imported coal will form a strong support for China’s coal market. On the whole, with the approach of the Spring Festival and the arrival of the off-season of industrial power consumption, the daily consumption of power plants has fallen. Based on the high inventory of ports and power plants, the short-term downstream demand is less than expected, and the coal price may operate weakly and stably. It is expected that the coal market will be under pressure in late January.
Coking coal: demand improved and prices continued to rise. 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 2600 yuan / ton, up 150 yuan / ton on a weekly basis. This week, some coal mines that temporarily stopped production for maintenance before New Year’s Day resumed production, and the coal mine output increased slightly. However, considering that the year is approaching, most coal mines are safety oriented, and the increment of origin supply is limited. 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, the same as last week; Due to the low-level operation and limited trading resources at the port, the price of Mongolian coal continues to rise slightly. The mainstream quotation of Mongolian 5 raw coal is about 1800-1850 yuan / ton and that of Mongolian 5 clean coal is about 2200-2260 yuan / ton. On the demand side, the storage of raw coal in coke steel enterprises is low in many places, and even 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 warehouse in winter have been strengthened, the coke market sentiment has continued to improve, focusing on active procurement, the demand for coking coal is good, while the supply increment is limited, the replenishment of the warehouse in the downstream is still difficult, the supply and demand of coking coal is tight, and the price is still rising.
Coke: the second round of price increase basically landed, and there is still room for price increase in the future. This week, the second round of coke increase basically landed, with a cumulative increase of 300-320 yuan / ton. On the supply side, as the mainstream steel mills in Hebei and Shandong raised the purchase price by 200 yuan / ton, the second round of price increase was fully implemented, the coke market sentiment continued to improve, the production enthusiasm of some coke enterprises increased, and the operating load continued to increase slightly. On the demand side, near the end of the year, the pace of resumption of production of downstream steel mills has accelerated. Among them, the start-up of steel mills in Handan, Hebei Province has increased significantly, and new blast furnaces have been put into operation in the region, and the hot metal output and coke demand have rebounded significantly; Moreover, the steel plant will gradually resume production, and the demand for Coke will increase. 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, short-term coke fundamentals continued to improve, and there is still action force in the short term.
Investment strategy. On the one hand, China has not mentioned “taking economic construction as the center” for seven years, and its intention to stabilize (stimulate) growth is clear. There is no need to tangle with specific means. The pro cycle will return in the first half of the year, and the value revaluation of traditional industries has not ended. On the one hand, the energy consumption of raw materials is not included in the total energy consumption control, and the State encourages the accelerated clean and efficient utilization of coal. Coal chemical industry welcomes the golden development period and has become a highlight of coal consumption. On the one hand, the continuous improvement of the current renewable energy ratio has an impact on the security and stability of the power system. Under the background of insufficient flexibility of thermal power transformation and large-scale supporting of energy storage, it is still necessary to add some new thermal power units to ensure China’s energy security and reliability. There is no need to be pessimistic or even optimistic about coal demand this year. 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.
