In March, coal production hit a record high, increasing production and ensuring supply, and enhancing energy security. (1) Output: in March, the national raw coal output was 396 million tons, a year-on-year increase of + 14.8%; From January to March, the cumulative output was 1.084 billion tons, a year-on-year increase of + 10.3%. Among them, the output of Shanxi / Inner Mongolia / Shaanxi / Xinjiang in March was 119 / 1.06/0.63/32 million tons, a year-on-year increase of + 16.5% / 21.7% / 6.6% / 30.1%; The cumulative output from January to march was 314 / 2.96 / 1.74 / 92 million tons respectively, with a year-on-year increase of + 9.1% / 14.7% / 5.6% / 29.4%. (2) Demand: the output of thermal power / pig iron / cement in March was – 5.7% / – 6.2% / – 5.6% year-on-year, and the cumulative output from January to march was + 1.3% / – 11% / – 12.1% year-on-year. We believe that the coal output in March hit a record high (average daily output of 12.77 million tons), reflecting the fruitful work of increasing production and ensuring supply in China. The output in the main production areas was released on schedule, which also played an early role in reducing imports to a certain extent. In March, affected by the epidemic situation, water scenery and other substitution effects, the demand side growth rate decreased significantly. Under such a mismatch between supply and demand, the coal price still rose as a whole, or reflected the replenishment and accumulation of inventories in all links, and the average calorific value of coal or decreased. Looking forward to the later stage, we believe that the tone of increasing production and ensuring supply may run through the whole year. It is expected that the growth rate of coal production in the whole year is still expected to grow steadily under the high base of last year. On the demand side, we believe that the general direction of steady growth throughout the year will not change, and strive to keep the economy running within a reasonable range.
The superimposed epidemic situation in the off-season resulted in a significant year-on-year decrease in daily consumption, and the national work safety inspection was opened. (1) The safety committee of the State Council: from mid April to the end of June, 16 comprehensive inspection teams were organized to carry out comprehensive supervision, assessment and inspection of national production safety inspection. (2) The coal price in QinGang this week was 1173 yuan / ton, with a month on month / year increase of + 38 / 386 yuan / ton. (3) Sxcoal: as of April 21, Yulin 5800, Inner Mongolia Eerduosi Resources Co.Ltd(600295) and Datong 5500 kcal index rose from – 45 / – 26 / – 45 yuan / ton to 940 / 787 / 920 yuan / ton on a weekly basis. (4) This week (April 15-21), the average daily consumption of power plants in eight coastal provinces was 1.59 million tons, which was – 11.7% compared with the same period of last year’s lunar calendar (1.6 million tons and – 11.4% respectively last week); The average inventory was 28.9 million tons, up + 23.7% from the same period last year (28.5 million tons and + 25.8% respectively last week). (5) As of April 23, the inventory of the four northern ports was 13.93 million tons, up from + 89 / – 5.6 million tons in the same period of 21 / 20 years (last week’s year-on-year – 83 / – 6.39 million tons). We believe that due to the impact of the end of heating, the weakening demand for heating coal and the outbreak of epidemic diseases in many places across the country, combined with the gradual development of hydropower and new energy, the market has entered the off-season. The port coal price rose first and then fell this week, and the overall decline continued. The short-term rebound is mainly due to the Daqin Line Accident and traders’ active price support based on cost considerations. It is expected that the short-term increase is limited, but considering the continuous low level of port inventory and limited import supplement, Coal prices may also be difficult to fall deeply. In the later stage, we need to pay attention to the resumption of upstream and downstream production, the price limit policy and the sustainability of the impact of the situation in Russia and Ukraine, as well as the impact of the epidemic on the demand side.
The national development and Reform Commission proposed to continue to reduce crude steel production in 22 years, and coke prices rose in six rounds. (1) National Development and Reform Commission: the press conference in April pointed out that the reduction of national crude steel output will continue in 2022. (2) Output: in March, the national coke output was 40.17 million tons, a year-on-year increase of – 1.1%; From January to March, the cumulative output was 115 million tons, a year-on-year increase of – 4.9%. (3) This week, Linfen secondary coke increased by 200 yuan / ton to 3680 yuan / ton, with a cumulative increase of 1200 yuan / ton in six rounds. (4) As of April 22, the operating rate of coking plant at the supply side was 77%, with a month on month ratio of + 1.3pct; On the demand side, the average daily hot metal output of 247 steel mills in Mysteel is 2.33 million tons, with a month on month / year-on-year ratio of – 0.1% / – 1.8% (last week’s year-on-year ratio of – 0.5%). We believe that with the gradual improvement of the epidemic situation in Hebei and other countries, steel mills have gradually resumed production, and there is a good demand for coke replenishment. In terms of supply, affected by the Shanxi epidemic, the raw material supply and product production of coke enterprises have been affected to a certain extent. The short-term supply and demand of coke is still tight, and the coke price continues to rise and fall this week. At present, the daily average hot metal output has recovered to the level close to the same period last year, slightly higher than the average daily output of 2.29 million tons in 21 years. If the reduction target of crude steel in 22 years is still strictly implemented, the daily output may still maintain a certain increase compared with the current level. In terms of coking coal, the short-term epidemic affected the shipment, and the landing price increased steadily with the rise of coke.
Investment suggestion: the follow-up steady growth policy is gradually strengthened, the demand toughness is enhanced, the logic of high coal price center remains unchanged, and we continue to be optimistic about the upward movement of sector performance center + valuation improvement opportunities. Three main lines are recommended: (1) stable performance and high dividend Baima, China Shenhua Energy Company Limited(601088) , Yankuang energy, Shaanxi Coal Industry Company Limited(601225) ; (2) Opportunities for coking coal sector driven by the expected improvement of demand, Shanxi Coking Coal Energy Group Co.Ltd(000983) , Pingdingshan Tianan Coal Mining Co.Ltd(601666) , Shanxi Lu’An Environmental Energydev.Co.Ltd(601699) ; (3) Continue to be optimistic about the transformation of coal enterprises, Shan Xi Hua Yang Group New Energy Co.Ltd(600348) , power investment and energy, Gansu Jingyuan Coal Industry And Electricity Power Co.Ltd(000552) , and pay attention to the opportunities of coal machinery and other equipment enterprises brought by the change of fixed asset investment in the industry, Zhengzhou Coal Mining Machinery Group Co.Ltd(601717) , Tiandi Science & Technology Co.Ltd(600582) .
Risk warning. The sharp decline in downstream demand, the impact of supply and price stability and production restriction policies need to be continuously tracked.
