Market review this week:
CITIC coal index closed at 300804 points, down 1.79%, underperforming the Shanghai and Shenzhen 300 index by 1.86pct, ranking 16th in the list of gains and losses of CITIC sector.
Analysis of key areas:
Power coal: low inventory & import upside down, and the price is still supported in the off-season. Last week, the port coal price stopped falling and rebounded. As of April 29, the mainstream quotation of port q5500 was about 1180 yuan / ton, and the weekly ring ratio was basically flat (falling first and then rising). In terms of origin, at the end of the month, due to the lack of coal management tickets at the end of the month, the shutdown and maintenance increased, and the supply fell month on month; Most coal mine sales are mainly based on Changxie coal procurement and chemical rigid demand. Traders’ procurement enthusiasm is not high. Most platforms and coal yards are dominated by inventory clearing, and the market price has decreased slightly. In terms of ports, the traffic volume of Daqin line further recovered, and the weekly average transfer in volume continued to rise. With the increase of transfer in, the fulfillment of long-term cooperation has been improved, and the transfer out volume has increased compared with last week. On the whole, the transfer out is less than the transfer in, and the inventory of Beigang has rebounded slightly, but it is still at a low level year-on-year. The function of the reservoir is poor, and the available resources are still tight. Downstream, the temperature rose, the epidemic disturbance, and the daily consumption remained low. At present, it is in the seasonal off-season of coal consumption. Due to the impact of the epidemic, some factories are started, and the power demand is relatively weak. Due to the power of new energy such as hydropower in the south, the overall demand is weak. The terminal daily consumption in the eight coastal provinces remains low. Most power plants are dominated by long-term cooperative coal procurement, and the inventory of power plants continues to accumulate. In terms of import, India has strong demand and strong overseas coal prices. Although the Ministry of Finance decided to cancel the coal import tariff, the actual impact is limited (the current applicable tax rate of Indonesian coal is 0, and the coal imports of Russia, Mongolia, Canada and South Africa are subject to the MFN tax rate). The inversion of the price difference between China and foreign countries is still the core contradiction. On the whole, the spring inspection of Daqin line will officially start in May, which will have an adverse impact on the transfer in of the port; Moreover, the import is still upside down, the subsequent import of coal may still be significantly reduced, the port will maintain a low inventory state, and the coal price is difficult to fall smoothly and sharply. Once the epidemic is under control, all localities will gradually resume work and production, and coal prices are expected to rise again driven by demand.
Coking coal: wait for “steel demand” to start. The downward pressure on coke appeared, the demand of downstream enterprises decreased, and the coking coal market began to weaken. As of last Friday, the Shanxi main coke of Jingtang Port had closed at 3350 yuan / ton, unchanged on a week-on-week basis. This week, the supply of coal mines in the producing area rebounded slightly. Due to the impact of the epidemic on transportation, the coal mine inventory is still slightly accumulated. The average daily clearance of coal vehicles increased by more than 306.4 days, and the average daily clearance of coal vehicles increased by more than 300.4 days. According to the data of Mongolia customs clearance, the average daily clearance of coal vehicles increased steadily, and the average daily clearance of coal vehicles increased by more than 306.4 days, which was lower than that of Mongolia customs clearance in the past week, At present, the mainstream quotation of Mongolian 5 raw coal is 24802520 yuan / ton. On the demand side, some coke steel enterprises have weakened their demand for raw coal due to the tightening of profits, and the pace of procurement has begun to slow down, mainly replenishing stocks on demand. In the future, the delayed demand always needs to be released, with low inventory of coke steel enterprises and sufficient power for downstream active replenishment, and the price of coking coal is still supported.
Coke: the market operates steadily under the weak reality, and there are still rising expectations in the future. This week, the coke market operated steadily. On the supply side, with the improvement of the epidemic situation in the region, the traffic control has been relaxed compared with that in the early stage, the automobile transportation in the province has been gradually restored, the arrival of raw materials of coke enterprises in the province has improved, and the coke enterprises whose production was limited due to the shortage of raw materials in the early stage have the behavior of increasing production; Affected by the concentrated outbreak of bad news such as loss of steel enterprises and reduction of output by policies, the market sentiment is depressed. Most coke enterprises and traders in the origin actively ship goods, and the inventory in the factory of coke enterprises continues to decline. On the demand side, the blast furnaces of some steel mills began to resume production, but at present, the profits of steel mills are upside down, and the overall increase in production is limited; Moreover, the profit of the steel plant is upside down, the willingness to accept high priced raw materials is not high, the coke inventory in the steel plant remains low, and there is a huge space for replenishment. On the whole, in the short term, under the weak reality, the coke market sentiment is weak, but the macro policy is constantly inclined, and the epidemic situation is gradually alleviated. The delayed demand always needs to be released. Superimposed on the historical low inventory of all links, there is room for coke prices to rise under the expectation of recovery of hot metal production.
Investment strategy. The Ministry of finance has decided to implement a provisional import tax rate of zero for coal from May 1, 2022 to March 31, 2023, but the actual impact is limited (the current applicable tax rate for Indonesian coal is 0, and the most favored nation tax rate is applied for coal imports from Russia, Mongolia, Canada and South Africa). The inversion of China’s foreign price difference is still the core contradiction. 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, the transformation of traditional energy enterprises under the goal of “double carbon” is worth looking forward to. The key recommendations are 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 and green power), Yankuang energy (new materials and green power), Shanxi Meijin Energy Co.Ltd(000723) (hydrogen energy) and China Xuyang group (hydrogen energy). Actively layout the national reform in Shanxi, and focus on recommending 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
