Matters:
Recently, the price department of the national development and Reform Commission organized a special meeting of key coal and power enterprises, relevant industry associations and market information institutions to exchange and discuss key issues such as how to define thermal coal. It is proposed that coal sold to power generation and heating enterprises or with calorific value less than 6000 kcal can generally be regarded as power coal.
Ping An View:
Define power coal from the perspective of flow direction and calorific value: from the perspective of flow direction, the coal directly or indirectly sold by coal production and operation enterprises to power generation and heating enterprises as fuel, regardless of coal type and calorific value, should be regarded as power coal. From the perspective of calorific value, according to the situation for many years, coal with calorific value less than 6000 kcal is mainly used for power generation and heating, which can generally be regarded as power coal. Coal with a calorific value of less than 6000 kcal sold by coal production and operation enterprises can generally be regarded as thermal coal if there is no clear contract, invoice and other evidence to prove that it is ultimately used for coking, chemical and other non power purposes.
The calorific value of anthracite is often higher than 6000kcal / kg: coal can be divided into lignite, bituminous coal and anthracite according to coal type. Generally speaking, lignite has high moisture content, large porosity and relatively low calorific value. The calorific value of Mengdong lignite is slightly higher than 3000kcal / kg; Anthracite has high fixed carbon, low volatile matter and relatively high calorific value, often above 6000kcal / kg; Bituminous coal is between lignite and anthracite in nature, and its calorific value is basically about 5000kcal / kg. Bituminous coal is the main power coal.
The power coal definition policy is conducive to the power generation, heat supply and building materials industries: the main uses of coal include power generation, heat supply, building materials, chemical industry and steel. The first three uses are mainly used as power coal, and some of steel and chemical industry are power coal. According to the statistics of China Coal Processing Association, in 2021, modern coal chemical industry (coal to oil and gas, olefins, ethylene glycol, etc.) consumed 147 million tons of raw coal, including 107 million tons of raw coal and 39 million tons of fuel coal.
Coal price for chemical raw materials may be higher than the price limit: due to the high fluctuation of international oil price, the price of main chemical products is at a high level, and relevant coal chemical enterprises have a high tolerance for coal price. Therefore, in the context of tight coal supply and demand pattern, the price of chemical coal may be higher than the long-term association price. Anthracite lump coal is an important kind of coal for chemical industry, and some bituminous coal with high calorific value can also be used as chemical coal. According to the data of March 2022, the monthly chemical coal consumption in Shanxi, Hebei, Shaanxi, Inner Mongolia and other places exceeds 4 million tons, and the coal used by coal chemical enterprises is mainly supplied by surrounding areas, which will benefit local chemical coal production enterprises.
Investment suggestion: with the support of the national policy of increasing production and ensuring supply, China’s coal output has increased significantly, and the power coal long-term association system has been implemented. For coal enterprises, anthracite companies and chemical coal companies in Shanxi, Hebei, Shaanxi and Inner Mongolia will benefit; For downstream enterprises, industries with high cost of power coal such as building materials may benefit. It is suggested to pay attention to the anthracite companies Shan Xi Hua Yang Group New Energy Co.Ltd(600348) , Shanxi Lanhua Sci-Tech Venture Co.Ltd(600123) .
Risk tips: 1) repeated global epidemics: China may have a decline in energy demand, and the downturn in overseas energy demand and prices will also be transmitted to China. 2) The promotion of double carbon policy exceeded expectations: the promotion of double carbon policy will curb the demand for relevant coal consumption. 3) Impact of rising cost: it may be affected by the rising cost of raw materials. 4) Impact of safety accidents: the occurrence of enterprise safety accidents has an impact on production and operation.
