Market review this week:
CITIC coal index closed at 314471 points, up 7.38%, outperforming the Shanghai and Shenzhen 300 index by 5.14pct, ranking No. 1 in the rise and fall list of CITIC sector.
Analysis of key areas:
Power coal: the epidemic disturbance continues and the operation is in a short-term stalemate. This week, the coal price rose first and then declined. As of May 21, the mainstream quotation of port q5500 power end coal was about 1280 yuan / ton, up 30 yuan / ton on a weekly basis. In terms of origin, the production of most coal mines is in good condition, and the overall supply continues to grow; After the price limit of most coal mines, the baochangxiehe will ship internally, the export volume of the market is small, and the coal source in the overall market is still tight; After the recent improvement of the downstream epidemic, the stock of small and medium-sized enterprises has increased, the stacking platform and traders have been active in purchasing, and most coal mines are produced and sold immediately, with strong prices. In terms of ports, the weekly average transfer in volume continues to decline due to the maintenance of Daqin line. Considering that the spring maintenance of Daqin line is about to end this week, the subsequent transfer in volume is expected to rise steadily. Due to the low daily consumption of the power plant and the influence of the price limit policy, the procurement is dominated by long-term cooperation, and the transfer out volume is reduced again. On the whole, the inventory of Beigang is slightly accumulated, 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; Among them, the coal storage in Qinhuangdao Port decreased to less than 4.5 million tons due to the lack of transfer in and transfer out. In the downstream, the daily consumption of the power plant is still low, mainly for rigid demand procurement. This week, the impact of the epidemic continued, the temperature in most parts of the country was appropriate, and the power consumption performance of the whole society was poor; Superimposed with the more than expected additional issuance of hydropower in the south, it has squeezed the demand for thermal power. Affected by this, the daily consumption of the power plant is still relatively low, the number of days available for coal storage is high, and it is more cautious to replenish the warehouse, mainly for rigid demand procurement. In terms of import, India’s enthusiasm for purchasing marine coal has subsided, Chinese buyers continue to hold a wait-and-see attitude, and the price of thermal coal in Indonesia is under pressure. The upside down of price difference outside China is still the core contradiction, and the depreciation of RMB has further exacerbated the increase of costs and limited import supply. On the whole, the current market situation is slightly complex, the coal price at the pit mouth is relatively strong, the port is disturbed by the price limit policy, the transaction between the buyer and the seller is difficult, and the short-term market will be deadlocked. The spring inspection of Daqin line has ended on May 20, and the shipment volume will gradually recover; However, considering that the import is still upside down, the subsequent imported coal may still be significantly reduced, and the peak summer is gradual, and the transfer out volume is expected to stabilize and recover. It is expected that the port will maintain a low inventory state, and the market supply is still tight. Once the epidemic is controlled, all localities will gradually resume work and production, and the coal price is easy to rise but difficult to fall.
Coking coal: market sentiment eased, waiting for the “steel demand” to start. Some high priced and high inventory coal still declined. The phenomenon of auction flow of mainstream coal enterprises in Shanxi is significantly reduced compared with last week. However, there are still few new orders in coal mines, the transaction of some coal types is still poor, and the price of high-priced coal continues to fall by 100200 yuan / ton. As of Friday, Shanxi main coke of Jingtang Port closed at 3050 yuan / ton, unchanged on a week-on-week basis. This week, some early accident coal mines in Linfen, Shanxi Province basically returned to normal, and the supply of coking coal continued to increase; Recently, the downstream began to appropriately purchase some coal types with fast price reduction and high cost performance, and some coal mine inventories began to be consumed. The increase of coal mine inventory has slowed down significantly this week. In terms of importing Mongolian coal, the epidemic situation in Mongolia is relatively stable, and the customs clearance volume at the port continues to rise. According to sxcoal data, the customs clearance for four days this week (5.16-5.19), with an average of 375 vehicles per day, an increase of 77 vehicles per month. Affected by the weakening of China’s coking coal market, the trading atmosphere in the port market is cold, and the downstream procurement is still cautious. The price of Mongolian coal continues to decline this week. At present, the mainstream quotation of Mongolian 5 raw coal is 19002000 yuan / ton. On the demand side, the coke market is still in a downward mood. Some coke enterprises control the arrival of raw coal and have a strong willingness to lower the price of some high-priced coal. However, for some low-priced coal, coke steel enterprises begin to replenish the stock appropriately, but the procurement is cautious; In terms of regions, coke enterprises in Shanxi Province purchase raw coal passively due to the continuous decline of coke price, mainly consuming the inventory in the plant; Hebei, Shandong and other places began to increase procurement considering transportation risks. In the future, the delayed demand always needs to be released. With the superposition of low inventory of coke steel enterprises and sufficient power for downstream active replenishment, the price of coking coal is expected to stabilize and recover.
Coke: the third round of lifting, lowering and landing, focusing on the demand for finished products and the support of coking coal. This week, the coke market operated weakly and stably, and the third round of coke lifting and lowering fell to the ground. This round of lifting and lowering was 200 yuan / ton, with a cumulative decrease of 600 yuan / ton. On the supply side, the third round of coke lifting and lowering fell to the ground. Due to the upside down of profits and their own inventory pressure, individual coke enterprises limited production slightly. The production of most coke enterprises was relatively stable, and the overall supply decreased slightly; Although the logistics and transportation gradually improved, the enthusiasm of downstream procurement decreased, and the inventory of coke enterprises decreased slowly. Considering that the inventory of coke enterprises is low, there is not much pressure. On the demand side, due to the continued weakness of the steel market, the profits of steel mills have not been significantly repaired, the output of individual steel mills has been reduced, the overall utilization rate of blast furnace has only increased slightly, and the coke is still mainly purchased on demand. Moreover, due to the weak operation of finished product prices and poor profits, steel mills are more willing to suppress coke prices. Overall, in the short term, under the weak reality, the coke market sentiment is weak, but the macro policy is constantly tilted, and the epidemic situation is gradually alleviated. The delayed demand always needs to be released. Superimposed on the historical low inventory of all links, under the expectation of the recovery of hot metal production, it is expected that the downward space of coke price is limited, and the focus will be on the finished product price and raw material support in the later stage.
Investment strategy. On Friday, the five-year LPR fell 15bp to 4.45% from the previous value. The five-year LPR is closely related to the mortgage interest rate. Last weekend, the lower limit of the mortgage interest rate on the basis of LPR was reduced, mainly for incremental loans, while the adjustment of the five-year LPR is also applicable to stock loans, which is conducive to the recovery of the real estate industry in the future. In addition, as far as the interest rate cut is concerned, the central bank has just proposed to pay close attention to prices and the Fed’s interest rate increase, that is, monetary policy is facing the dual pressure of stabilizing prices and exchange rate. Finally, the interest rate cut is still higher than expected by 15bp, indicating that more policy “big gift bags” are expected to be seen in the follow-up. 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 the upward cycle of coal price, we are optimistic about high elastic varieties. Recommendations: Shanxi Coal International Energy Group Co.Ltd(600546) , Yankuang energy. The first coking coal is Pingdingshan Tianan Coal Mining Co.Ltd(601666) , Shanxi Coking Coal Energy Group Co.Ltd(000983) .
Risk tip: China’s output release exceeded expectations, the downstream demand was less than expected, and the on grid electricity price was significantly reduced
