[institutional Review] Coal Industry week thinking: coal price risk continues to release concern about the rise in daily consumption in the peak season

Investment strategy: recently, the coal industry policy is intensive, and the coal price adjustment is relatively large. With the rising demand in winter, coal price is expected to stabilize, and the period of maximum adjustment pressure may have passed. In the medium to long term, we believe that the constraints on the supply side of coal are still strong. In the context of small annual growth in demand, coal will be scarce resources in the next few years, stock production capacity may be high profits, and now mainstream stocks pay dividends according to 50-60%. The dividend yield of coal stocks is still expected to reach double-digit levels. Recently, three quarterly reports of coal enterprises have revealed that the performance of some enterprises in the third quarter is significantly higher than the previous quarter, especially for those enterprises with a high proportion of coal in the market. Although there is regulation and control such as the price limit policy, the coal price center will still be significantly improved compared with the past few years. Coal assets need to be repriced, and stock prices do not fully reflect this, and continue to be optimistic about the investment value of the sector. Priority is given to those with a high proportion of coal in the market and flexible targets for capacity growth. Thermal coal stocks suggest to pay attention to: Haohua Energy, Yanzhou Coal Industry, Shaanxi Coal Industry, China Coal Energy, China Shenhua. Metallurgical coal stocks suggest to pay attention to: Lu'an Huaneng, Ping Coal shares, Shanxi Coking Coal, Huaibei Mining, Jizhong Energy, Shanxi Coking. Anthracite suggests attention: orchid Kechuang. Coke shares suggest attention: Kailuan shares, Jinneng Science and Technology, China Xuyang Group, Shaanxi Black Cat.

In terms of thermal coal, the momentum of falling coal prices is limited. The price of 5500 kcal thermal coal produced in Qingang and Shanxi this week is 1130 yuan / ton, down 370 yuan / ton from the previous week. Domestic coal prices experienced a rapid decline last week, international coal prices also followed a sharp decline, domestic coal prices fell less this week, there are signs of stabilization. On the supply side, capacity release, port and power plant inventory has been significantly increased, superimposed policy uncertainty and the impact of the epidemic, less coal trucks, pit mouth coal prices slightly down. In terms of imports, downstream inquiries have increased, and importers have a strong willingness to ship, but the counter-offer price is still low and the market transaction is less. On the demand side, a new round of strong cold air is about to leave, and inquiries from some power plants are increasing. As the temperature drops, the daily consumption of power plants begins to rise, demand and sales are expected to improve, and the momentum of coal price decline is limited or will stabilize.

In terms of coking coal, the market is weak. This week, the price of Shanxi coking coal bank in Jingtang and Hong Kong has been reduced by 4050 yuan / ton (including tax), down 150 yuan / ton from the previous week. On the supply side, the output of coal mines in the main producing areas increased, and the coking coal in Hong Kong and Australia began to clear customs in the early stage, the overall supply resumed, and the shipments of the origin turned worse. This week, the prices of main coking coal and fat coal in Shanxi, Inner Mongolia and other places have dropped slightly. In terms of imports, Ganqimodu Port cleared customs for 4 days this week, with an average of 221 vehicles per day (compared to-25 vehicles), and the price of Mongolian coal continued to fall. In terms of demand, the start-up of steel mills has fallen sharply, the coke market has weakened, and the superimposed coking coal market is still expected to reduce prices. although the inventory of coking coal in coking enterprises has dropped to a low level, the market demand is weak.

In terms of coke, the first round of lifting and landing, supply and demand are both weak. As of November 5, the price of secondary metallurgical coke in Tangshan area was 3960 yuan / ton, down 200 yuan / ton from the previous week.

On the supply side, affected by the heating season and environmental production restrictions, coke enterprises start production restrictions to a certain extent, in addition, after the price reduction, coke enterprise shipments are still not ideal, factory inventory is high. On the demand side, the start of steel mills continued to decline, due to the impact of environmental protection, weather and the Winter Olympic Games, production restrictions were strengthened, and coke demand was under pressure.

On the whole, the supply and demand of coke market is weak, coke enterprises and steel mills are facing varying degrees of production restrictions, policy constraints are larger, steel mills are more optimistic about coke.

Thermal coal: Port coal prices fall, port inventory increases. (1) as of November 5, the price of 5500 Dakashan thermal coal in Qinhuangdao Port was 1130 yuan / ton, down 370 yuan / ton from the previous week. (2) as of November 4, Newcastle thermal coal prices were US $151.64 per tonne, down 20.19% from the previous week.

(3) as of November 5, the railway regulation volume of Qinhuangdao Port was 62.3tons, an increase of 32000 tons compared with the previous week. (4) as of November 5, the inventory of Qinhuangdao Port was 5.26 million tons, an increase of 360000 tons compared with the previous week, and that of Guangzhou Port was 2.158 million tons, a decrease of 164000 tons.

Coking coal: domestic coking coal prices fell month-on-month, coking plant inventory decreased. (1) as of November 5, the price (including tax) of Shanxi coking coal warehouse in Jingtang and Hong Kong has been reduced to 4050 yuan / ton, down 150 yuan / ton from the previous week. (2) as of November 3, the price of hard coking coal in Fengjing Mine was 426.5 US dollars / ton, up 0.53% from the previous week. (3) as of November 5, the total inventory of coking coal in domestic independent coking plants was 6.858 million tons, a decrease of 54300 tons compared with the previous week.

Coke: the price dropped month-on-month, and the operating rate of the coking plant recovered to some extent. (1) as of November 5, the price of secondary metallurgical coke in Tangshan area was 3960 yuan / ton, down 200 yuan / ton from the previous week. (2) as of November 5, the productivity of coke ovens in 100 independent coking plants in China was 65.48%, an increase of 0.47% compared with the previous week. (3) as of November 5, the national blast furnace operating rate was 48.48%, down 3.59% from the previous week.

(4) as of November 5, the total coke inventory of the three types of coking enterprises (production capacity < 1 million tons; production capacity 2 million tons; production capacity > 2 million tons) was 503800 tons, with a rise of 85300 tons per week.

Industry key news review: (1) power coal supply repeatedly set new highs in power plant coal storage exceeded 110 million tons (2) the national special supervision and inspection team inspected coal supply in Datong, Shanxi Province, (3) accelerated release of coal production capacity in Shanxi Province in the first three quarters of the Association shipping volume of more than 200 million tons (4) the coal market supply and demand situation improved a number of coal enterprises took the initiative to reduce coal prices at the mouth of the pit. (5) clearance is limited. Mongolian coal prices have fallen sharply.

Risk hints: economic growth is lower than expected; policy regulation is too strong; renewable energy substitution; coal import impact risk.