Guohai Securities: International thermal coal prices strengthen, and the coal sector still has both offense and defense

The Zhitong Finance App learned that Guohai Securities published a research report saying that in terms of thermal coal, due to seasonal decline in daily power plant consumption, domestic production and port market prices fell slightly last week, but overseas price performance was stronger than domestic (affected by expectations of a boost in China's economy and an increase in coal-fired power generation in India). Considering that downstream inventory removal during the summer peak season is obvious, there is still room for inventory replenishment in winter. Short-term port thermal coal prices fluctuate mainly in the narrow range, and coal prices remain optimistic during the peak winter season. Looking at the coking coal industry chain, iron and water production continued to pick up last week. The fifth round of the increase in coke came to fruition on October 8, and the sixth round of increase began on October 10. Coke has already turned a loss into a profit. The operating rate is expected to increase, and coking coal prices are expected to be stable and strong.

Weekly summary of thermal coal: Production area: Prices in some coal mines have mixed ups and downs, and most coal production and sales are basically balanced. On the port side: Daily consumption of terminal power plants has declined, procurement demand has declined, the atmosphere is relatively deserted. Prices are expected to fall back in the short term, but the magnitude is limited. Overall, the enthusiasm of some terminals to prepare goods declined after the holiday season, and there was strong wait-and-see sentiment in the market, but demand for winter storage was supported, and there was little downward pressure on prices. Considering that the downstream inventory is clearly removed during the peak summer season, there is still room for inventory replenishment in winter. Short-term port thermal coal prices fluctuate mainly in a narrow range, and the maintenance of coal prices during the peak winter season is optimistic.

Weekly summary of coking coal: In terms of production area, prices have increased a lot since the National Day, shipments have been smooth, and stocks have been removed quickly. On the demand side, terminal iron and water production continued to rise, and profits of coking companies improved after a continuous rise. Downstream coking companies were more motivated to start construction, and procurement of raw materials was also accelerated. The price of coking coal is expected to be stable and strong.

Weekly summary of coke production: In terms of production, steel prices continued to rise during the holiday season due to a sharp rise in futures markets, leading to a continuous rise in coke prices. The profitability of coke companies has clearly recovered, and production enthusiasm has increased. In terms of production, the price of coke has continued to rise. The increase in coking coal has been relatively slow. The profits of coking companies have clearly recovered, the enthusiasm of coke companies to produce has increased, and supply has increased. Short-term coke is running strongly.

Focus on: (1) Thermal coal is more flexible: Yankuang Energy (600188.SH), Guanghui Energy (600256.SH), and Jinkong Coal Industry (601001.SH). (2) Coking coal is more flexible: Huaibei Mining (600985.SH), Pingmei Co., Ltd. (601666.SH), Lu'an Huaneng (601699.SH), and Shanxi Coking Coal (000983.SZ). (3) Steady targets: China Coal Energy (601898.SH), Shaanxi Coal (601225.SH), China Shenhua (601088.SH), Power Investment Energy (002128.SZ), and Xinji Energy (). 600493.SH

Risk warning: 1) risk of economic growth falling short of expectations; 2) risk of policy regulation exceeding expectations; 3) risk of continuous replacement of renewable energy; 4) risk of impact on coal imports; 5) focus on risk of company performance falling short of expectations; 6) risk of measurement errors.