Shanxi Securities: Overseas coal prices continue to rise, port inventories continue to fall

The Zhitong Finance App learned that Shanxi Securities released a research report saying that overseas coal prices continue to rise, compounded by tariffs and policy changes in overseas coal producing countries. It is expected that domestic imported coal will still be variable, and there is not much room for the domestic thermal coal price center to continue to decline. The supply side of coal has basically remained stable. Demand for non-electricity has rebounded into the “gold three silver four”. Although external demand is expected to be affected by the tariff dispute, there is still plenty of room for favorable macroeconomic improvement; thermal coal prices have entered the Changxie benchmark price range, and import price spreads have begun to reverse, and the bottom support is strong; metallurgical coal stocks are low over the years, and bifocal prices remain flexible in the later stages. On the financial side, leading coal companies' performance exceeded expectations, conveying confidence to the market. Long-term capital such as insurance entered the market trend, and the attractiveness of valuation and dividend rates continued to increase after the pullback in the coal sector.

The main views of Shanxi Securities are as follows:

Thermal coal: Port inventories continue to fall, and coal prices rebound in Kengkou

Coal mine production in the production area remained at a normal level last week. On the demand side, residential electricity consumption is low during the low season, and the daily consumption of electricity and coal is weak due to falling loads; downstream resumption of work and infrastructure still need to be raised, and demand for coal for industrial raw materials remains at the same time; coal prices in the northern port were compounded by the promotion of coal prices in Shugang, and coal stocks in northern ports declined last week; in terms of coal prices, imported low-calorie coal continued to be inverted. Domestic trade demand increased, compounded by production restrictions in some production areas, and the price of coal in Kengkou rebounded, but downstream demand was still affected by downstream demand. Mainly by Changxie Transportation, coal prices at the port remain weak.

Looking ahead to the second quarter, the tariff dispute will affect foreign trade. Domestic economic stabilization policies may continue to be introduced, and demand for non-electric coal may recover. Meanwhile, overseas coal prices will continue to rise, compounded by tariffs and policy changes in overseas coal-producing countries. It is expected that domestic imported coal will remain variable, and there is not much room for the domestic thermal coal price center to continue to decline.

As of April 11, the spot reference price of Bohai Rim thermal coal was 676 yuan/ton, Zhou Chiping; Guangzhou Port and Shanxi Premium Blend was 700 yuan/ton, a weekly change of -2.78%; and the European Three Port Q6000 thermal coal was 760.36 yuan/ton, with a weekly change of +2.43%. On April 11, the Northern Port had a total coal inventory of 27.51 million tons, a weekly change of -4.25%. Last week, the Bohai Rim port transferred an average of 1.836,400 tons per day, with a net transfer of 14,400 tons per day.

Metallurgical coal: Overseas coking coal continues to rise, and metallurgical coal is bottoming out. Coal mine metallurgy coal production and supply remains normal

On the demand side, downstream has entered the traditional peak season, and steel meters need to recover. The start of blast furnaces and the increase in iron and water production drive demand for metallurgical coal. However, international tariff disputes affect external demand expectations. Fluctuations in iron ore and steel prices have intensified, compounded by weak real estate, low steel price fluctuations, and metallurgical coal prices are still weak; in the later stages, there is plenty of room for policies to boost domestic demand, and macroeconomic policy is expected to recover. At the same time, downstream metallurgical coal stocks are at a low level over the years, and there is not much room for further decline in metallurgical coal prices.

As of April 11, the price of the main coking coal depot in Jingtang Port had increased by 1,380 yuan/ton, Zhou Shiping; 1/3 of the coking coal depot in Jingtang Port had raised the price of 1,180 yuan/ton, Zhou Chiping; the spot price of hard coking coal from Fengjing Mine in Australia had increased by $188.50 per ton per ton, a weekly change of +2.45%. On April 11, the total coking coal stocks of independent domestic coking plants and 247 sample steel mills were 8.145,300 tons and 7.7947 million tons, respectively, with weekly changes of +1.31% and +1.26%; injection coal stocks were 4.032,200 tons, with weekly changes of -0.80%. The operating rate of blast furnaces in the 247 sample steel mills was 83.30%, with a weekly change of +0.15 percentage points; the operating rate of coke ovens in independent coking plants was 73.01%, with a weekly change of +0.39 percentage points.

Coke and steel industry chain: inventories declined, coke prices stabilized

Prices of coke rebounded last week due to falling inventories, negative feedback on profits from coking plants, etc., but the downstream black industry chain was affected by weak demand expectations under the tariff dispute, and overall prices were still weak. However, macroeconomic expectations are expected to continue to be implemented. Foreign trade is sluggish or domestic demand is expected to be stimulated. The peak period of infrastructure and real estate construction is approaching, and steel demand is still rigid. Combined with expectations of coke supply contraction under low profit margins, coking coal prices are still relatively strong, and there is not much room for coke prices to fall under cost support.

As of April 11, the average price of first-class metallurgical coke at Tianjin Port was 1,480 yuan/ton, Zhou Zhiping; the average price difference of coke and coal (coke - coking coal) at the port was 207 yuan/ton, a weekly change of +5.08%. The total coke stocks of independent coking plants and sample steel mills were 659,900 tons and 6.6788,000 tons respectively, with weekly changes of -0.44% and -0.74%; total coke inventory in the four ports was 2.377 million tons, weekly change +7.93%; the average price of rebar in the national market was 3,299 yuan/ton, weekly change of -1.44%; total inventories of rebar society and manufacturers totaled 563.1 million tons and 2.146 million tons respectively, with weekly changes of -4.74% and +3.58% respectively.

Coal transportation: high winds compounded the inversion of foreign trade coal, and coastal coal freight rates rebounded

Demand for electricity and coal was weak last week, but windy weather affected ship turnover. Combined with the weakening of the coal price advantage in foreign trade, the release of domestic trade demand for domestic trade transportation, and a recovery in coastal coal freight rates. As of April 11, China's coastal coal freight index was 722.22 points, with a weekly change of +2.53%. The long-distance transportation freight rate of the Ordos Coal Highway is 0.21 yuan/ton/km, Zhou Chiping; on April 11, the cargo ship ratio of the four ports in the Bohai Rim Rim was 33.20, a weekly change of +9.93%.

Investment advice: Resource pricing guides the valuation of listed coal companies. It is recommended to focus on those that have performance support and are undervalued

Companies that account for a small share of non-coal business are significantly undervalued; Shaanxi Energy (001286.SZ) and Power Investment Energy (002128.SZ) are also underestimated among companies with a large share of non-coal business; the price of a single ton of transaction resources in the Shanxi region is generally high. It is recommended to focus on Jinkong Coal () and Huayang Shares (Dubai). 601918.SH 601101.SH 601898.SH 601001.SH 600348.SH

In addition, cases in the monetary instrument market such as buyback and refinancing and SFISF continue to be implemented, and arbitrage trading is expected to continue to deepen the value of coal dividends. It is recommended to focus on varieties with high dividends with high elasticity and stable dividend varieties. In terms of stable and high-dividend varieties, I am relatively more optimistic about China's Shenhua (601088.SH) and Shaanxi coal industry (601225.SH). In terms of highly flexible dividend varieties, they are relatively more optimistic about Huaibei Mining (600985.SH) and Pingmei (601666.SH).

Risk Alerts

The release of supply exceeded expectations; the improvement on the demand side fell short of expectations; the EU coal gap fell short of expectations, and a large amount of imported coal poured into the domestic market; strong price control; the transformation of coal companies failed, etc.