Coking coal pressure is relatively small

International thermal coal prices rose sharply, while coking coal prices fell slightly. Heavy rain caused the tight supply of thermal coal in Australia, coupled with the fall in the US dollar index, the price of thermal coal (6,000 kcal/kg) in Newcastle last week rose sharply by 5.5 US dollars, or 5.2% to 111.24 US dollars/ton. As the quarterly negotiations on coking coal prices approached and the willingness to purchase steel products weakened, FOB Australia's FOC price of primary coking coal fell slightly by US$3.3, or 1.4%, to US$225.0/ton. Considering the factors such as VAT and sea freight, the international thermal coal price is higher than the domestic price by RMB 72/ton, and the international coking coal price is RMB 163/ton higher.

The price of thermal coal in the port fell slightly, and the prices of coking coal and anthracite rose steadily. 1) Hangkou thermal coal prices continue to rise, but port thermal coal prices have declined. The price of thermal coal pits in Zhangzhou and Quzhou generally rose by RMB 5-15/ton; while that of Qinhuangdao Shanxi high-grade coal (5,500 kcal/kg) fell by RMB 10/ton to RMB 800/ton. Datong High-grade Coal (up to 6,000 Card / kg) fell 15 yuan / ton to 850 yuan / ton. 2) The price of coking coal in Sichuan and Guizhou provinces generally rose by 50 yuan/ton, while that in the rest of the region remained unchanged from the previous week. 3) Anthracite prices rose significantly in Shanxi Jincheng, Sichuan and Guizhou, and other regions remained stable.

International and domestic shipping costs continue to fall. The BDI and BCI indices fell by 0.1% and 7.7%, respectively; domestic ocean freight rates fell sharply, and sea freight rates from Qinhuangdao to Guangzhou and Qinhuangdao to Shanghai dropped by 5 yuan/ton, 6 yuan/ton to 70 yuan/ton and 59 yuan/ton respectively. .

Qinhuangdao stock rose sharply and power plant inventory remained generally at normal levels. Fog weather has a great impact on recent port coal transportation. Qinhuangdao coal inventories have increased by 15% to 6.73 million tons. Except that some local power plants have low inventory, the inventory of power plants in the country is generally adequate, and the enthusiasm of the power plants to purchase coal is generally low.

Rising raw material costs and winter storage demand pushed steel prices up slightly. In Shanghai, except for rebar, which was unchanged from the previous week, the prices of hot-rolled, cold-rolled and medium plate prices rose slightly by 0.7%, 0.4% and 0.7% to 4,460 yuan/ton, 5,290 yuan/ton and 4,580 yuan/ton respectively.

The price of coke rose steadily and iron ore prices remained stable. The price of secondary metallurgical coke in Taiyuan and Linyi in Shanxi Province increased by RMB 20/ton and RMB 30/ton to RMB 1,720/ton and RMB 1,680/ton, respectively; coke prices in Shaanxi, Sichuan, and Guizhou provinces generally increased by RMB 50/ton. Iron ore prices remained stable.

Valuation and recommendations:

It is expected that the thermal coal price will remain high and the coking coal price will rise steadily. The demand for thermal coal during the peak season and the sharp rise in international oil prices and coal prices all provide strong support for domestic thermal coal prices. However, the state's intervention in the coal market will weaken the upward momentum of coal prices. It is expected that the price of thermal coal will be consolidating at a high level in the near future. The recent tilting of capacity to power coal has caused a certain constraint on the supply of coking coal, while energy-saving and emission reduction efforts have eased and steel mills' winter storage has increased some of the demand. Coking coal prices are expected to rise steadily.

The rate hike boots have not yet landed, and the coal sector may continue to consolidate. The country recently proposed that 10 million sets of affordable housing will be built in 2011, an increase of 72.4% year-on-year, and coal demand will be supported. However, under the constraints of coal price control and policy tightening, thermal coal companies, especially those with a high proportion of contracts, lack the upward momentum. It is recommended to focus on companies with low impact on restricted prices, significant improvement in the performance ratio, and internal and external growth drivers. A shares are concerned about Lanchuang Kechuang (Ding Ning mine production is expected to reach 4 million tons, anthracite prices continue to rise, chemical business gradually turn losses), Kailuan shares (coking coal and coke prices have significantly improved performance), Xishan coal and electricity (Xicuogou mine promotion The future production will increase rapidly and there will be a certain increase in price expectation.) and Yanzhou Coal (the spot coal price rose significantly in the fourth quarter. The appreciation of the Australian dollar brought book losses, and Felix contributed significantly to the production). The H-shares are concerned about Fushan Energy (coking coal price increases improve earnings The approval of the Lianshan Mine will significantly increase the company's coal resources reserve and improve long-term growth prospects.) and Yanzhou Coal Mining. In addition, we prompt investors to pay close attention to the economic and inflation data for November.

risk:

Increased inflation has led to further tightening of policies or price control efforts.