The Zhitong Finance App learned that Huafu Securities released a research report saying that in 2024, the overall volume and price of the Coal Changxie Plan will remain stable. The benchmark price is expected to remain at 672 yuan/ton, and the price of thermal coal will continue to fluctuate in a narrow range. Looking ahead to 2024, thermal coal supply and demand will return to a tight balance. There may be a small gap in 2025. With the support of the policy of securing supply and price stability, it is expected that the spot price of thermal coal will be supported in 2024, or may continue to fluctuate at a high level. In 2024, thermal coal prices may receive some support in terms of supply and demand. At the same time, most coal companies value cash dividends to give back to investors, and thermal coal-related companies have ushered in better investment opportunities.
It is recommended to focus on:
(1) Sector leaders, such as: China Shenhua (01088), Shaanxi Coal Industry (601225.SH), etc.
(2) Companies with high dividends and high dividends, such as: Yankuang Energy (01171), Shanmei International (600546.SH), etc.
(3) Companies with low net market ratio and price-earnings ratio, such as China Coal Energy (01898), Haohua Energy (601101.SH), etc.
The main views of Huafu Securities are as follows:
The momentum for increasing coal production is showing clear signs of weakening, and future growth is expected to be limited
(1) The growth rate of raw coal and thermal coal production has clearly slowed in 2023. The cumulative year-on-year growth rates of production were 3.62% and 1.87%, respectively. (2) The year-on-year growth rate of raw coal production in the four major production areas of Jinshan, Shaanxi, and Mengxin has all declined sharply, or it is predicted that production will reach a peak. (3) The growth rate of fixed asset investment in the coal mining and washing industry has declined. The newly approved production capacity of coal mines is relatively limited, and the capacity utilization rate of coal mining may have peaked.
Power generation continues to grow, thermal power is still the main body, and coal use in the power industry is expected to grow steadily
Against the backdrop of China's continued economic recovery, the electricity consumption of the whole society is expected to reach 9.6 and 10 trillion kilowatt-hours respectively in 2024-2025, up 4.08% and 4.17% year on year. The power generation capacity is growing in line with economic development and electricity demand. New energy power generation has broad prospects, but it is still facing challenges in the process of replacing thermal power. The share of thermal power generation continues to decline slowly. It is estimated that in 2024-2025, coal consumption in the power industry will reach 27 billion tons and 2,764 billion tons, respectively.
The thermal coal surplus narrows in 2023, and supply and demand may shift to a tight balance in 2024
On the supply side, there is limited room to increase domestic thermal coal production, and thermal coal imports are affected or declined somewhat; on the demand side, thermal power is still the main power generator, and China's continued economic recovery is driving the increase in electricity consumption. According to the calculation results, Huafu Securities expects the supply and demand of thermal coal to shift from excess 85 million tons to shortages of 31 million tons and 147 million tons in 2023/2024/2025. There is still excess thermal coal supply and demand in 2023, but the excess narrows, and supply and demand will return to a tight balance in 2024, or there may be a small gap.
In 2024, Changxie's volume price is stable, and spot prices may continue to fluctuate at a high level
The overall volume and price of the 2024 Coal Changxie Plan will remain stable. The benchmark price is expected to remain at 672 yuan/ton, and the price of thermal coal will continue to fluctuate narrowly. In 2023, as fundamentals continue to be excessive and narrow, the spot price of thermal coal showed a “V” trend. Looking ahead to 2024, Huafu Securities believes that thermal coal supply and demand will return to a tight balance, and there may be a small gap in 2025. With the support of the policy of securing supply and price stability, it is expected that the spot price of thermal coal will be supported or will continue to fluctuate at a high level in 2024.
Risk warning:
(1) The economic growth rate fell short of expectations; (2) capacity construction fell short of expectations; (3) progress in achieving the dual carbon target exceeded expectations; (4) the volume of coal imports exceeded expectations.