Coal industry: Optimistic relative earnings of the industry under expectation of coal price rise

I. Weekly Industry Data Overview

On September 9, steel stocks in major cities continued to rise to 14.04 million tons; the comprehensive steel price index fell slightly to 135.1; the international steel price index rose slightly to 203.3; on September 13, Shanghai's hot rolled coil remained stable, and the rebar fell. 20 yuan/ton to 4720 yuan/ton. On September 9th, with the exception of Kunming Steel's coal injections, which rose by RMB 100/t to RMB 1,325/t, the prices of coking coal at consumer sites in Laiwu Steel, Handan Iron and Steel Co., Ltd. and Kunming Steel Co., Ltd. remained stable; the price of coking coal at coal production sites remained stable.

On September 9, coal prices in Qinhuangdao and Guangzhou Port remained stable; on September 13, Qinhuangdao's inventory fell by 716,000 tons to 6.687 million tons. On September 9, coal inventories rose by 194,000 tons to 2.624 million tons. On September 9th, the coal price at Shaanxi Shenmu rose from 15 yuan/tonne to 680 yuan/tonne in the thermal coal prices of various producing areas, and other regions temporarily stabilized. The coal price of the power plant is temporarily stable. On September 8, the BDI index rose by 42 points to 1782 points month-on-month. On September 7, China's coastal coal freight index rose by 44.6 points to 1,628.21 points.

The national anthracite price remained stable last week. On September 13, urea prices throughout the country remained stable except for Yuntianhua. In other areas, there were different degrees of rise: Hualu Hengsheng, Henan Xinlianxin and Lanzhou Science and Technology rose by RMB 10/t, RMB 20/t, and RMB 70 respectively. / Ton to 2200 yuan / ton, 2280 yuan / ton, 2270 yuan / ton.

On September 13th, the methanol price remained strong. Except for the temporary stability of Boyuan's transportation and sales, other regions all showed rise: Yankuang Guohong, Tangshan Zhongrun, Shanxi Coking and Shaanxi Lutianhua rose by RMB 80 and RMB 30 per ton, respectively. 60 yuan, 100 yuan to 2970 yuan per ton, 2820 yuan, 2710 yuan, 2600 yuan. On September 12, Brent crude oil fell slightly to US$112.25 per barrel, and NYMEX Natural Gas rose slightly to US$3.9 per million British thermal units. On September 9, the lowest price of nonferrous metals in the Yangtze River fell by 40 yuan/ton to 17,870 yuan/ton, and London LME aluminum spot price rose by US$55/ton to US$2,455/ton.

Second, recent views and recommended companies

The price of coke is stable. Metallurgical coal continues to strengthen in certain regions, steel production remains high, steel stocks increase slightly but remains low overall, and accelerated construction of affordable housing continues to boost demand for coking coal. The coal demand for thermal coal continues to be strong. The maintenance of the Daqin Railway, which began in late September, will also affect coal transportation. After early adjustments, thermal coal prices are expected to re-enter the rising channel under the winter coal storage started in October.

The current industry valuation is about 16 times lower than the historical average. Although the CPI remained lower in August than in the previous month, the coal sector lacked trend opportunities in the absence of improvement in macro-liquidity. However, taking into account the expected increase in coal prices, we continue to favor the relative earnings of the coal industry determined by profit.