Zhitong Financial APP learned that according to the Indonesian Ministry of Energy and Mineral Resources, the benchmark price of Indonesian thermal coal set by the Ministry of Energy and Mineral Resources for October 2022 was 330.97 US dollars / tonne, up 3.68 per cent from the previous month, and 169.34 US dollars / tonne, up 104.77 per cent from a year earlier. The price index hit its highest level since its release, surpassing the all-time high of $323.91 a tonne just set in June.Open source securities analysis said that the intensification of the conflict between Russia and Ukraine has further led to a continued escalation of the global energy crisis. The bombing of the Beixi-1 and Beixi-2 pipelines at the end of September further aggravated the energy shortage in Europe. OPEC+ announced on October 5 that it would reduce production by 2 million barrels per day, crude oil prices continued to soar and oil distribution was close to $100. the energy shortage in Europe, especially natural gas, will quickly shift alternative demand to coal. Coal prices will be stronger or stronger. Related targets: Shanxi Coking Coal (000983.SZ), Huayang Stock (600348.SH), Xinji Energy (601918.SH), Zhengzhou Coal Power (600121.SH).

Since Russia's "Beixi-1" pipeline was overhauled and stopped supplying natural gas to Europe, the European Union's coal embargo on Russia came into effect, and with the approaching winter in the northern hemisphere, European countries were "hard to get a coal." in order to make up the gap, European countries began to look for coal all over the world. In the first half of this year, Europe imported 809000 tons from the United States and 1.3 million tons from Colombia. Total coal imports soared 49%, of which South Africa's coal exports to Europe soared eight-fold, and Germany threw 150 million tons of coal to Indonesia, equivalent to the total coal imports in the past five years.

In addition, since September 2020, Indonesian thermal coal HBA prices have risen 569.7%, soaring nearly sixfold.Especially since January 2022, due to the economic recovery after the COVID-19 epidemic eased, the sharp rebound in electricity demand, and the conflict between Russia and Ukraine quickly pushed up coal prices, thermal coal has become the best performance of electricity and people's fuel for the winter. Li Dewan, director of the Minerals and Coal Department of Indonesia's Ministry of Energy and Mineral Resources, also said that some EU countries have approached Indonesian coal producers, of which Germany has taken the lead in selling a large order of 150 million tons.

As early as April, Esso Mining, a large South African coal producer, said its current coal production capacity had been booked in advance by European countries. But even so, it cannot meet the needs of Europe.According to the International Energy Agency (IEA), EU coal consumption is expected to grow by 7 per cent this year, up from 14 per cent last year, as the power sector increasingly uses coal instead of natural gas. In addition, industry insiders say that for Europe, the demand for heating this winter may be a greater challenge.

Domestically, China's resource endowment of "rich coal, poor oil and less gas" determines the important position of coal in energy supply. It can be seen that although the proportion of raw coal in China's energy consumption has been declining, as of 2021, coal still accounts for half of the energy consumption.It can be predicted that coal will still be the main energy of our country for a long time in the future.

The alternative demand for natural gas in Europe has shifted to coal, and overseas coal grabbing may pose a greater challenge to China's coal imports.In addition, before the major meeting, the intensity of safety supervision was relatively strict, and the recent public health incidents in some producing areas of Inner Mongolia, Shanxi and Shaanxi were repeated. In addition, the Daqin line will be overhauled in autumn from September 28 to October 22, and the supply side may fall. Domestic coal supply is tight.

On the demand side, growth policies and non-thermal coal such as cement chemical industry are still expected to stabilize demand during the peak season. With the northern heating season approaching, relevant departments strengthen the implementation of winter storage, the inventory gap in coastal areas and some inland areas is still large, the domestic supply situation is still tight, superimposed non-electric enterprises continue to prepare materials, and thermal coal has a strong demand rigidity.

In terms of coking coal, the operating rate of steel mills across the country has remained high, recent steel social inventories have continued to decline, and downstream infrastructure and real estate chains have been restored. Coking coal inventory is still at an all-time low, with the strengthening of safety inspections, coking coal mine production may be affected.

It is worth mentioning that after the first round of coke prices rose and landed during the National Day, a reporter recently learned exclusively that Inner Mongolia Yuantong Coal supply and Marketing Co., Ltd. issued a price adjustment letter on October 9, according to the price adjustment letter issued by Inner Mongolia Yuantong Coal supply and Marketing Co., Ltd., recently, raw coal and transportation prices in Ordos, Shaanxi, Shanxi, Ningxia and other places continue to rise, and the cost of coal into the furnace continues to rise, resulting in continuous losses for coke enterprises. In order to reduce losses, the company decided to raise the land price of the national standard secondary coke field by 100 yuan / ton from 0: 00 on October 10. Some people in the industry said that this means that the second round of coke enterprises has begun to rise.

Cinda Securities analysis pointed out that the current coal economy is in the early stages of a new round of upward cycle, fundamentals, policy resonance, the allocation of coal plates at this stage is timely. Under the logic of big energy inflation, grasping the high-quality coal enterprises with high barriers, high cash and high dividends, the coal sector is expected to usher in a historic market with both performance and valuation.

CITIC released a research report that Q3 thermal coal prices remain high, although coking coal, coke prices appeared greater pressure, but the industry profit is still expected to improve. The bank expects the performance of mainstream companies in the sector to rise by more than 80% year-on-year in the first three quarters. Q3 can also achieve a slight increase in single-quarter operating net profit compared with the previous quarter. Driven by the peak season effect, the decline in hydropower output and the superposition of the effects of stable growth policies, the bank believes that the industry boom Q4 has further expansion. The performance of the coal sector has improved significantly, the dividend yield is also expected to rise, the sector has a cost-effective allocation, continue to recommend low valuations, leading companies with growth logic and companies that transform new energy businesses.

Minsheng Securities also said that with the approach of the heating season in the north, the government has strengthened the implementation of winter storage, while the inventory gap in coastal areas and some inland areas is still large, the domestic supply situation is still tight, and the superimposed non-electric enterprises continue to prepare materials. thermal coal has a strong demand rigidity. In addition, the sharp devaluation of the RMB has led to a sharp rise in imported coal prices, supporting domestic coal prices are easy to rise but difficult to fall, and high thermal coal prices are expected to remain high in the future.

Related concept stocks:

Shanxi Coking Coal (000983.SZ): issued the first three quarters of 2022 results forecast, the company from January 1, 2022 to September 30, 2022 performance forecast period, is expected to be attributed to shareholders of listed companies net profit of 8.093 billion yuan-8.462 billion yuan, compared with the same period last year, an increase of 155% ran 167%; net profit after deducting non-recurring profit and loss of 8.075 billion yuan-8.444 billion yuan, an increase of 167% compared with the same period last year Basic earnings per share of 1.9755 yuan per share-2.0655 yuan per share.

Huayang Co., Ltd. (600348.SH): the total proven resource reserves have reached 3.11 billion tons, the exploitable reserves are 1.552 billion tons, and the confirmed reserves are 726 million tons. Anthracite reserves account for more than 75% of the company's coal reserves. The installation and commissioning of the sodium ion battery production line built by Shanxi Huaxin Core has been completed.

Xinji Energy (601918.SH): the total area of the mining area is about 1092 square kilometers, the coal-bearing area is 684square kilometers, and the resource reserves are 10.16 billion tons, accounting for about 40% of the total resources of the four major coal enterprises in Anhui Province.

Zhengzhou Coal Power (600121.SH): the sulfur content of the raw coal of the company is less than 0.5%, the lowest is only 0.27%, and the average sulfur content is 0.35%. It is the high quality and environmentally friendly thermal coal most suitable for thermal power units.