Recently, domestic coal futures continue to fluctuate. Coking coal futures 2305 contract fell 3% in intraday trading on the 4th, and the coking coal coke contract resumed its rising market in the following days.

At the same time, the Hong Kong A coal plate is floating red in a large area. As of press time, Shaanxi Black Cat rose by the daily limit, Zhengzhou Coal Power rose by nearly 6%, and Mountain Coal International, China Shenhua Energy and Lu'an Ring Road rose by more than 3%.

Recently, there are market rumors that the National Development and Reform Commission held a meeting with some power and steel companies to discuss the resumption of Australian coal imports. The plan will first allow Baowu, Datang, Huaneng and Guoneng to import coal from Australia, and the ban could be lifted as early as April 1.

China may resume import of Australian coal

Recently, there are media reports that the National Development and Reform Commission held a meeting with some power and steel enterprises to discuss the resumption of Australian coal imports. Datang, Huaneng, Guoneng and Baowu are expected to import Australian coal peer-to-peer, and the ban may be lifted as early as April 1.

Coal is Australia's main export commodity. In 2020, China imported about 35 million tons of Australian coking coal, accounting for 48.4% of the total imports, and imported about 42.36 million tons of Australian thermal coal (other bituminous coal, other coal and lignite), accounting for 19%.

However, due to some reasons, China has reduced its import of Australian coal.

The latest data show that from January to November 2022, China imported coal mainly from Indonesia, Russia, Mongolia, Canada, the United States and other countries, accounting for 58.3%, 23.3%, 10%, 3.2% and 1.6% of the total imports, respectively. From January to November 2022, thermal coal was mainly imported from Indonesia and Russia, accounting for 77.4% and 16.6% respectively, while Mongolia, Russia, Canada and the United States, the main importers of coking coal, accounted for 37.6%, 33.7%, 13.2% and 7.3%, respectively.

With regard to the news that the Australian coal ban may be lifted, Sinosteel Futures Research News pointed out that the low price of Australian coal will have an impact on the domestic coking coal market, but because China's coal imports and Australian coal exports have formed a new pattern, in the case of friction costs in the reconstruction of the trade pattern, short-term imports or difficult to release volume, the impact on the market is more emotional.

A senior analyst at the International Energy Agency also said that even if the import ban is lifted, China is in no hurry to buy thermal coal from Australia because it still has enough options to meet its own needs around the world. especially medium calorific value fuel.

What is the impact of the release of the Australian coal ban?

Australian coal is mainly exported to Asia. In the past 20 years, Japan and China are the top two exporters of Australian coal, accounting for 29.5% and 22.7% respectively. After the ban on Australian coal imports, the coal trade pattern between China and Australia has been greatly adjusted.

Domestically, we have increased coal imports from Indonesia and Russia. In 21 years, coal imports from Indonesia and Russia increased by 39% and 44% respectively compared with the same period last year.
For its part, Australia's main exports have shifted to other Asian countries, including Japan, South Korea and India. The share of Australian exports to Japan, South Korea and India in 2021 increased by 3.5,3.8 and 5.8pct, respectively, compared with 2020.

Australian coal imports may be re-liberalized, although it does not have a volume-price advantage in the short term, but it has a marginal impact on market sentiment, while the decline in international resource prices is expected to lead to a long-term decline in Australian coal prices. In addition, the import of high-quality high-calorie coal from Australia can alleviate the shortage of domestic high-calorie supply, and coastal power plants are expected to be the first to benefit.

Yongan Futures also said that after the lifting of the ban, domestic Australian coking coal imports will increase by about 10 million tons, but will not form a real increase in the total amount, but in the form of replacing imports from North America and other regions.

From a global point of view, in the absence of recession, the supply and demand of coking coal is basically balanced in 23 years.

From a domestic point of view, the main contradiction of 23 years' fundamentals lies in downstream hot metal demand, domestic coking coal production and Mongolian coal import increment, and the liberalization of Australian coking coal ban, under the condition of high import profits in the short term, it will put pressure on domestic higher spot prices, which can slightly reduce domestic import costs to a certain extent in the long run, but has little impact on domestic supply and demand fundamentals.

Organization: the better-than-expected performance is expected to catalyze the sector market.

According to the Coal 2023 report released by the International Energy Agency, global coal demand is expected to grow by 1.2% in 2023, an all-time high of more than 8 billion tons for the first time. The shortage of natural gas caused by Russia's invasion of Ukraine was the main reason for the surge in demand for coal, which increased the use of coal for power generation by 2%. Even if Europe can reduce its dependence on coal by 2025, Asia's demand for this kind of energy looks set to grow in the coming years.

Demand for coal will be flat over the next three years, based on expectations of a shift from coal to cleaner sources of energy and increased coal use in emerging economies in Asia.

At the same time, coal is expected to remain by far the largest single source of carbon dioxide emissions as countries around the world issue ambitious climate commitments, invest heavily in renewable energy and try to achieve economic decarbonization.

Open source securities released a research report that since the end of September 2022, coal and other traditional energy sectors have undergone a major adjustment, the current layout is approaching the time point.

The coal industry is affected by both supply and demand, but it will also face the weak reality of supply in the first quarter, and the weak supply and demand will lead to high coal prices. At present, coal stocks have been fully adjusted, and imply the expectation of weak economy in the first quarter, in addition, high dividend-low valuation, not only has a greater attraction and has a high enough margin of safety, both offensive and defensive. Recently, Guanghui Energy disclosed that the company's net profit in 2022 is expected to increase by 126% MUE 130% compared with the same period last year. Other coal companies' 2022 annual report results will be gradually disclosed. 2022 is a year of rapid profit growth in the coal industry, and the better-than-expected performance is also expected to catalyze the sector market.

Cinda Securities also pointed out that continue to take a long view of the coal sector, it is recommended to continue to pay attention to the historic allocation of coal opportunities. From the bottom up, focus on two main lines, one is Yanzhou Mining Energy, Shaanxi Coal, Guanghui Energy, China Shenhua Energy, China Coal Energy, etc., which have large room for endogenous and extension growth, excellent resource endowment and excellent corporate governance; second, Pingshan Coal, Shanxi Coking Coal, Huaibei Mining, Panjiang Co., Ltd., which have special scarcity of global resources and have room for growth.

Edit / lydia