① The company's management expects that the coking coal supply and demand gap will gradually appear by the end of this year, that the new coal price center will be basically clear, and that the economy will remain prosperous in the medium to long term. ② The production capacity of non-coal resources will increase significantly in the next few years. The production cost is generally 25-35 yuan/ton, and the selling price ranges from 30 to 70 yuan/ton. It is expected that market prices in developed regions will stabilize and that less developed regions will rise steadily, but there is limited room for growth.
Financial News Agency, November 7 (Reporter Zhang Liangde)Under the influence of market supply and demand factors, the coking coal industry has maintained a high level of prosperity for nearly three years. Relevant listed companies have become “favors” for long-term investors due to their high profitability and high dividend rates. At the third quarter results briefing of Huaibei Mining (600985.SH) today, when some investors asked about the company's management's expectations for the future development of the industry, Sun Fang, the chairman of the company, expressed an optimistic attitude: “It is expected that the gap between supply and demand will gradually appear by the end of this year, the new price center for coal will be basically clear, and coal will remain prosperous in the medium to long term.”
Huaibei Mining's quarterly profit for the third quarter was 1.47 billion yuan, a slight drop of 10.74% from the previous year, which was basically the same as in the second quarter. However, while profits declined, the company's ability to control costs improved. The company's sales cost of tons of coal in January-September was about 624 yuan, a significant decrease compared to the tonne coal cost of 670.44 yuan/ton in the first half of the year.
Sun Fang told investors that the main reason for the decline in costs in the third quarter was, firstly, that coal prices fell in the third quarter, and no benefit wages were calculated in the current period; second, the company reduced operating costs, and expenses such as material costs fell relatively; and third, expropriation investment was relatively reduced in the third quarter.
The long-term coking coal price rebounded in the fourth quarter. Sun Fang said that the average price of the company's coking and refining coal in the fourth quarter increased by about 175 yuan/ton compared to the third quarter, and about 2,000 yuan/ton after the price adjustment.
The re-rising long-term coking coal price exceeded market expectations. Some investors began to re-evaluate the market development of the coking coal industry and asked the company questions. Sun Fang expected that coal would remain prosperous in the medium to long term, and at the same time expressed his views on both supply and demand at the conference.
On the supply side, due to the withdrawal of many domestic coking coal mines in recent years, there has been less new production capacity, and the recent frequent occurrence of coal mine safety incidents and stricter safety supervision policies have also had a certain impact on short-term coking coal production. On the overseas supply side, Australia may include coking coal, bauxite, and iron ore in the “key minerals” list, or increase tariffs or ban exports, thereby affecting domestic supply.
On the demand side, in the first nine months of this year, coking coal usage maintained an upward trend due to a year-on-year increase in molten iron production. In the later stages, with the gradual implementation of macroeconomic policies such as real estate, and the issuance of additional 1 trillion yuan of treasury bonds to support post-disaster recovery and reconstruction and project construction to enhance disaster prevention, mitigation and relief capabilities, demand for steel is expected to increase, which will lead to an increase in demand for coking coal.
Compared with the company's main coking coal business, the profitability of the company's coal chemicals and non-coal resources is relatively weak.
The production capacity of the company's non-coal resources projects will increase significantly in the next few years. 174 million tons of resources were collected and stored in the first three quarters. Construction of the Ledong mine in Hainan is being accelerated and is expected to be completed and put into operation in the first half of 2024; mining production line projects such as Jingzhou Baguyan are undergoing pre-construction preparations. It is expected that after all of them are completed and put into operation, an additional production capacity of 15.5 million tons/year will be added.
However, the unit price of non-coal resource projects is low. Qiu Dan, secretary of the company's board of directors, said at the meeting that the production cost of non-coal mines is generally 25-35 yuan/ton; there are regional differences in market prices, and the price of gravel ranges from 30 to 70 yuan/ton. It is expected that market prices in developed regions will stabilize and that less developed regions will rise steadily, but there is limited room for growth.
However, in the coal chemical business, Qiu Dan admits that due to upstream and downstream squeezing, the coal chemical's main product, the coke business, is losing a lot. However, judging from the company's production capacity structure, the company's coking equipment uses a 4×55-hole, 6-meter JN60 coke oven; the company's location has not introduced a production capacity optimization policy similar to Shanxi, so there is no need to worry about shutdowns or expensive equipment upgrades due to poor equipment.