In terms of overall growth rate, the import growth rate in 2024 has significantly declined compared to 62% in 2023.
According to the statistical data of the General Administration of Customs, in May 2024, China imported 43.816 million tons of coal and lignite, a year-on-year increase of 10.7%; From January to May, China imported 204.969 million tons of coal and lignite, a year-on-year increase of 12.6%.
In terms of overall growth rate, the import growth rate in 2024 has significantly declined compared to 62% in 2023. According to the analysis from institutions, the overall import volume for the year may remain at around 490 million tons (470 million tons in 2023).
The main reason for the decline in import growth rate is as follows:
As the curtains fall on the Indian general elections, it is predicted that the power shortage and increase in demand for manufacturing will make India the largest coal market in the world in the future. According to the estimation of the total demand for coking coal in India, which is around 150-170 million tons, and the assumption that the proportion of main coking coal is between 35% and 40%, the demand for main coking coal in India will increase from around 30 million tons in 2023 to 53-68 million tons in 2030, and the demand is expected to double. It can be foreseen that the demand for overseas high-quality main coking coal resources in India will continue to rise.
The decline in the import growth rate of coal is mainly due to the sharp decline in domestic coal prices after March, which has led to the narrowing of import arbitrage space. It can be observed that in the case of port 5500 calories, the average price in 2023 was 965 yuan/ton, the average price in 24 Q1 was 900 yuan/ton, and the average price as of early June in 24 Q2 was only 845 yuan/ton, which is a significant drop in prices. Institutions predict that the average price of coal for the year may be between 880-900 yuan.
Feedback from Shanxi investigation: Institutions have visited five listed top coal enterprises in Shanxi and the overall feedback is that after mid-May, the government requested comprehensive resumption of production, and the overall feedback is that the output has increased compared to April, and is expected to recover to a similar level as the same period in 2023 in June. Overall, the production targets of listed enterprises for this year are relatively conservative, and the production volume is certain to decrease compared to 2023, with a decrease of about 10%.
The increase in thermal coal prices has temporarily slowed down, and it is waiting for the arrival of the summer peak season. Institutions believe that the next month may be the most comfortable phase for the fundamentals. Thermal coal > coking coal, but the overall high point of prices is not expected to exceed the high point of 950 yuan/ton after spring festival in 2024, and the expected range of the increase is between 920-950 yuan/ton, which is still lower than the average price of 957 yuan/ton during the electricity consumption peak season in Q4 2023.
The increase in production in Shanxi is currently lower than expected. Under the background that safety production is the top priority, the supply side lacks elasticity, which may be the catalyst for another market. The turning point of coking coal may occur at the intersection of lean and peak season in August. It is bullish on the price elasticity in Q4.
Coal-related companies include:
China Coal Energy (01898), Yanzhou Coal Energy (01171), Yancoal Aus (03668), China Shenhua Energy (01088), SouthGobi (01878)