From January to November 2024, the cumulative output of raw coal reached 4.322 billion tons, an increase of 1.20% year-on-year, but the growth rate decreased compared to the same period in 2023. In November alone, the output of raw coal was 0.428 billion tons, an increase of 1.80% year-on-year, with the growth rate also decreasing compared to last year.
Zhito Finance APP learned that Shanxi released Research Reports stating that safety supervision at coal producing areas has returned to normal, with supply rebounding in November but a slight decrease in the year-on-year growth rate compared to last year; the demand for coal remains unfulfilled due to expectations of a warm winter in thermal power generation, leading to a relatively weak price for thermal coal at domestic ports. In terms of coking coal and coke, demand is weak, with limited incremental demand for non-electricity coal, and a decline in the operating rate of downstream steel mills, putting pressure on coking coal prices. Overall, due to strict safety supervision returning to normal and ongoing economic stabilization policies, there remain expectations of marginal improvements in real estate and infrastructure policies to stabilize the economy. Additionally, with the cold winter approaching, thermal coal for power generation is likely to see marginal improvements. Demand for coal remains strongly rigid, making it difficult for the supply and demand relationship of coal to loosen further in 2024, and there is minimal likelihood of significant fluctuations in coal prices in the fourth quarter.
Supply: From January to November, the supply of raw coal slightly increased compared to the same period in 2023. From January to November 2024, the cumulative output of raw coal reached 4.322 billion tons, an increase of 1.20% year-on-year, with the growth rate decreasing as compared to the same period in 2023. In November, the output was 0.428 billion tons, an increase of 1.80% year-on-year, with a decrease in growth rate compared to last year.
Demand: From January to November, investment in manufacturing has shown high growth, while overall demand remains under pressure. The growth rate of fixed asset investment remains stable, with high growth in manufacturing investment. From January to November 2024, fixed asset investment increased by 3.3% year-on-year (an increase of 0.4 percentage points compared to the same period in 2023). Manufacturing investment increased by 9.30% (an increase of 3.0 percentage points compared to last year), infrastructure investment increased by 4.2% (a decrease of 1.6 percentage points compared to last year), and real estate investment decreased by 10.4% (the decline increased by 1.0 percentage points compared to last year). For the period from January to November 2024, the cumulative growth rate of thermal power generation achieved 1.90%, a decrease of 3.80 percentage points compared to last year; cumulative growth of coke was -0.90%, down 4.20 percentage points from last year; cumulative growth of pig iron was -3.50%, down 5.30 percentage points from last year; and cumulative growth of cement was -10.10%, down 9.20 percentage points from last year.
Imports: From January to November, import volumes continued to grow. From January to November 2024, cumulative imports reached 490.34 million tons, an increase of 14.80% year-on-year, with imports for November totaling 54.98 million tons, an increase of 26.37% year-on-year, although the growth rate slightly decreased compared to last year.
Prices and Profits: The prices of thermal coal and coking coal are generally relatively weak. The average price of Shanxi premium mixed 5500 thermal coal in November was 845 yuan/ton, a decrease of 10.64% year-on-year, and a decrease of 2.24% month-on-month. The average price of main coking coal at Beijing Tang Port in November was 1659 yuan/ton, a decrease of 33.71% year-on-year, and a decrease of 12.20% month-on-month. The average price of secondary metallurgical coke at Tianjin Port in November was 1688 yuan/ton, a decrease of 23.74% year-on-year, and a decrease of 4.40% month-on-month.
Suggestions to pay attention to: It is recommended to focus on cases involving repurchase increases, re-loans, and SFISF and other monetary tools in the market, as carry trade is expected to deepen the coal dividend value, and it is advisable to pay attention to high-dividend stocks with high elasticity and stable high-dividend stocks.
In terms of high-dividend varieties with elasticity, there is relatively more bullish sentiment toward Guanghui Energy (600256.SH), Pingdingshan Tianan Coal Mining (601666.SH), YANKUANG ENERGY (600188.SH), Anhui Hengyuan Coal Industry and Electricity Power (600971.SH), Beijing Haohua Energy Resource (601101.SH), Huaibei Mining Holdings (600985.SH), and Jinneng Holding Shanxi Coal Industry (601001.SH).
Regarding stable dividend-paying varieties, there is a relatively bullish view on China Shenhua Energy (601088.SH), Shaanxi Coal Industry (601225.SH), and China Coal Energy (601898.SH).
Shanxi coal enterprises are frequently expanding reserves, and based on the unit price of transaction resources calculated per ton, the market cap level is far higher than the current market cap. The earlier production cuts have resulted in a bearish outlook diminishing, and the valuations of related enterprises have significant recovery potential. It is recommended to pay attention to Shan Xi Hua Yang Group New Energy (600348.SH), Shanxi Lu’an Environmental Energy Dev.Co.,Ltd (601699.SH), and Shanxi Coking Coal Energy Group (000983.SZ).
Risk Warning: Excessive release of supply; insufficient improvement in demand side; coal shortage in the EU is less than expected, large amount of imported coal flooding into the domestic market; strong price controls; failed coal enterprise transformation, etc.
