Jinwu Finance News | Coal stocks declined across the board, with SOUTHGOBI (01878) down 8.5%, HIDILI INDUSTRY (01393) down 7.58%, CHINA QINFA (00866) down 5.93%, China Coal Energy (01898) down 5.64%, China Shenhua Energy (01088) down 3.77%, MONGOL MINING (00975) down 3.66%, SHOUGANG RES (00639) down 3.15%, YANKUANG ENERGY (01171) down 2.91%, and YANCOAL AUS (03668) down 2.67%.
Sealand states that, at this point in time, there is still pressure on coal prices due to high inventory of Thermal Coal, but there is no need to be overly pessimistic about the future market. Firstly, the inflection point for port and power plant inventories has already appeared, and there is a trend of marginal improvement in demand. With strong chemical demand and the accelerated daily consumption of power plants, along with a continuous decline in the days of coal availability at power plants, port inventories are continuously being reduced. Secondly, looking at the capacity utilization rates of sample coal mines, the potential for further increase is limited, and the price gap for imports is narrowing, making it difficult for supply to grow further. Overall, if the improvement in demand can be sustained and port inventories continue to decrease, coal prices are expected to stop declining and rebound. A more patient and optimistic approach is needed for the future. In terms of coking coal, at the production end, some coal mines are experiencing slight supply contractions due to accidents and the imminent completion of annual production tasks. Last week, the capacity utilization rate of sample coal mines decreased by 0.44 percentage points. On the import side, the passing volume of Mongolian coal significantly decreased last week, alleviating pressure at the ports, with a reduction in inventory levels.
The bank pointed out that, overall, the inflection point for coking coal inventory is emerging downwards. If the supply continues to contract, and steel mills maintain a high level of replenishment, the internal inventory of coking coal plants will continue to be reduced, and coking coal prices are expected to stabilize and rebound. From a broader perspective, the investment logic in the Industry remains unchanged. The bank forecasts that in the coming years, the coal Industry will still maintain a tight balance state. The quality of Assets in the coal Industry is high, with abundant cash flow on hand, and coal listed companies continue to exhibit the five characteristics of 'high profitability, high cash flow, high barriers, high dividends, and high safety margins.' It is recommended to grasp the value attributes of low-position coal Sector and maintain a 'recommended' rating for the Coal Mining Industry.
