The new production capacity is insufficient, and the supply side is still inelastic.
In terms of existing production capacity, the capacity utilization rate continues to be highWhen coal prices fell, Xinjiang's output contracted, and the average output in 23 months decreased by 12 compared with 23Q153% vs. 784%。It is difficult for existing mines to sustain high-intensity production over the long term。Since 2021, the Bureau of Statistics has shown that the overall capacity utilization rate of the coal mining and washing industry has rapidly increased from about 70% in 2020 to 74% in 20229% or so. However, from the perspective of the average capacity utilization rate of the industry from 2021 to 2023, the capacity utilization rate has entered a plateau period, basically stable at the level of 74%-75%.
Outside the main producing areas, production declined in many regions, reflecting the acceleration of production capacity depletion and withdrawal. In addition to the main producing areas, the output of most non-main producing areas has shown a contraction trend this year, such as Shandong, Hebei and other places, even under the supply guarantee policy, the output of these provinces is still showing a downward trend, and we believe that the natural decline in output is mainly due to the depletion of resources.
In terms of new production capacityThe capacity bottleneck caused by the lack of investment in fixed assets in the early stage continues, and from the perspective of the approval of new production capacity, the overall scale of new capacity approval is small, and considering the construction period of 3-5 years, the marginal production contribution brought by new mines in the medium term is limited. On the whole, assuming that high coal prices continue next year, the marginal output will increase, and the corresponding output growth rate will be 17%。
In terms of imports, overseas demand has recovered, and the import volume may fall back to 4 in 2024About 200 million tons.
Imports: Significant increase in '23 with a marginal decline in the later periodThe sharp increase in imports in 2023 is mainly due to the global weakness caused by excess European excess and sluggish European demand, and the import volume has increased significantly. From 22Q3, European electricity prices have been rapid**, and overly market-oriented electricity prices have suppressed electricity demand, and European power generation in 22Q4 has decreased by 9% year-on-year1%, of which renewable energy generation increased by 05%, and natural gas power generation decreased by 10 percent year-on-year4%, and thermal power generation decreased by 76%。Since entering 2023, the decline in demand in Europe has not been significant, and social power generation from January to October has decreased by 2% year-on-year82%, but due to renewables (+8.).6%) and hydroelectric power (+15.).6%), with 229 coal-fired power generation in Europe achieved in the first 10 months97 million MWh, down 2648%, corresponding to a reduction in coal demand of 34.79 million tons (Q5500), resulting in a large number of transshipments of European coal to other countries.
European coal demand is expected to pick up in winter, and China's international coal supply that can be imported may shrink. In 2022, due to the warm winter in Europe, the demand for power generation in Europe in winter was significantly lower than in previous years, and the demand for coal-fired power generation in Europe continued to remain high in 2022 against the backdrop of high oil and gas ** and prominent coal economy. Entering the winter, European demand is expected to rebound seasonally, while the advantage of imported coal ** is eliminated, we see that after entering 23Q4, the import volume has declined sharply month-on-month, and the downward trend is expected to continue.
Looking forward to 2024, the current European electricity price has fallen, and the certainty of the improvement of residential electricity demand is strong, but natural gas** may return to a high level due to the impact of tight supply in Europe, and the economics of thermal power in the context of improved demand are also further highlighted, we expect that the demand for coal in Europe in 2024 is expected to turn positive, thereby squeezing the international ** coal space that China can import.
Thermal power is resilient, and chemical demand is growing rapidly.
Considering the increased likelihood of La Niña weather leading to abundant water supply, and the significant increase in installed wind and solar capacity in 2023, the growth rate of thermal power generation may slow.
In terms of chemical industry, there are abundant new coal chemical projects to be put into production, and we estimate that the coal consumption increase of new coal chemical industry in 2024 will be about 053~0.6.5 billion tons. The total demand is expected to be 515.3 billion tons, an increase of 2% year-on-year, much faster than the growth rate of supply.
**The bottom is verified.
Because the capacity utilization rate of the main producing areas has been difficult to improve, the supply increment or from Xinjiang and other regions, while the central and eastern stock production capacity is limited by the geological structure of the mining cost is higher, Xinjiang is limited by the location of the cost of transportation is higher, so the cost of the industry continues to rise, and it is expected that the future cost will form a support. In addition, the impact of imported coal and the squeeze of hydropower in 2023 have also basically verified the bottom of the port of about 800 yuan tons. So even if demand falls more than expected, earnings certainty remains strong.
In 2024, the ** center is expected to move upward, and the price may start to rise after the Spring Festival.
Looking ahead to 2024, we expect the pivot to move upwards from 2023. At the same time, the thermal coal spot market presents the characteristics of "small market size + large fluctuation + dependence on cement demand", and it is expected that the spot price will usher in an inflection point in the cement off-peak season in 2024. The supply of coking coal is similarly rigid, but the elasticity of response to demand is higher than that of thermal coal. The current trend of thermal coal and coking coal is expected to continue, but it is expected to usher in a price increase window in the peak season after the Spring Festival.
Investment Advice:
In 2022, the sector ** will be driven by performance, and in 2023 it will be driven by valuation, and in 2024, the sector is expected to usher in a Davis double-hit, and the sector may have overall investment opportunities.
We recommend the following main investment lines:
1) The investment value of companies with stable profits, high cash flow and high dividend yield is further highlighted, and it is recommended to pay attention to Shanmei International, Jinkong Coal, Shaanxi Coal, China Shenhua and Yankuang Energy.
2) The demand for coking coal is expected to increase in valuation, and it is recommended to pay attention to Hengyuan Coal Power, Huaibei Mining Pingmei Co., Ltd. and Shanxi Coking Coal.
3) Coal and electricity joint venture, steady growth in performance, it is recommended to pay attention to Xinji Energy.
4)**During the upward window, it is recommended to pay attention to Guanghui Energy, etc.
This is an abridged excerpt from the report, the original PDF of the report
Fossil Energy-Coal Industry 2024 Investment Strategy Report: Supply Shortage Again, Double-Click Time Has Arrived-Minsheng**[Zhou Tai, Li Hang]-20231212[Page 35]".
Report**: Value Catalog