Coal Market Update:China trip takeaways,negative for thermal near term

类别:行业研究 机构:德意志银行 研究员:德意志银行研究所 日期:2017-05-19

A negative outlook already priced in

    We recently toured China, meeting with coal companies such as Shenhua andChina Coal, power companies and coal traders. Industry participants seeslowing demand for thermal coal in the coming months and increased supplywith mines operating at 330days, leading to thermal coal prices declining fromthe current RMB590/t (vs. Newcastle at US$73/t) to the bottom end of thegovernment’s targeted price band of RMB530-570/t (US$65-70/t NEWC Eq).Inventory at IPPs (19days) and port stocks (19-20Mt) are at normal levels. Coalstocks already seem to be pricing in the likely drop in thermal coal. Our topsector picks are Shenhua and China Coal.

    Entering the weak season for coal demand

    Chinese power demand increased 6% in 1Q17with thermal coal demandincreasing by 4% (c. 100Mt increase). However coal and power companies areseeing weaker demand in May due to strong hydro power. Over the mediumterm coal demand is expected to slow (net additions of 20Gw per annum) dueto competition from wind (35Gw p.a.) and natural gas (10Gw p.a.) with coalfalling from 60% to 55% of the total energy mix by 2020. Market participantssee the top 5power producers as currently break-even (gross margin 2c/kwhr),Mergers between coal producers and IPPs is a possibility, as well as thegovernment raising power tariffs slightly.

    Thermal price seen dropping into RMB530-570/t green band on strong supply

    With most thermal mines operating at 330days or higher, industry participantsexpect the thermal coal price will fall from current spot of RMB590/t into thegovernment “green band” of RMB530-570/t and perhaps even as low asRMB470/t (US$60/t NEWC Eq). Inspection times seem to have been shortenedbut trucking restrictions at Northern ports remain in place. Over the mediumterm, new mines are still required to meet demand and most SOEs productiontargets for 2017are unchanged due to underinvestment. There is still 300-500Mt of unlicensed capacity and c. 1Bt of new capacity under constructionacross the coal industry. The government is closing lower-efficiency highercostmines with lower-cost larger mines. The ‘no new mine for 3years’ policywas relaxed in 4Q16, although the NDRC is still encouraging a “new for oldpolicy”. Coal companies expect industry production growth of 2% p.a or300Mt over the next 5years. This is slightly ahead of our domestic demandforecast, and we expect Chinese net thermal coal imports to continue easinglower. For coking coal, domestic production should be flat in 2017.

    Global coal stock valuations and sensitivities

    The global miners with exposure to coal are; pure plays Shenhua (BUY,thermal 41% of FY18E EBITDA, discounting flat RMB480/t), China Coal (BUY,52% of FY18E EBITDA, discounting flat RMB470/t), and WHC (HOLD, thermal66%/semi-soft 34% of FY18E EBITDA, discounting US$60/t flat), anddiversified miners; GLEN (HOLD, 22% of CY17E EBITDA), S32(HOLD, 7% ofFY18E EBITDA), AAL (HOLD, 11% of CY17E EBITDA), BHP (HOLD, 6% ofFY18E EBITDA).



招商银行 中性 -- 研报
洛阳钼业 持有 -- 研报
紫金矿业 持有 -- 研报
盛屯矿业 持有 -- 研报
鹏欣资源 买入 -- 研报
格林美 持有 -- 研报
华友钴业 持有 -- 研报
雅本化学 买入 -- 研报
中国国旅 买入 68.60 研报
宝莱特 持有 35.00 研报
用友网络 持有 -- 研报


招商银行 1.35 1.48 研报
盛屯矿业 0.38 0.21 研报
格林美 0.68 0.41 研报
洛阳钼业 0 0.22 研报
鹏欣资源 0 0 研报
紫金矿业 0.33 0.28 研报
华友钴业 0 0 研报
雅本化学 0.49 0.40 研报
中国国旅 0.75 1.12 研报
宝莱特 0.89 0.91 研报
用友网络 0.66 0.68 研报


贵州茅台 34 持有 中性
高能环境 34 持有 买入
沧州明珠 34 持有 持有
碧水源 33 持有 买入
伊利股份 30 持有 中性
南京银行 29 持有 买入
中青旅 28 持有 买入
万科A 28 持有 中性
伊利股份 27 持有 中性
泸州老窖 27 持有 中性
清新环境 27 持有 买入
保利地产 26 持有 中性
恒顺醋业 26 持有 中性
中炬高新 26 持有 中性
中国国旅 26 持有 买入
建设银行 26 持有 买入
海天味业 26 持有 中性


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