Huafu Securities: Daily consumption of power plants has rebounded significantly, and coal prices have returned to the rise

The Zhitong Finance App learned that as of September 24, Huafu Securities released a research report saying that as of September 24, the liquidation price of 5,500K coal in Qingang was 988 yuan/ton, +17 yuan/ton from week to week. This week, power plant daily consumption surged and power plant inventories rose slightly; major safety incidents enhanced supply contraction expectations, compounded by continued high temperatures, and short-term coal prices were difficult to rise and fall, and coal prices were in a new upward cycle. Coal companies' asset statements are generally healthy. Combined with the overall improvement in dividend ratios, coal stocks still have a comparative advantage. It is recommended to grasp targets with excellent resource endowments, stable operating performance, and high dividend ratios, or targets that have the potential to increase production and benefit from the bottom of the coal price cycle.

The main views of Huafu Securities are as follows:

Thermal coal

As of September 24, the final liquidation price of 5,500K coal in Qingang was 988 yuan/ton, +17 yuan/ton from week to week. Inner Mongolia's 5,500K production price had risen sharply, Shanxi's 5,500K production price had risen slightly, and Shaanxi 5,500K had remained flat. As of September 25, the 462 thermal coal sample mines had an average daily output of 5.272,000 tons, +28,000 tons from week to week, or -6.7% year over year. Power plant daily consumption rose sharply this week, power plant inventory rose slightly, thermal coal inventory index rose slightly, and Qin Port inventory fell slightly. As of September 21, thermal coal inventory index was 186.5 (+0.8 points). In terms of non-electricity, the operating rates of methanol and urea were 83.8% (+0.9pct) and 82% (+1pct), respectively, and are still at a high level in the same period in history.

coking coal

As of September 24, the price of the main coking coal depot in Jingtang Port had increased by 2,640 yuan/ton, which was flat from week to month. Prices in Shanxi fell slightly, prices in Henan remained flat, and prices in Anhui remained flat. As of September 25, the average daily refined coal output of the 523 sample mines was 659,000 tons (-20,000 tons), year-on-year - 14.5%; 523 sample mines had refined coal stocks of 1.707 million tons (+ 400,000 tons), year-on-year - 19.1%; as of September 25, China's average daily iron and water production was 2.357 million tons (20,000 tons), or -0.83% year on year. On September 19, the customs clearance volume of Ganqimaodu Port of Mongolia was 72,000 tons (20,000 tons), -58% year over year, and a total of 34.228 million tons year to date, +30.5% year over year. The price of rebar rose slightly this week, and the operating rate of large-scale coking rose slightly. As of September 18, the operating rate of coking plants (>2 million tons) was 71.7%, +1.3 pct from week to week.

Core ideas

Major safety incidents have increased expectations of supply contraction, compounded by continuing high temperatures, and short-term coal prices tend to rise and fall. At the macro level, geopolitical conflicts have strengthened countries' energy priorities, high inventories, or countermeasures. At the same time, with the strengthening of policies such as rectifying internal competition and expanding domestic demand, the bottom of the coal price policy has already been determined in 2025. At the demand level, AI development is driven by increased demand, while China's supply chain and energy depressions are a solid guarantee of electricity consumption, and coal prices are in a new upward cycle.

The bank is in an era of major energy changes. Under policy guidance and energy security demands that were established first and then broken, coal may still be in a golden age. The flexibility of coal supply is limited: First, in the context of double carbon, production capacity control is strict, and safety and environmental protection policies are squeezing out overproduction; second, supply shows regional differentiation. As resources in the eastern region decline and Shanxi enters an era of “stable production,” the difficulty of mining or gradually increases, domestic production capacity is further concentrated in the west, increasing supply costs; third, after further mining and safety standards are raised, the difficulty of coking coal mining will increase, and underproduction may become the new normal, and resource scarcity will become more obvious. The status of coal as the main energy source is difficult to change in the short term. Although weak macroeconomics have affected coal demand in stages, supply rigidity and rising costs have effectively supported the bottom of coal prices, and coal prices are still expected to maintain a volatile pattern. Coal companies' asset statements are generally healthy. Combined with the overall improvement in dividend ratios, coal stocks still have a comparative advantage.

Investment advice

The bank suggests grasping coal investment opportunities from the following dimensions: (1) targets with excellent resource endowments, stable operating performance, and high dividend ratios, or the possibility of increasing dividends; (2) targets that have the potential to increase production and benefit from bottoming out of the coal price cycle, it is recommended to focus on: Yankuang Energy, Huayang Co., Ltd., Guanghui Energy, Jinkong Coal Industry, Gansu Energy; (3) Those that benefit from tight long-term supply and have global scarce resource attributes, are recommended targets.: Huaibei Mining, Pingmei Co., Ltd., Shanxi Coking Coal, Lu'an Huanneng, Mountain Coal International; (4) Coal-power joint ventures or integrated models, targets for calming cycle fluctuations, it is recommended to focus on: Shaanxi Energy, Xinji Energy, and Huaihe Energy.

Risk Alerts

The release of domestic coal production capacity exceeded expectations, imported coal exceeded expectations, electricity generation from alternative power sources exceeded expectations, and the macroeconomy fell short of expectations