The industry is expected to remain weak in 2020, but it is expected to pick up seasonally. The supply side will continue to expand moderately in the next 2-3 years. In 2020, the new capacity will decrease year-on-year and demand will improve structurally. .
The current high inventory situation will suppress coal prices, but the decline in coal prices throughout the year is expected to be limited. We maintain the sector's “Neutral” rating. Leading companies with stable pricing mechanisms have configuration value.
In the short to medium term, it is in a moderate expansion phase, and supply pressure will ease in 2020.
According to the tracking statistics of the newly approved mines, it is estimated that the average annual production capacity of the main coal producing areas in the next three years will be about 70 million tons, and the additional output will be 1-120 million tons. Moderate expansion.
From the perspective of the industry cost curve, if the port coal price drops to 520 yuan, it will hit a small number of high-cost coal mines, and the output will gradually shrink. Therefore, the elasticity of supply will be constrained by the cost curve.
In 2019, due to the advantage of a substantial discount, it also exerted significant pressure on the supply and price of coal on the eastern coast. As domestic coal prices fell, the advantages of imported coal also disappeared, and the probability of thermal coal imports in 2020 will decrease.
There may be structural improvement in demand, and the extent of improvement still depends on macroeconomic conditions.
The concentrated power generation of hydropower, wind power and nuclear power in 2019 and the slowdown in the growth rate of electricity consumption in the whole society have led to a growth rate of only about 1% in thermal power generation and thermal coal demand.
According to historical data, there is a high probability that hydropower output will decline in 2020. The growth rate of thermal coal demand or structural recovery will be 0.5-1 pct. The growth rate of nuclear power and wind power will also slow down due to a high base. We expect the growth rate of thermal coal demand or Rising to 2.5-3%, the upward growth rate still depends on macroeconomic conditions.
From a structural point of view, the coal demand in the eastern coastal and northern ports will still be weaker than inland areas due to policies and imported coal factors.
There is no need to be overly pessimistic about the price of thermal coal, and it will improve quarter by quarter in 2020 or in the weak.
We expect supply to decelerate in 2020 and structural improvement in demand, but the overall loose supply pattern has not yet been effectively reversed, and coal prices are still in a weak state, but demand is expected to enter the improvement channel in the second half of the year, and coal prices are expected to show seasonal improvement. Rhythm.
It is estimated that the average price of thermal coal ports in 2020 will drop 4-5% year-on-year, from 585 yuan in 2019 to 550-560 yuan, and Changxie coal prices will fall by about 1%, while the price of pit mouths will decrease due to structural support for inland demand or Smaller, with a year-on-year decline expected to be around 2%.
Risk factors: The further slowdown of the macro economy affects coal demand and prices; policies such as safety supervision and environmental protection are relaxed.
It is expected that the coal price hub will still decline in 2020, so the overall profit of the sector will decline, and the phenomenon of performance differentiation may be more obvious. Under the influence of factors such as output expansion, effective cost control and relatively stable long-term contract prices, the performance is expected to remain stable.
