The annual coal demand will exceed 3.5 billion tons, an increase of 8 to 9% year-on-year. Considering the downstream demand structure, it is expected that the demand for coking coal will not be lower than this growth rate. The rise in steel prices is the first condition for increasing the price of coking coal. We believe that when the economy is in the recovery cycle, steel prices will be ahead of coking coal prices.
Macroeconomic support for coal demand. Although the transformation of macroeconomic structure and the shift in monetary policy have exerted pressure on investment growth, the inertia of traditional “investment-led†economic growth models still remains. In addition, 2011 is the first year of the “Twelfth Five-Year Planâ€, and large-scale infrastructure investment is expected to continue. (For example, high-speed rail construction, urbanization in the second and third-tier areas, etc.) Therefore, it is expected that there will be no significant F drop in fixed asset investment growth in 2011 and will remain at around 23%. Under this scenario, we estimate that the annual coal demand will exceed 3.5 billion tons, an increase of 8 to 9% year-on-year; considering the downstream demand structure, coking coal demand is expected to be no lower than this growth rate.
The volume of downstream industries is picking up, and demand for coking coal is bullish. Steel Association statistics show that steel production rose by 7.7% in the first half of January this year. According to statistics from the Bureau of Statistics, the investment in the steel industry from January to December 2010 has increased by 10.3%, which is faster than the rate of g% in the first 11 months. This shows that the self-investment enthusiasm of steel enterprises has gradually increased, indicating that the utilization rate of steel enterprises is closer to that of steel enterprises. At a high level, it is estimated that the annual crude steel capacity utilization rate can reach more than 75%, and it can also be surpassed by the sudden increase due to unexpected factors. According to conservative estimates, it is expected to reach 670 million II Tuen crude steel production capacity in 2011, and the demand for coking coal will exceed 500 million tons, an increase of more than 9% year-on-year.
The rise in steel prices is the first condition for increasing the price of coking coal. We believe that when the economy is in the recovery cycle, steel prices will be ahead of coking coal prices. At present, major steel mills are expected to increase the ex-factory prices of steel products during the March-March period. Accumulatively, the cumulative increase has been 4 to 5% since the beginning of the year, and international copper prices have also increased by 6 to 8%, providing support for domestic steel prices; There will still be room for price increases driven by cost. The rise in steel prices has increased the ability of steel companies to absorb costs, creating the necessary conditions for coking coal to raise prices again.
Three major demand factors contributed to boosting the second price increase of coking coal. We judge that after the Spring Festival, local construction projects will start gradually. After the policy is expected to be clear, the demand for infrastructure investment will be released and the demand for steel will increase significantly. At the same time, the current stocks of steel enterprises remain low, and the short-term stock-restocking incentives are strong; The relaxation effect of the row of policies will also appear later in the year. Considering comprehensively, the three factors of concentrated release of fixed-asset investment, restocking effect by steel companies, and relaxation of energy-saving emission reduction policies will boost the second price increase of short-term coking coal. The price increase rate is expected to be above 5%, and the average annual price of coking coal in 2011 will be the same The increase is expected to exceed 17%.
Industry risks: Energy conservation and emission reduction restrain the recovery of the steel industry, raise the level of utilization of scrap steel, curb the growth of demand for coking coal, the negative impact of global low-carbon economy and the risk of commodity price correction.
Investment strategy: This year, the annual static average price of coking coal has risen by 11%. It is expected that the next three factors will force the coking coal price increase for the second time in the year and optimistic about the 17% increase in the average domestic coking coal price in 2011. The coking coal sector is expected to become a rebounding coalmine leader, recommending companies with high performance elasticity, high volume and low valuation, focusing on Jizhong Energy, Lu'an Huaneng, Panjiang, Xishan. Coal, electricity, Pingdingshan Coal, etc., it is recommended to pay attention to the expansion of energy will soon increase the "coking coal upstart" Yongtai Energy.
Macroeconomic support for coal demand. Although the transformation of macroeconomic structure and the shift in monetary policy have exerted pressure on investment growth, the inertia of traditional “investment-led†economic growth models still remains. In addition, 2011 is the first year of the “Twelfth Five-Year Planâ€, and large-scale infrastructure investment is expected to continue. (For example, high-speed rail construction, urbanization in the second and third-tier areas, etc.) Therefore, it is expected that there will be no significant F drop in fixed asset investment growth in 2011 and will remain at around 23%. Under this scenario, we estimate that the annual coal demand will exceed 3.5 billion tons, an increase of 8 to 9% year-on-year; considering the downstream demand structure, coking coal demand is expected to be no lower than this growth rate.
The volume of downstream industries is picking up, and demand for coking coal is bullish. Steel Association statistics show that steel production rose by 7.7% in the first half of January this year. According to statistics from the Bureau of Statistics, the investment in the steel industry from January to December 2010 has increased by 10.3%, which is faster than the rate of g% in the first 11 months. This shows that the self-investment enthusiasm of steel enterprises has gradually increased, indicating that the utilization rate of steel enterprises is closer to that of steel enterprises. At a high level, it is estimated that the annual crude steel capacity utilization rate can reach more than 75%, and it can also be surpassed by the sudden increase due to unexpected factors. According to conservative estimates, it is expected to reach 670 million II Tuen crude steel production capacity in 2011, and the demand for coking coal will exceed 500 million tons, an increase of more than 9% year-on-year.
The rise in steel prices is the first condition for increasing the price of coking coal. We believe that when the economy is in the recovery cycle, steel prices will be ahead of coking coal prices. At present, major steel mills are expected to increase the ex-factory prices of steel products during the March-March period. Accumulatively, the cumulative increase has been 4 to 5% since the beginning of the year, and international copper prices have also increased by 6 to 8%, providing support for domestic steel prices; There will still be room for price increases driven by cost. The rise in steel prices has increased the ability of steel companies to absorb costs, creating the necessary conditions for coking coal to raise prices again.
Three major demand factors contributed to boosting the second price increase of coking coal. We judge that after the Spring Festival, local construction projects will start gradually. After the policy is expected to be clear, the demand for infrastructure investment will be released and the demand for steel will increase significantly. At the same time, the current stocks of steel enterprises remain low, and the short-term stock-restocking incentives are strong; The relaxation effect of the row of policies will also appear later in the year. Considering comprehensively, the three factors of concentrated release of fixed-asset investment, restocking effect by steel companies, and relaxation of energy-saving emission reduction policies will boost the second price increase of short-term coking coal. The price increase rate is expected to be above 5%, and the average annual price of coking coal in 2011 will be the same The increase is expected to exceed 17%.
Industry risks: Energy conservation and emission reduction restrain the recovery of the steel industry, raise the level of utilization of scrap steel, curb the growth of demand for coking coal, the negative impact of global low-carbon economy and the risk of commodity price correction.
Investment strategy: This year, the annual static average price of coking coal has risen by 11%. It is expected that the next three factors will force the coking coal price increase for the second time in the year and optimistic about the 17% increase in the average domestic coking coal price in 2011. The coking coal sector is expected to become a rebounding coalmine leader, recommending companies with high performance elasticity, high volume and low valuation, focusing on Jizhong Energy, Lu'an Huaneng, Panjiang, Xishan. Coal, electricity, Pingdingshan Coal, etc., it is recommended to pay attention to the expansion of energy will soon increase the "coking coal upstart" Yongtai Energy.