Walking on thin ice!

Different from some opinions in the market, we always believe that imports play an important role in the balance of coking coal.

It is understood that as of 2019, the overall domestic coking clean coal output was 470 million tons, the main coke and fat coal output was 228 million tons, and the imported coking coal was 75 million tons, accounting for 16% of the overall coking coal supply, and accounting for the main coke and fat coal supply.

Why is it that imported coking coal is specifically classified as main coke and fat coal, and the balance sheet is calculated separately for this classification? The main basis is that the coal quality indicators of imported coal are closer to the domestic main coke and fat coal and futures delivery standards.

Combined with the proportion of imported coking coal by country in the past few years, Australian coal and Mongolian coal accounted for 40%-50% of imported coking coal respectively.

If Australia’s coal import restrictions are prolonged, where can the reduction in supply come back from?

Let me talk about Mongolian coal first, both of which are imported.

According to public information from MMC and SouthGobi Resources Co.

As for the issue of transportation capacity, Mongolian coal enters the customs through the three ports of Ceke, Ganqimaodu and Manduhan, and the transportation method is mainly automobile transportation.

Judging from past experience, even if the number of normal customs clearances in recent years is maintained, various ports have occasionally encountered problems such as overhauls, computer system failures, and weather effects.

　　Since Mongolia's coal will most likely not be able to fill the shortage of Australian coal in a short period of time, increasing the production of internal mines is of paramount importance.
This is also the main reason why there has been no shortage of main coke and fat coal in China in recent years, especially during the period of Australian coal import restrictions this year.

　　my country’s main coke and fat coal production areas are concentrated in Shanxi and Guizhou.
Among them, Guizhou’s output has continued to decline in recent years.
Shanxi has naturally become the main driving force for the increase in domestic supply in the past few years, accounting for 48% of the total in 2016.
Increased to 59% in September 2020.
The current coal supply reform is coming to an end, and the release of production capacity in other regions has always been limited.
Therefore, the importance of Shanxi's main coke and fat coal supply side in the future is becoming more and more prominent.

　　From the perspective of the production capacity announced by the National Energy Administration, the coal production capacity in Shanxi is 963 million tons/year.
As of 2019, its raw coal output was 971 million tons, and the capacity utilization rate reached 100.
83%, indicating a certain degree of overproduction.
Since 2020, the growth rate of raw coal production in Shanxi has continued to rise, with a cumulative growth rate of 8% from January to October.
That is, in 2020, coal mine overproduction in Shanxi will be more serious.
This can also be confirmed by more micro-level operating rate data.
Since March, the operating rate of sample coking coal mines in Shanxi Province has maintained a year-on-year growth rate of about 10%.

　　Therefore, combined with Shanxi’s supply ratio and the increase in production, the supply of internal mines has increased by about 6%, which can partially compensate for the reduction in Mongolian coal at the beginning of the year and the Australian coal reduction in the second half of the year.
In other words, the continuous release of Shanxi's coal production capacity can become the main alternative source for future sea coal reduction.

　　But in the author's view, the increase in production in Shanxi also hides a crisis, and the fragile supply pattern cannot withstand any additional stimulus.

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　　However, my country's coal resource endowment determines the characteristic of "less and low-sulfur".
At the same time, most of the imported coking coal is low-sulfur coal.
Therefore, the supplement of imported coal is not only a supplement in terms of quantity, but also a qualitative improvement.
Therefore, long-term restrictions on sea coal imports, or long-term restrictions on imported coal, will gradually amplify the problems of domestic supply and quality, and are not conducive to maintaining environmental protection effects.
In the future, the tight problems of main coke and fat coal will most likely be reflected in Low-sulfur coal link.

　　In addition, it is precisely because of the upgrading and transformation of the steel coke industry in recent years that the blast furnace and coke oven bodies have become larger and larger, which has increased the strength requirements of the coke, and thus the strength requirements of the coal entering the furnace are also getting higher and higher.
It is already fermenting and will continue to expand with subsequent replacement of production capacity.

　　The supply and demand pattern is like walking on thin ice

　　Based on Haimei’s shipping schedule and Mongolian coal customs clearance vehicles, we expect imports in October to be +20% year-on-year, November -25% year-on-year, and December -50% year-on-year assumptions.
Based on the operating rate of the sample coal mines and the seasonality of the monthly output of main coke and fat coal, we expect domestic production in October to be -3% year-on-year, November +6% month-on-month, and December +1.
76% month-on-month.

　　Based on the above two forecasts, calculate the full-year supply and demand balance sheet for 2020:

　　From the above balance sheet, we can see the pattern of coking coal shortage in 2020.
On the whole, the shortage is more due to the reduction of domestic mine production at the beginning of the year, but more due to the decrease in imports in the second half of the year.

　　In 2021, the possible demand changes due to coke production capacity are: about -6% in the short term and about 2% in the whole year.
Once the Australian coal restrictions continue for a long time, the supply side will face a maximum reduction of 15%.
Therefore, the focus of attention is on the "imported coal policy.
"

　　Therefore, as long as the continuation of the Australian coal import restrictions can be confirmed at the beginning of next year, the balance sheet of coking coal will most likely be tight, and there will even be a shortage, and the beginning of the shortage will start from the low-sulfur main coke.
At this time, the operation will be mainly on the bargaining table.
.
However, if Australia's coal import restrictions are lifted, it needs to wait and move.

Transfer from: China Energy Network

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