Guotai Haitong Securities Co., Ltd. has released a research note stating that national raw coal output recovered to 385 million tons in September, an increase of approximately 23.31 million tons month-on-month, and a rebound of about 42 million tons from the low point of 340 million tons in July, meaning the phase of greatest supply contraction pressure has passed.
On the demand side, thermal power generation fell 1.4% year-on-year in September, while residential electricity consumption dropped 6.0% year-on-year, with overall demand performance remaining relatively stable. As coal production continues to recover, the previously tight supply-demand balance has begun to ease at the margin.
Entering October, policy efforts to stabilize production and ensure supply have intensified further. The National Development and Reform Commission and the National Energy Administration are pushing for accelerated resumption and full-capacity production at suspended coal mines in Shanxi, and combined with continued output recovery in other major producing regions, coal supply is expected to have further room to increase.
On the demand side, winter stockpiling in northern China is providing temporary support for coal prices, but actual winter temperatures and end-user coal consumption still need to be monitored. The firm believes that the core contradiction in the fourth-quarter coal market will gradually shift to the tug-of-war between supply recovery and demand absorption. As the supply-demand balance improves at the margin, the upward slope of coal prices may slow, and the sustainability of winter stockpiling demand and the implementation of production-boosting and supply-guarantee policies should be watched going forward.
The main views of Guotai Haitong Securities Co., Ltd. are as follows:
Supply Side: Domestic Coal Output Rebounds Month-on-Month, Imports Also Rise
1) Domestically, national above-scale raw coal output in September was approximately 385 million tons, up 6.4% month-on-month and down 6.8% year-on-year. By province, raw coal output in Inner Mongolia, Shanxi, Shaanxi, and Xinjiang all increased month-on-month, rising by approximately 5.94 million, 4.23 million, 4.08 million, and 3.23 million tons respectively; among them, Shanxi's output recovered but still fell 31.3% year-on-year.
2) On imports, national coal imports in September were approximately 43.37 million tons, up 3.0% month-on-month and down 5.7% year-on-year. By coal type, coking coal imports were approximately 13.47 million tons, up 3.0% month-on-month and up 23.3% year-on-year; thermal coal imports were approximately 29.9 million tons, up 3.0% month-on-month and down 14.8% year-on-year.
Demand Side: Electricity Demand Falls Month-on-Month, Thermal Power Declines, Non-Electric Downstream Performance Diverges
1) On the electricity consumption side, total society-wide electricity use in September was 899.7 billion kWh, up 1.2% year-on-year and down 12.9% month-on-month. Among this, electricity consumption by the secondary and tertiary industries grew 1.7% and 4.9% year-on-year respectively, while residential electricity consumption fell 6.0% year-on-year and 35.7% month-on-month.
2) On the power generation side, above-scale thermal power generation fell 14.8% month-on-month in September, hydropower generation declined month-on-month, and nuclear, wind, and solar power generation all increased year-on-year.
3) In the coal-coke-steel sector, coke, pig iron, and crude steel output all declined month-on-month in September, falling 2.2%, 3.4%, and 1.4% respectively, and down 8.2%, down 1.4%, and up 0.1% year-on-year respectively; steel exports were 10.49 million tons, up 3.3% month-on-month and up 0.2% year-on-year; August billet exports were 1.926 million tons, down 23.8% month-on-month and up 9.2% year-on-year.
4) In other non-electric sectors, cement output rose 11.6% month-on-month in September but still fell 5.3% year-on-year; urea output fell 6.0% month-on-month and rose 3.3% year-on-year.
Investment Recommendations: Shaanxi Coal Industry, Yankuang Energy, China Shenhua Energy, China Coal Energy; for the coking coal sector, Huaibei Mining and Pingdingshan Tianan Coal Mining
Risk Warnings: Economic growth falling short of expectations; large-scale influx of imported coal; supply exceeding expectations.
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