Supply is tight

In the medium and long term, with the resumption of coke oven production, the continuous investment of new production capacity and the approach of traditional peak demand season, the pressure of coke coal replenishment will continue to support the operation of coke coal price. In terms of operation, the middle line still maintains the idea of bargain hunting layout and multiple orders.

Since the first half of the year, the price of coking coal has been rising steadily, during which there has been a correction, but now it has returned to a high level, and the short-term oscillation is expected to be ready. Before the contradiction between supply and demand is effectively resolved, it is expected that the price of coking coal will be relatively strong for a long time, and the middle line will still be treated as low.

Import gap difficult to fill

First of all, review the import structure of coking coal in the past two years. According to the data, China will import 74.6576 million tons of coking coal in 2019 and 72.5694 million tons in 2020, of which Australia accounts for 41.44% and 48.74% respectively, and Mongolia 45.24% and 32.75% respectively. From the perspective of import structure, Australian coal and Mongolian coal are the main components of China's coking coal import.

Since December last year, Australia's coal imports have completely stagnated. There have always been rumors about the relaxation of Australian coal import control in the market. However, according to the actual data, in the first half of the year, one ton of Australian coal was not imported. Looking ahead, we believe that under the circumstances of difficult Sino Australian relations, it is difficult to see Australia's coal import deregulation in the second half of the year. According to the past data, it is estimated that the annual import loss will be 30-35 million tons.

In the first half of June, due to the continuous disturbance of COVID-19, China's import customs port basically maintained a semi closed state in the first half of June, especially in the late June. It is expected that after Daqing in early July, in order to cooperate with the supply guarantee policy, the import of Mongolian coal will be gradually relaxed. In addition, at present, the complete vaccination rate in Mongolia has reached 53%, and 62% of the people have received at least one dose of vaccine. If the vaccination is carried out in an orderly and steady way, it is expected that Mongolia can achieve the initial group immunization in the third quarter, which will also lay a good foundation for the normalization of Mongolia's coal imports in the second half of the year. It is estimated that the annual import volume of coal in Mongolia this year will be between 25 million and 30 million tons, which is equal to that in 2020, but it is difficult to see a large increase.

In addition, the import volume of Russia, the United States, Indonesia and other countries surged unexpectedly in the first half of the year, providing an increase of about 5 million tons in the first half of the year. It is optimistic that this situation will last for the whole year or even longer, which will bring an increase of about 10 million tons in the whole year. Combined with the above, it is roughly estimated that the import gap of coking coal in this year is 20-25 million tons.

Limited room for domestic supply growth

According to the statistical report of coal mine safety net, as of June 17, 2021, there have been 35 coal mine accidents in China. After March, the safety inspection began to be tightened, the coal production started and stopped, and the output growth momentum was insufficient. From March, it turned into a year-on-year negative growth. Finally, from January to may, the clean coal output of coking coal was 159.64 million tons, with a year-on-year increase of 8.8%; According to the survey data of the Federation of steel and iron, the average daily output of 110 coal washing plants continued to be stable at about 600000 tons, about 100000 tons lower than the average level in previous years. In June, before the centennial of the founding of the Communist Party of China, the production limit was obvious. It is expected that the coal mine production will begin to follow the repair expectation from July. However, under the pressure of safety and environmental protection production throughout the year, it is difficult for domestic coal supply to achieve large-scale growth.

In addition, from the perspective of inventory data, the total inventory of ports, coke enterprises and steel plants is out of stock seasonally under the policy disturbance. The current inventory is close to the level of 2018, the role of inventory reservoir is weakened, and the ability of the middle and lower reaches to deal with the supply side risk is weak.

Coking coal short-term strong oscillation, midline bargain long

Since late June, the upstream and downstream of the coke steel industry chain have entered a state of limited production, and the disk price is relatively stable. After the party's founding in Daqing in July, both supply and demand sides have begun to follow the logic of resumption of production. However, from the perspective of supply recovery potential, coking coal is inferior to coke and steel, and the short-term terminal seasonal off-season. It is expected that the middle and downstream can wait and see to extend the replenishment cycle. However, in the medium and long term, with the resumption of coke oven production and the increase of supply potential, coking coal is inferior to coke and steel With the continuous input of new production capacity and the approach of traditional peak demand season, the pressure of coking coal replenishment will continue to support the strong operation of coking coal price. In terms of operation, the middle line still maintains the idea of bargain hunting layout and multiple orders.