[Epoch Times October 20, 2021]Since the beginning of this year, China has experienced a rare “coal shortage” and coal prices have continued to soar. Recently, the A-share coal sector has seen a wave of daily limit, and the share prices of many stocks have doubled.
In recent days, the main contract prices of thermal coal, coke and coking coal futures have set a record high all the way. On October 19, the main thermal coal futures reported a record high of 1,982, shocking the industry.
On October 19th, “21st Century Business Herald” reported that the coal sector has risen 69.38% year-to-date, and 10 stocks have doubled their gains. From the beginning of 2021 to the present (as of October 18, the same below), the China Securities Shenwan Coal Index surged 3.97%, significantly outperforming the broader market.
In terms of individual stocks, from the beginning of 2021 to the present, the stock prices of the top 10 rising stocks such as Yanzhou Coal Industry, Lu’an Huaneng, and Shaanxi Black Cat have all doubled.
In comparison with the same industry, the coal industry’s trend is outstanding. In the first three quarters of 2021, the coal sector has a cumulative increase of 40.90%, the largest increase in the industry.
In terms of funds, the Cathay Pacific China Securities Coal ETF outperformed the benchmark significantly and ranked first among coal-themed funds.
Since the beginning of this year, China has experienced a “coal shortage”, and the prices of thermal coal and coking coal have risen for four consecutive quarters.
In the third quarter, the average price of Qinhuangdao 5500 thermal coal closed at 1,127 yuan/ton, breaking a record high, with a month-on-month increase of 28.87% and a year-on-year increase of 95.86%; the average price of main coking coal in Jingtang Port closed at RMB 3,125/ton, breaking through a record high, with a month-on-month increase of 62.26 %, an increase of 119.96% year-on-year; the average price of secondary metallurgical coke in Tianjin Port closed at RMB 3,171/ton, breaking a record high, with a month-on-month increase of 27.87% and a year-on-year increase of 75.41%. The increase in coke was significantly behind that of coking coal.
According to calculations by Tianfeng Securities, from January to August, the total supply and demand gap of thermal coal and coking coal in China reached 102 million tons and 17.1 million tons, respectively.
Investigating the reasons behind the continuous rise in coal prices, Huajin Securities believes that the main logic is the mismatch of supply and demand in the context of dual carbon, dual control and dual limits, which has led to a substantial increase in the sector’s prosperity. In the third quarter, the release progress on the supply side was slow, and the output in the main producing areas contracted. In the first eight months of 2021, Shanxi had a large decline, and Shanxi was the main producer of coking coal.
Since August of this year, many places in China have reproduced the power rationing and blackouts in December 2020, and the power supply shortage this time involves a wider range, covering about 20 provinces and cities.
The Chinese Communist Party has recently relaxed the range of fluctuations in the trading price of coal-fired power generation market, and at the same time, it is required to promote coal-fired power generation and industrial and commercial users to enter the power market, and establish a market mechanism in which electricity prices can “fall and rise”.
Hong Kong financial analyst Katherine Jiang Tianming told The Epoch Times that the NDRC’s move will help coal-fired power plants to transmit soaring fuel costs to users through increased electricity prices, thereby alleviating the sharp increase in the price of electricity this year. Rising coal prices are squeezing the profits of power plants. However, this will push up the cost of electricity for industrial and commercial users, bring serious obstacles to economic development, and make production activities that have fallen further worse.
Editor in charge: Li Bing#
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