Recent frequent weather extremes are expected to have a significant impact on the global coal supply in the first quarter of 2011, and coal market demand will continue to remain high in 2011, so coal prices will continue to rise in the future, and the coal sector will continue to look promising in 2011;

In terms of investment direction, it is recommended to focus on Zhengzhou Coal & Power, Shenhuo Power, Suizhong Energy, which has relatively high performance elasticity, and the recent assets injection of expected Huaneng and Kailuan shares. (For details, please refer to the current edition of “Golden Stocks” "Section" column), Guoyang New Energy, Pingzhuang Energy, Pingmei Coal, etc.

Macroeconomic regulation does not change the high profitability climate. The recent appearance of freezing weather in southern China is expected to continue. At the same time, floods in Queensland, Australia, affect 98 million tons of metallurgical coal production capacity. About 37% of global coal supply contracts will not be fulfilled due to force majeure. The mining giants BHP Billiton and Rio Tinto and other energy companies were affected. Affected by these factors, coal prices may continue to rise in the future, and coal stocks have once again performed strongly in the near future.

From the perspective of fundamentals, coal prices are subject to policy control, and the stable increase in coal prices in Hangkou benefits from the rapid development of downstream production. In 2010, demand in the coal industry rose steadily. According to statistics, in the first 10 months of 2010, the coal output was 2.747 billion yuan, an increase of 16.44% year-on-year, and the annual output is expected to reach 3.2 billion tons. However, since April, in order to curb the rapid rise in housing prices and complete the eleventh five-year energy-saving emission reduction targets, the government has issued a series of regulatory policies, which have somewhat restrained coal demand.

Although December PMI fell by 1.3 percentage points from the previous month to 53.9 points in November, the growth rate of exports and investment remained at a high level. Since the PMI reached 51.2 in July, it continued to rise in August and November, and the new orders index also bottomed out in July. After a rapid increase, the equipment manufacturing industry grew faster, and it is expected that the consumption of upstream raw materials will increase in the later period.

With the recovery of prosperity, the recent downstream prices have gradually picked up. At the end of December, the prices of steel, cement, and urea rose by 11%, 18%, and 21% from the beginning of July. From January to November, gross profit margins for thermal power, iron and steel, cement, and synthetic ammonia also gradually bottomed out, among which the gross profit rate of cement and synthetic ammonia increased by 1.2 percentage points from January to August respectively. It is expected that next year, as the downstream industry's volume and price rise, profits will increase. The capacity will increase significantly.

The "12th Five-Year Plan" in energy consumption planning mainly refers to the coal downstream power, steel, chemical and building materials industries, requiring the elimination of backward production capacity and energy-saving emission reduction. According to calculations, the status of traditional energy during the “12th Five-Year Plan” period is still difficult to change. The “12th Five-Year Plan” energy saving target has a negative impact on coal demand of about 110 million tons per year, which is about 3% of the consumption, of which electricity is consumed due to coal. The decline in the proportion of electricity and the elimination of outdated production capacity will affect about 60 million tons. Coal demand will remain strong during the 12th Five-Year Plan period.

Inflationary pressures gradually showed that coal prices continued to rise in 2011. Since October, the United States and other Western powers have again launched the “quantitative easing” monetary policy in the initial stage of the financial crisis to boost the real economy, and the expectation of renewed liquidity in the US dollar has made the recent international The prices of commodities and assets such as agricultural products and energy have soared. In addition, factors such as oversupply of domestic currency and rising labor costs have exacerbated domestic inflation. In November, the CPI has broken 5 for the first time since the economic crisis. It is expected that inflationary pressure in the first half of 2011 will remain high and the CPI will operate at a high level.

The analysis found that China’s previous inflation was accompanied by a rise in coal prices, especially in the latter part of inflation. In the three years in which inflation was high in 2001, 2004, and 2008, Datong high-mixed prices rose by 17%, 34%, and 55% year-on-year, respectively, and they are currently up 33% on average for 10 years. Therefore, supported by inflation factors, coal prices will increase in 2011.

For coal companies, the average selling price of coal rose by 1%, and the performance elasticity ranged from 2.5% to 12%. The higher performance elasticity is Zhengzhou Coal & Power, Shenhuo Shares, Suizhong Energy, etc. It is recommended to pay close attention, the lower is Shenhua, Shanghai Energy, open-pit coal and so on.

Resource Integration and Reorganization During the “12th Five-Year Plan” period, resource consolidation and merger and reorganization of the coal industry are still the focus of development. It is expected that the output of small-scale mines from the “12th Five-Year Plan” will decrease from 28% in 2009 to 13% by the end of 2015. It will also drop from 11,000 to 4,000. At present, the integration of resources in Shanxi and Henan is in progress. Shaanxi, Guizhou, Shandong, and Ningxia are also steadily advancing.

After the coal mines are integrated, they tend to bring about a relative contraction of production, which in turn drives up the price of coal. After the integration of Shanxi and Henan provinces, prices have a significant impact. Shanxi put forward a new round of integration targets in March 2009, and the supply contraction has restrained the downward trend of coal prices. Among them, the trend of affected coking coal prices has always been stronger than that of other coal types. Since the integration of Henan in April 2010, The price increase of each coal species is higher than other regions. It is expected that the integration of Shanxi and Henan in the past two years will still have a large impact on the supply of coking coal. The price of coking coal is expected to exceed expectations, but thermal coal and anthracite coal may be affected by relatively abundant resources, and the increase may be relatively low.

In the current integration of small mines nationwide, Shanxi and Henan have made significant progress, and over 98% of the integrated small mines have signed a formal agreement. At the same time, major groups have achieved a lot in this integration. Xishan Coal, Shenhuo, Pingmei, Luan Huaneng, Lanzhou Kechuang, and Guoyang Xineng have directly integrated the main companies listed on the market, and they have the most abundant harvest. Among them, the newly-added recoverable reserves of Lanzhou Kechuang and Guoyang Xinneng were approximately 33% and 32% respectively, and that of Xishan Coal was 15%.

Asset injection is an important source of the company's growth. In 2009, the company's/company's output ratio is larger than that of Kailuan, Xishan Coal, Zhengzhou Coal, Tongmei, Guoyang Xineng, Luan Huaneng, and Suizhong Energy. And so on, these companies have a relatively high probability of realizing asset injection in the later period. Individual stocks are advised to focus on the recent coal injection of expected assets of companies, including Lu'an Huaneng, Kailuan shares, Guoyang Xinneng, Pingzhuang Energy, Pingmei shares.