煤炭-不受欢迎的必要性：反对有助于矿工的利润

1、Global Equity Research15 January 2019Corrected Note (first published 14 January 2019) (See page 22 fordetails)Coal in 2019Unloved necessity: Opposition helps miners profitsCoal looks set to remain an unloved necessity for the developed world for several decades and in the developing world it remains

2、 a stepping stone to stronger local economies. While regions with temperate climates like the US west coast are bidding for higher renewables targets in their power grids region with higher energy needs remain wedded to fossil fuels. Germany is struggling to reconcile green lobby pressure to end coa

3、l usage by 2030 with uncertainty over how an industrial economy can replace fossil fuel and remain competitive in its industrial economy. Consequently, the IEA in its latest report summarizes the situation by saying “Much talk but not much change” in coal global demand stable through 2023. Supply co

4、uld be a different matter given the modest investment in the sectors mine capacity so we would not be surprised to see continued volatility in Seaborne prices in 2019.The New-Year was starting mixed with uncertainty over Chinas coal imports but India has increased its purchases to keep with its stro

5、ng economic growth. Power demand in India could in H219 after elections. Yet demand remains strong from other SE Asian nations seeking to follow the Chinese model of coal driven economicgrowth.Implicit Barriers to entry seem to protect established miners. combination investor interest in dividends a

6、nd share buybacks together environmental pressure coal mine investment seems to be making established mine capacity more valuable elevating prices particularly for better quality coals. While constraints on lower coal such as typical Indonesian coal is limited supplies of Newcastle 6000kcal coal rem

7、ainstight.US market export market stronger for longer. The premium for higher BTU coal, together with the continued strength in metallurgical coal is helping miners. Miners higher energy coal in Appalachia and the Illinois Basin have been benefiting from the extended period strength in seaborne ther

8、mal prices. miners advantage is that have the installed productive capacity which is becoming available as the US grid replaces coal with natgasThe fracking miracle of the last decade has ramped shale oil and production but even more remarkably JPMs E&P team reports ( HYPERLINK /research/content/GPS

9、-2853727-0 here) companies are generating free cashflows. The solution to this problem for gas could be increased exports LNG, bigger exports to Mexico and greater domestic usage. However, increased gas demand is likely to draw gas away from the US power grid making room for renewables (when these a

10、re available) and coal and nuke power as baseload/back up. JPMs Shikha Chaturvedi expects increased exports to result in more volatile gas especially over the winter period and this could/should further losses in coals contribution to the grid until affordable ways to store renewable energy are deve

11、loped. It was interesting late last year to see gas prices spike breaking a 10 down trend which had taken the fuel to +40 lows in real terms.Precious Metals & CoalJohn Bridges, CFA, ACSM AC(1-212) 622-6430 HYPERLINK mailto:john.bridges john.bridgesBloomberg JPMA BRIDGES J.P. Morgan Securities LLCSid

12、dharth Mishra(91-22) 6157-3018 HYPERLINK mailto:siddharth.mishra siddharth.mishraJ.P. Morgan India PrivateLimitedAsia Basic Materials Po Wei AC(852) 2800 8537 HYPERLINK mailto:po.wei po.weiBloomberg JPMA PW EI J.P. Morgan Securities (Asia Pacific) LimitedASEAN Coal & Thailand Energy, InfrastructureS

13、umedh Samant, CFA AC(66-2) 684 2682 HYPERLINK mailto:sumedh.y.samant sumedh.y.samant Bloomberg JPMA SAMANT JPMorgan Securities (Thailand) LimitedMetals & Mining Lyndon Fagan AC (61-2) 9003-8648 HYPERLINK mailto:lyndon.fagan ly HYPERLINK mailto:ndon.fagan ndon.faganBloomberg JPMA LFAGAN J.P. Morgan S

14、ecurities Australia LimitedMetals & Mining/ Oil & Gas Pinakin Parekh, CFA AC(91-22) 6157-3588 HYPERLINK mailto:pinakin.m.parekh pinakin.m.parekhBloomberg JPMA PAREKH J.P. Morgan India Private LimitedEMEA Metals, Mining & Steel Dominic OKane AC(44-20) 7742-6729 HYPERLINK mailto:dominic.j.okane domini

15、c.j.okaneBloomberg JPMA OKANE J.P. Morgan Securities plcSee page 22 for analyst certification and important disclosures, including non-US analyst disclosures.J.P.Morgandoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethatmay a of the of as a HYPERLINK

16、/ Summary and conclusionsThe latest IEA outlook says it well “Much talk, but not much change”. For all the investment in renewables coals contribution to humanitys energy needs has yet to change much. Coals share of the energy mix was stable at 38% in 2018 after a small decline supported by growth i

17、n China and India. IEA forecasts coal demand will be stable through 2023 as growth in Asia continues to offset cuts in the US and Europe.The IEA report highlights that while coal prices have been strong, boosted by often record demand from countries developing their economies this is not triggering

18、significant new mine investment. Risks associated with climate policies creating fear that investment could be stranded have cooled interest. Plus banks, insurance companies and others are exiting the coal sector.Perversely, opposition to coal seems to have been a positive for companies with existin

19、g capacity. Anti-coal sentiment seems to raise the barrier to entry for new entrants into the coal sector. And higher coal prices have allowed US miners emerging from Chapter 11 reorganization to exceed forecasts. In Australia, coal exports have taken the crown as the biggest revenue generators from

20、 iron ore.China is in the later stages of its telescoped industrial growth as the rate of growth in its (massive) coal usage slows. India is still growing fast and looks set together with other developing nations to underpin coal demand well into the 2020s.Established mine capacity in the US has bee

21、n benefitting from the impasse over new capacity and US exports look set to be stronger for longer. This is helped by the relative shortage of higher energy coals like that sourced in the US from the Appalachian and ILB regions.The energy mix driving the US power grid faces a dilemma. The consensus

22、is that low gas prices will progressively drive coal from the mix. Yet E&P companies are often unable to generate positive free cashflows at current oil and gas prices and cost cutting technologies are not working as well. So the question is will there be enough extra efficiency to control costs whe

23、n the E&Ps deplete the sweet spots in their acreage?Table 1: J.P. Morgans latest estimates for seaborne coal pricesSource: J.P. Morgan Research, Bloomberg, Platts, SNL and Woodmac.Coal price trendsSince the excess coking coal capacity that was built up in the 2000s supercycle boom was flushed out in

24、 2015/6, met coal prices have been reluctant to return to the$140/t level we feel is the minimum incentive price to build be Australian mines. This is probably due to the modest level of investment in the sectors mines. We have to assume that price will like an apple falling from a tree succumb to g

25、ravity but the forward curve seems to have adapted to the new normal and only assumes a slow fall from current levels.Figure 1: Met CoalSGX FOB Australia Coking Coal Futures270SGX FOB Australia Coking Coal Futures27022017012070Source: Bloomberg.Seaborne thermal coal prices are more susceptible to ch

26、anges in demand so Newcastle 6000 prices ran up on peak summer demand in Japan and Korea. API2 price seemed to be lifted by under-performance from European renewables and high gas prices that made coal power economic even after paying up for carbon credits. Interestingly the API2 forward curve sugge

27、sts the market will again need coal power in summer 2019.Figure 2: Thermal seaborne coalNewCNewC5,500kcalNewC 6,000 kcalAPI2 1MFuturesSource: Bloomberg.Regionally speakingCoaltradingEuro coal through the end of 2018 was helped as EUA prices pulledback and Germany reacted to the booming price of carb

28、on emissions by increasing EUAsuppliesChinas on-off import constraints have complicated coaltradingUnusually the API2 forward price has moved into contango until Nov2019.Its a risk off coal trading world with derivative volumes down in 2018and into 2019Chinas coal market could be well supplied in 20

29、19A weak 4Q18 for thermal coalChinese thermal coal price performance has been weak in 4Q18 and was down by 12% from its peak in November (Figure 3). This was mainly due to the high IPP inventories entering into the winter heating season and continued growth in Chinas raw coal production (Figure 4 an

30、d Figure 7). Although IPPs daily consumption has finally picked up in December due to cold weather and, as a result, IPP inventory days have slipped from 27 day highs to 20 days, though absolute inventories are still high.Figure 3: China thermal coal price: fell 12% from peak to trough in 4Q18 (QHD

31、5,500Kcal, Rmb/ton)Source: SXCoal, J.P.Morgan.Figure 4: China IPP inventory: although inventory days have normalized due to seasonal pick up in consumption, absolute inventory amount is still highSource: SXCoal, J.P.MorganFigure 5: China IPP average daily coal consumption: pick up slowly in 4Q18Sour

32、ce: SXCoal, J.P.MorganFigure 6: China raw coal production: up by 5% in Jan-Nov 2018Source: SXCoal, J.P.MorganDownside risk remains despite near-term stabilizationAfter reaching Rmb580/ton1, Chinas thermal coal price is showing signs of stabilization and has rebounded slightly. We however remain bear

33、ish on Chinas thermal coal price in the near term for two reasons:The Chinese government has lifted the coal import ban (again): Chinesehave resumedclearingalltypesofimportedcoalfrom1January2019,bringinganend to the restrictions and bans on foreign coal introduced since mid-Nov 2018. The restriction

34、 was introduced in mid-Nov as the government aimed to ensure the total import volume of coal last year was lower than the previousyear.1 QHD 5,500 Kcal thermal coalDemand is expected to sequentially fall during the Chinese New Year: dueto lower industrial electricity usage during the Chinese New Yea

35、r. Chinas thermal coal demand on average falls by 15% sequentially inFebruary.Figure 7: Normal seasonality of Chinas thermal coal demandSource: NBS, SX Coal, J.P. Morgan estimates.Import policy could be a wild cardThroughout 2018, the Chinese government used import restrictions to control coal price

36、s: the government tightened the import quota twice in 2018 in April and November. On both occasions domestic coal prices were facing significant downward pressure due to low demand and high inventories.While there were debates on whether these bans were for environmental protection (like waste paper

37、 import ban) or price regulation, we are increasingly convinced that the Chinese government is using import policy to help regulate domestic coal prices within its target range.We believe the risk the Chinese government re-introduces the import ban is high in 2019 when we expect thermal coal prices

38、to face downward pressure again.Figure 8: QHD 5,500 Kcal thermal coal price and import restriction policiesSource: NBS, SX Coal, J.P. Morgan estimates.Demand growth to structurally slow in 2019A breakdown of Chinas coal demand shows that power generation is the most important demand driver accountin

39、g for almost 60% of the consumption, followed by building materials (cement) (10%), heating & chemicals (7% each) and iron & steel (4%).In 2019, we see downside demand risk for coal in building materials and iron & steel segments. We also expect demand from power generation to slow as well.Drivenbyt

40、hegovernmentssupplysidereformpolicies,weexpectcementandsteel productionwilllikelyfallby1-2%in2019.Thatshouldbringdowncoaldemandby a similar magnitude aswell.Also, Chinas thermal power generation growth has slowed to 3.9% in November 2018 vs the 6.2% in January-November 2018.Overall, we expect Chinas

41、 coal demand growth will slow to 1% in 2019 after rising 4.5% in 2018 as a smaller increase in power generation will be offset by a decline in steel and building materials (Figure 11).Figure 9: China thermal coal demand breakdown: 60% used by thermal power generationSource: SXCoal, J.P.MorganFigure

42、10: Breakdown of Chinas electricity consumption by industriesSource: CEC, J.P.MorganFigure 11: After growing by 4.5% in 2018, we expect thermal coal demand to slow to 1% in 2019ESource: Company data, J.P.MorganProduction growth to resume as Shanxi, Shaanxi and Inner Mongolias production normalizesOn

43、arelativebasis,supplyismoredifficulttoforecastthandemandgivenitismore policydriven.Aftercoalpricesdoubledin4Q16,theNDRCcalledforrelaxationof the 276 working days restrictionpolicies.Subsequently, Chinas raw coal production rebounded in 2017 and 2018 but is still lower than the level prior to the pro

44、duction suspension in 2015 (see Figure 6 again).Our analysis suggests that production in Shanxi, Shaanxi and Inner Mongolia are normalizing. In November 2018, Chinas raw coal production grew by 5% YoY with growth in Shanxi, Shaanxi and Inner Mongolia being slightly offset by declines in other provin

45、ces.Figure 12: China raw coal production growth by province: growth picked up towards the end of 2018Source: SXCoal, J.P.MorganFigure 13: Chinas raw coal production in November 2018: up by 5% yoy mainly driven by increase in Shanxi and Inner MongoliaSource: SXCoal, J.P.MorganIn 2019, growth in Shanx

46、i, Shaanxi and Inner Mongolia is likely to be partially balanced by declines in other provinces.2 Overall, we expect raw coal production should grow by 4%. (Figure 14).Figure 14: China raw coal production forecasts: after growing by 5% in 2018, we expect raw coal production will grow by 4% as produc

47、tion in Shanxi, Shaanxi and Inner Mongolia normalizeSource: NBS, J.P.MorganWe expect a moderately oversupplied coal market in 2019We expect Chinas coal market will be well supplied in 2019 as supply grows by 4% vs. demand growth of 1%. Reflecting on this deteriorating operating environment, we expec

48、t a gradual decline in thermal coal prices from an average of RMB646/ton in 2018 to RMB627/ton in 2019.Table 2: JPM China thermal coal price forecastQHD thermal (5,500 kcal / ton)1Q182Q183Q184Q18201720182019E2020ENew price702620633631639646627608YoY (%)13%3%-1%-9%1%-3%-3%Source: Company data, J.P.Mo

49、rgan estimates2 China is expected to cut the total number of coal mines to 7,000 in 2018, from 10,800 in 2015, mainly by closing down small coal mines outside of Shanxi, Shaanxi and Inner Mongolia.Indias strong first half coal demand could slip in H219Indias coal supply situation had improved by the

50、 end of last year with December data showing some softening in power demand and a combination of higher output from Coal India and continued momentum in imports, pushing coal inventories up to a comfortable level (Figure 15). But with countrys National Elections just a few months away and the large

51、industrial states seeing a sharp pick-up in demand, JPMs Pinakin Parekh maintains his forecast for elevated power generation demand in the run up to the election and coal inventories to inch lower along with that. We would also highlight comments from JPM Indias Utilities analyst, Sumit Kishore on t

52、he increased pace of electrification and the likely positive impact on power demand. Per Sumit, the run-rate of household electrification in India over past couple of months has been close to 100,000/day. At this run-rate by end of Dec-18 96.5% of Indias households should be electrified (vs. 100% ta

53、rget).Figure 15: Power Plant Coal Inventory (MT)Source: Bloomberg.ImportsIndias total non-coking coal imports have increased by 23% in 1HFY19 and are in the 14-15MT per month range for CY18 v/s the 10-12MT per month range Indias imports have been in CY15 and CY16. Indias non-coking coal imports peak

54、ed at 188MT in FY15 and since then came off 40MT in FY17. 1HFY19 non coking coal imports stands at 89MT and unless we see sharp deceleration in power demand, Indias coal imports could increase further (Figure 16).Figure 16: India Non Coking Coal Imports (MT)Source: Steelmint.Coking CoalThe Coking co

55、al situation remains interesting with steel prices slippage putting pressure on the price of inputs like coking coal. Globally, prices have seen some upward movement in the last week, which could be attributed to seasonality in Q1. In Pinakins view, a meaningful pickup in Chinese exports is unlikely

56、 from current levels of 5MT a month. Also, the Chinese spot HRC export spread has not sustained below $200/t, other than the period of low-price exports seen in 2015 and 2016.Current spot spreads are at $230/t, and with the busy coking coal season ahead of us, meaningful price decline here looks dif

57、ficult which could spur coking coal import demand as Pinakin there is visibility on steel demand growth of 6- 8% for the next 2 years while there are no new large capacity additions in that period. Given this dynamic, India has become a net steel importer for much of this year, and this trend should

58、 continue as imports are required to meetdemand.Outlook for 2019Pinakin believes coal demand will remain firm in the first half of 2019, which is expected to potentially wane in the secondhalf.Investors have been asking about the firmness in seaborne thermal coal prices which also affects the E-auct

59、ion market, while the whole commodities space is melting down. The key reasons for that, we believeare:Coal to gas/LNG switching. Sharply lower LNG and natural gas prices have spurred their demand in big markets like Japan, South Korea and China for power generation, pushing coal demand lower and th

60、e priceshigher.Barriers to entry and lack of investment. Bringing a coal mine to production takes of commitment. But with the global communitys negative view on coal, no new player is coming to the market while major international thermal coal players are consolidating their position, making it a se