中國(guó)煤炭：連線畫(huà)圖

1、February 14, 2019 09:00 PM GMTAsia PrimerFebruary 14, 2019 09:00 PM GMTChinaCoal: ConnectingtheCoalislikelyremainChinasmajorenergysourcedespiteenvironmental concerns.ItisastrategicallyimportantresourceChinagivenreliability andthecountrysself-sufficiency.Inthisprimerweidentifykeyindicatorspricingtren

2、ds,aswellaspolicyandindustrydynamics.MorganStanleydoesandseekstodobusinesswithcompaniescoveredinMorganStanleyResearch.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictof interestthatcouldaffecttheobjectivityofMorganStanleyResearch.InvestorsshouldconsiderMorganStanleyResearchasonlyasinglefa

3、ctorinmakingtheirinvestmentdecision.For analyst certification and other important disclosures, refer to the Disclosure Section, located at the end of this report.+=Analystsemployedbynon-U.S.affiliatesnotwithFINRA,maynotbeassociatedpersonsofthememberandmaynotbesubjecttoNASD/NYSErestrictionson communi

4、cationswithasubjectpublicappearancesandtradingsecuritiesheldbyaresearchanalystaccount.ContributorsMORGAN STANLEY ASIA LIMITED+SaraChanEquityAnalyst+8522848-5292 HYPERLINK mailto:Sara.Chan Sara.ChanMORGAN STANLEY ASIA LIMITED+HannahYangResearchAssociate+8522239-7079 HYPERLINK mailto:Hannah.Yang1 Hann

5、ah.Yang1MORGAN STANLEY ASIA LIMITED+Rachel L ZhangEquityAnalyst+8522239-1520 HYPERLINK mailto:Rachel.Zhang Rachel.ZhangMORGAN STANLEY ASIA LIMITED+Sean XiangResearch Associate+8522848-8154 HYPERLINK mailto:Sean.Xiang Sean.XiangMORGAN STANLEY ASIA LIMITED+Simon H.Y. Lee, CFAEquityAnalyst+8522848-1985

6、 HYPERLINK mailto:Simon.Lee Simon.LeeMORGAN STANLEY ASIA LIMITED+Valena HsuResearch Associate+8522239-7687 HYPERLINK mailto:Valena.Hsu Valena.HsuAsia PrimerChinaCoal: ConnectingtheCoalislikelyremainChinasmajorenergysourcedespiteenvironmental concerns.ItisastrategicallyimportantresourceChinagivenreli

7、ability andthecountrysself-sufficiency.Inthisprimerweidentifykeyindicatorspricingtrends,aswellaspolicyandindustrydynamics.CoalistheonlyminedenergyresourceinwhichChinaislargely self-sufficient:Chinaisthelargestcoal-producingcountryinworldwithanannualproductionof3,450mntanda64%globalshare inCoalaccoun

8、tedasubstantial60.4%ofChinasenergycon- sumptioninwellaheadofoilat19.4%andrenewablesat3.4%. Comparedtoitshighimportdependencyoil(70%)andgas(40%), coalimportsaccountedonly7%ofChinastotalcoalconsumption in2018.Therefore,weviewcoalasthemostimportantenergyChina.Coaldemanddownbutnotout:AlthoughChinahasbee

9、npushing cleanenergyasasubstitutecoalamidaglobalcommitment toreducecarbonemissions,coalcontinuestobethecountrysenergy source evidenced by its large contribution to energysumptioninnotethatcoalsshareasChinasprimaryenergy source has declined from 73% in 2007 to 60% in 2018, and the Chinese government

10、targets to further cut this to below 58% by IndustryViewChina Coal - In-Line2020.Givenitsdominanceinpowercontribution,coaldemandhad ahighGDPcoefficientof0.9-2.4during2002-10,jectthiscoefficientwillfallto0.3-0.4xover thenextfiveyears,translatingtojust2-3%demandgrowth.Surpriseindicatorsofpricingtrends

11、:Inthisreport,wehighlight multiplesupplyanddemandfactorsthatdriveshort-termcoalmovements. Production, transportation, and inventorytheavailabilityofcoalsupplies.Powergeneration,weathercondi- tions,andutilizationofcoalalternativesalldeterminecoaldemand. Meanwhile,wealsolookintoChinashistoryofpolicych

12、angesobjectives.Contents5Executivesummary10 Environmental control another form of supply- side reform17indicatorsalongthesupplychain24 Chinas coal landscape34 Coal applications44 Seaborne coal market47 Listed coalcompanies53 Appendix: Coal 101ExecutivesummaryChinas Blue Sky Protection CampaignChinas

13、 Ministry of Ecology and Environment launched a clean-aircampaigninJune2018(effectiveuntilApril28,2019)tofur- ther control air pollution, following its Air Pollution Action Plan in 2013-17.Whilethatplanachievedalltheparameterssetin2013,29%ofits600+citiesmetnationalstandardsinNewinitiatives inthelate

14、stcampaignincludeagovernancesystemandenviron- mentalinspectionsofheavyindustriessuchassteel,cement,coal.By2030,ChinatargetsallairqualitymeasurestoachievePM2.5 (particulate matter in the atmosphere with a 10%powerdemandgrowthwereinWestChina,whileprovincesalongcoastalChinarecordedthan-average power de

15、mandgrowth.City gasThecitygasindustryshouldbenefitfromanincreaseingasutilization andcoal-to-gasconversion.Althoughdownstreamcitygassuppliers willbenefitfromhighergasconsumptiontargets,webelievestream suppliers may benefit more, as incremental gas would come from gas power plants. Gas equipment compa

16、nies should also benefit from the constructionboom.Gas IPPsChinesegasIPPsshouldbenefitfromincreasingopportunitiesbuildnewgaspowerplants,aswellaspotentiallymorepoliciesongasvolumeallocationandthegaspowertariffnism.Uncertaintyremainsoverthegaspowertariffpolicy.RenewablesRenewableenergywillcontinuetota

17、kemarketsharefromconven- tional coal power, but we think that China will slow down its wind/solarinstallationsin2019/2020duetoarenewablefunddeficit.Thesubsidydelayhascausedcashflowproblemsmostwind/solardevelopers.Inaddition,Chinaisontracktoachieve its15%targetofnon-fossilfuelenergyasapercentageoftot

18、alpri- maryenergyby2020,whichstoodat14%in2018.Curtailmentsignificantlyimprovedin2018,whichisdown5pptto7%energyanddown2.8pptto3%solarenergy.havealsoseen provincial-levelgovernmentscommitmenttofurtherreducecurtail- ment and introduce supportive policies including the announcementonPrioritizedPowerDisp

19、atchWind/Solar(see, HYPERLINK /eqr/article/webapp/2370de4c-2392-11e9-ac94-5832e596b7d4?ch=rpint&sch=sr&sr=1 China Clean Energy: Announcement on Prioritized HYPERLINK /eqr/article/webapp/2370de4c-2392-11e9-ac94-5832e596b7d4?ch=rpint&sch=sr&sr=1 DispatchWind/SolarIPPs(29Jan2019).SteelThesteelindustryi

20、samongtheleastenvironmentallyfriendlytriesinChinaandisundergovernmentpressuretolimitpollution.believe this pressure is also a means the government toExhibit 20:excesscapacityintheindustry.Cuttingpollutionwillincreaseductioncostsandforceoutsomecapacity,whichcouldbepositive the industry in the longter

21、m.Stricter environmental control has more impact on coal demandStricter environmental control that started in 2017 has morecoal-relatedindustriesthandidtheoriginalsupply-sideespeciallysteelandcementproduction.Thefrequentinspections haveledtotheclosureofillegalplantsandthosethatfailtomeet environment

22、alstandards.FromNovember2017toMarch2018,theaveragePM2.5concentra- tionin28citiessurroundingBeijinghadtobecutby15-25%achievethis,materialsindustries,especiallysteel,implementedpro- duction cuts. A total of steel production was monthlyinthewinterproductioncontrolperiod,whichledtolesscokingdemandmonthl

23、yfromNovember2017toMarch2018.Comparedwiththewinterheatingseasonin2018-19hashadtoughertargetofcuttingemissionsby3%onalreadyloweremis-sions and expanding the environ-mentcontrolareastotheYangtzeEstimatedcoaldemandimpactfromsteelproductionsuspensioninthe2018-19winterheatingseason(mnt)total volume impac

24、tproductioncoaldemandmonthly volume impactproduction coal demandSteel20.017.05.04.2Total17.04.2As % of 2018E total production0.5%1.4%* Note: calculated indirectly with power consumptionSource: Morgan Stanley Research (E) estimatesRiver Delta region. However, winterproductionpolicythisyearmoreflexibl

25、eassteelmillsthatmet the ultra-low emissions dardscanbeexcludedfromproduc- tion suspension. expect impactonmonthlysteelproduction toreach5.0mnt,implyingacoal demand reduction October2018toMarch2019.Supply-side reform: Where we are nowPolicyreversalhasreleaseddomesticsupplies2H18Afterthreeyearsofsupp

26、ly-sidereform,newmineshavestartedramp-upsince2H18.estimatethatnewmineramp-upswill200-300mtperannumandwilloffsetcapacityreductionsachieved in2016-1H18.Comparedtoits70%and40%importdependencyonoilandgas respectively, China is largely self-sufficient in coal, with just comingfromimports.Therefore,givenm

27、arketconcernsoverenergy securityfromexternalresources,thegovernmenthasresumedmineapprovalssinceApril2018.Afterramping-upinthepast2-3 quarters,newmineshavestartedtocomeonlinesince4Q18andwill continuetocommenceoperationsthisyear.Exhibit 22:Coal production in major coal-producing provincesCoal Producti

28、on in Key Provinceskt1,200,000 Exhibit 21:5,000China coal5,000China coalcapacity4,500newly coal mines4,0003,500capacity cuts inunder3,000supply-sidereform2,5002,0003,9004,100mtc4,200capacityclosuresc4,200capacityclosuresundersupply-side reformend-20172018 cut2019e cutnew buildsend-2019EExhibit 23:Am

29、ongfossilfuels,coalisonlyresourcethatdoesnotrelyon importsChina import dependancy80%1,000,00070%Oil GasCoalOil: 69%800,000600,00060%50%40% Gas:38%400,00030%200,000-2011201220132014201520162017Shanxi Inner Mongolia Shaanxi20%10%0%20002003200620092012Source: Wind, BP Statistics, Morgan Stanley Researc

30、hCoal:10%Source: SXCoal, Wind, Morgan Stanley ResearchExhibit 24:China List of approved new mines (as of February 14, 2019)CapacityTotalCapex pertonApprovedDateProvinceProject(mt)Investment(Rmb/ton)(Rmb bn)23-Dec-16 Inner MongoliaBaiyinhua No.4 Mine Stage II5.02.2443.816-Mar-17 ShaanxiBinchang Xiaoz

31、huang6.05.4902.816-Mar-17 Inner MongoliaKhujirt Shilawusu10.04.9485.316-Mar-17 ShanxiLiliu Sanjiao No.16.09.41,569.016-Mar-17 ShaanxiBinchang Mengcun6.04.0673.316-Mar-17 ShaanxiYushen Caojiatang15.06.3422.719-Apr-17 XinjiangJiangjun Gobi Desert No.2 Open-Pit Coal Mine Stage I10.04.6458.019-Apr-17 Xi

32、njiangDananhu West District Dananhu No.7 Stage I6.03.7617.810-Oct-17 Inner MongoliaNalinhe No.2 Mine8.07.9981.510-Oct-17 Inner MongoliaKhujirt Muduchaideng Mine6.01.7277.717-Jan-18 XinjiangBalikun Mine Area Jilangde Open-pit Mine Stage I2.01.6782.017-Jan-18 XinjiangBaicheng Mine Area Aergemin Open-p

33、it Mine1.20.8626.717-Jan-18 XinjiangBalikun Mine Area Biesikuduke Open-pit Mine Stage I2.00.9459.511-Feb-18 XinjiangYining Mine Area Northern Area Yili No.4 Mine6.03.8632.814-Mar-18 XinjiangDananhu Mine Area West District No.2 Open-pit Mine Stage I6.02.5416.714-Mar-18 XinjiangZhundong Wucaiwan Mine

34、Area No.1 Open-pit Mine Stage I7.01.6228.614-Mar-18 Inner MongoliaHuolinhe Mine Area Dalaihushuo (Huolinhe No.2) Mine6.03.4566.723-Mar-18 XinjiangHoxtolgay Mine Area Shajihai No.1 Mine5.03.4671.028-Apr-18 HenanPindingshan Mine Area Liangbei Mine2.42.2927.923-May-18 ShanxiHuodong Mine Area Zhongyu Mi

35、ne5.07.71,539.024-May-18 GuizhouSouth Panjiang Mine Mayixi2.43.21,333.37-Jun-18 XinjiangYining Mine Area Northern Area NO.24.01.3325.06-Mar-18 GansuTianshuibao Mine Area No.22.42.1861.311-Feb-18 ShanxiJincheng Mine Area Chezhai Mine1.52.41,596.011-Feb-18 XinjiangXinjiang Naomaohu Mine Area Xingsheng

36、 Open-pit stage 13.00.4141.326-Jan-18 XinjiangXinjiang Heishan Mine Area Heishan open-pit stag 14.02.4603.311-Feb-18 XinjiangXinjiang Sandaoling Mine Area Shadunzi mine stage 13.02.7898.04-Jul-18 ShanxiShanghe Coal CO Ltd. Of Yangquan Coal Group1.231-Jul-18 Inner MongoliaDzungar Mine Area Longwanggo

37、u Mine Modification10.04.6459.81-Nov-18 ShaanxiYuheng Mine Area North Area Dahaize Mine15.010.4690.819-Nov-18 ShanxiYixin mine expansion1.822-Nov-18 Inner MongoliaWomengbaiyinwula Mine Area Manglai Mine5.01.0200.030-Nov-18 Inner MongoliaXilinguole No.2 Mine Expansion18.03.7206.724-Dec-18 YunnanYunna

38、n Guanyinshan mine1.830-Dec-18 ShaanxiChenghe Mine Area Xizhuo mine3.09-Jan-19 XinjiangZhundong Wucaiwan Mine Area No.1 Mine Stage I6.03.6602.322-Jan-19 XinjiangXinjiang Zhongrun open-pit mine stage I4.0Subtotal206.789.7675.0Total (since 2015)1,156.4275.9674.3Source: NDRC, Morgan Stanley ResearchWhy

39、 supply-side reform was neededChina accelerated its industrial and urbanizationfrom2000.Theheavyfixed-assetinvestmentsinproperty,auto,chemical,andotherhighinvestmentandExhibit 25:Largenumberofcoalcompaniessufferedfromlossesduringthetroughofthe cycleenergyconsumingindustriesledtohugedemandcoalChina.C

40、ombinedwiththecoalexportcontrollaunched2014,coalcompaniesinChinaenjoyed10yearsoffastopment with highprofitability.Jan-12Jul-12Jan-13Jul-13Jan-14Jul-14Jan-15Jul-15Jan-16Jul-16Jan-17Jul-17Jan-18Soundprofitability,strongdemandgrowthprospects,fiscalstimulusledtosignificantcoalcapacitygrowth2008.Thegloba

41、lfinancialcrisisin2008,combinedwithnificantincreasesincoalimports,andtheswitchtoclean energysuchasrenewableresourcesunderprotectionpressure,ledtoacoaloversupplyandcoalfellbetween2012and2015.CoalproducersinChinafered losses during thatperiod.Jan-12Jul-12Jan-13Jul-13Jan-14Jul-14Jan-15Jul-15Jan-16Jul-1

42、6Jan-17Jul-17Jan-182,5002,3002,1001,9001,7001,5001,3001,100900700500Number of loss making coal companiesRmb/tNo. of lossmakingNo. of lossmakingenterpriseQHD price -RHS800.0700.0600.0500.0400.0300.0Jul-18200.0Jul-18Source: CEIC, Morgan Stanley ResearchAsaresult,theChinesegovernmentlaunchedsupply-side

43、 reformattheendof2015toaddresstheoversupplyproblem inindustriessuchassteel,cement,andcoal.Supply-sideExhibit 26:coalindustryprofitshaverecovered,butarestillbelowthehistoricalhighRmbbnChinese Coal Industry Profit - GrossProfitreformwasconsideredakeypriorityinthe13thPlanperiod(2016-20),targetingexcess

44、capacityreduction asChinaseconomyreachesnewnormsanddemandTheprogramwaslaunchedwithsteelandcoalaspilottries, setting quantified capacity elimination targets150mntsteel;800mntcoal).helpwithemployee- settlement-related costs, the government established Rmb100bnfundsubsidiesandisfocusedontheexecution of

45、 thatplan.1000.0900.0800.0700.0600.0500.0400.0300.0200.0100.02008200920100.0200820092010Source:CEIC,MorganStanleyResearch2011201220132014201520162017Gross ProfitGross margin - RHS201120122013201420152016201735.0%30.0%25.0%20.0%15.0%10.0%5.0%20180.0%2018Exhibit 27:Supply-side reform: Provincial targe

46、tsProvinceAnnounce dateTimetableTargets detailsNo. of minesCapacity (kt)Yunnan21-Jun-162016-2018Reduce 20.88mnt coal capacities to 70mntNA20,8802016Reduce coal capacities by 18.56mnt in 2016NA18,560Shaanxi15-Sep-162016Close 42 mines of 18.24mnt in 20164218,240Shandong18-May-162016-2018Cut coal capac

47、ity by 45mnt by 2018NA45,0002016-2020Close 114 coal mines and exit 64.6mnt capacities11464,600Chongqing29-Jan-161-Mar-1620162016-20172016-2018Shut down 219 coal mines Shut down 340 coal minesControl capacity within 20mt from 40.84mt in 201513,00023,00020,840Shanxi1-Feb-163-Aug-162016-20202016-2020Sh

48、ut down capacity of 258mt by 2020Cut production by 100mtNANA258,000100,0007-May-172017Shut 18 mines and eliminate capacity by 17.4mt1817,4004-Apr-162016-2020Maintain coal capacity to within 1bn ton,NANAwith 400-500mt to be consolidated7-Apr-162016-2020Reduce operating capacity by 16%145,000Fujian16-

49、Feb-1620162016-2018Shut down 29 coal minesShut down 4.8mnt by 2018NA1,4004,800Inner Mongolia9-Mar-1623-Aug-162016-20202016-2020Shut down about 280 coal minesShut down about 65 coal mines120,00054,14023-Aug-16201610 mines have been suspended since 2015 and to be shut103,300Jiangxi18-Jun-162016Shut do

50、wn 205 coal mines20512,7902016-2020Shut down 283 coal mines28318,680Hebei25-Feb-162016Shut down 70 coal mines70NA2017Cut production by 70mtNA70,0007-May-172016-2020Shut 123 mines and limit total capacity within 50mt12351,03026-May-162016-20202016-2020Shut down 112 coal mines of 63.07mntShut down 123

51、 coal mines of 51.03mnt63,07051,030Anhui10-Mar-162016Shut down 30mt coal capacityNA30,0002016-2020Shut down 21 mines with total capacity of 31.83mtNA31,830Henan11-Sep-162016-2018Shut down 256 mines of 62.54mnt25662,540Guizhou2-Mar-162016-2018Control number of coal mines under 100NANA2016-2020Shut do

52、wn 510 coal mines51070,000Gansu3-Mar-162016-2020Phase out 10mt coal capacity graduallyNA10,000Sichuan2-Mar-162016-2018No new coal mines allowedNANA29-Feb-162016-2017Cut coal capacity of 22.4 Mtpa by 2017NA22,40023-Aug-162016-2020Shut 215 coal mines in 3-5 years, no new approval in 3 years21533,030Ji

53、angsu26-Mar-162016Shut down 11 coal mines1110,1602018Shut down 2 coal mines24602020Shut down 1 coal mine11,200Hubei3-Jun-162016Cut 4mnt capacitiesNA4,0002016-2018Cut 8mnt capacities; shut down 80 - 100 coal mines808,000Xinjiang28-Jan-162016Control 2016 production within 150mtNANAHunan18-Apr-162016-2

54、020Eliminate 15mnt and control mine number to around 200NA15,0008-Mar-162016Hunan Coal Industry Group to shut down 2mt capacityNA2,0002016-18Hunan Coal Industry Group to shut down 4mt capacityNA4,00015-Aug-162016Closed 257 mines of 16.1mnt25716,100Qinghai12-May-162016-2018Cut capacities by 2.76mntNA

55、2,760Liaoning16-Aug-162016-2020Shut down 20.4mt coal capacityNA30,400Heilongjiang16-Aug-162016-2020Shut down 44mines of 25.67mnt4425,670Ningxia1-Jul-162016-2020Shut down 11.19mt coal capacityNA11,190XPCC18-Jun-162016-2020Shut down over 2.8mt coal capacityNA2,800NEA23-Feb-162016Shut down over 1,000 c

56、oal mines1,00060,000NDRC14-Jul-162016Shut down 250mt capacity in 2016250,000State Council25-Mar-162016-2020Shut down capacity of 500mntNA500,000Total target shutdown in 13th FYP (2016-2020)1,214671,510Total target shutdown in 2016329105,690Source: Local governments, NEA, NDRC, State Council, Morgan

57、Stanley ResearchProgress of supply-side reformSincethelaunchofsupply-sidereform,Chinahadremoved630mnt ofcoalcapacitybytheendofJuly2018.Coalsupplyduringsupply- side reform has been tight, as outdated capacity was constantly removedfromthemarket.Thus,ductionwassignificantly

58、reduced,from3.7bntin2015toinwhileimportsincreasedfrom206mntin2015to271mntExhibit 28:China Supply-side reform targetsCoal Capacity Cut ProgressExhibit 29:Chinas coal imports increased owing to falling domestic productionCoal production vs. Importmnt900800700600500400300800mnt (100%)4,0003,500700mnt (

59、87.5%)250700mnt (87.5%)2503001502501501502502,5002,0001,5001,0005009.0%,t473,3777.4%7.5%7.9%1,7441,6971,8496.8%7.3%7.3%7.0%5.2%7.0%6.0%5.0%4.0%3.0%2.0%1.0%0TargetActual020152016201720181H172H171H18coalproductionCoal Import % of total supply - RHSSource: China Customs, Morgan Stanley Research0.0%Sour

60、ce: State Council, Morgan Stanley ResearchExhibit 30:China coal supply-demand model201020112012201320142015201620172018E2019E2020E2021E2022EChina real GDP10.3%9.2%7.8%7.7%7.4%6.9%6.7%6.6%6.8%6.3%6.1%6.1%6.1%(mt)Production3,2463,5203,6503,9743,8743,6123,2723,3773,5463,7343,9214,0934,216Import12513528