China Coal Strategic Planning Outlook - H1 2022

China’s target of carbon neutralisation by 2060 is now a challenging task. The coronavirus pandemic, the Russia-Ukraine conflict, and even the carbon reduction policy itself resulted in the QHD price staying at above RMB1,000/t in most of the past twelve months. However, we do believe the soaring price will be a short-lived issue under the government’s strong intervention and the QHD price will return to RMB550/t in the long term. For met coal, the growing portion of EAF in the short term will shrink hot metal production and decrease demand for coke and met coal from the peak in 2020. In 2036, when hydrogen injection starts to replace portions of PCI consumption, the coal demand decline will deepen, and the price will be RMB1,513/t by 2050. For more details, please read our report.