Forge the mutual benefit of peers and promote development

The medium and long term contract negotiation meeting of coal, steel and coke in 2020 was opened in Nanning, Guangxi on November 19. At the opening ceremony, eight member enterprises of Shanxi coking coal, Shandong energy, Longmei group, Huaibei mining, Jizhong energy, Pingmei Shenma, Kailuan Group and Shenmei group launched an initiative to jointly practice the strategic thought of "four revolutions and one cooperation" in the energy revolution, always adhere to the character of sincerity, be the firm executor of the medium and long-term contract system and deepen the supply side structural reform Practitioners; work together to build an upgraded version of coal steel coke industrial chain cooperation, build a market-oriented mechanism of honest, trustworthy, long-term stability, win-win cooperation and collaborative development between coal steel coke and upstream and downstream enterprises; protect the exploitation and utilization of scarce coking coal resources, accelerate the coking coal production and technological revolution, achieve safe and efficient production, ensure stable and reliable supply, and ensure national energy security. The initiative came at the right time. Since the second half of this year, there have been periodic fluctuations in the coal market. Profits and prices in all links of the coal coke steel industry chain, including coal enterprises, have declined. There have also been voices questioning the benchmark price in the society.

Some user enterprises think that when the market price goes down, the benchmark price should also be lowered accordingly. Never forget the past, the teacher of the future. In the second half of 2016, the price of international coking coal and coal in domestic local market rose rapidly, and the price of domestic coking coal main supply enterprises rapidly differentiated, and showed an increasing trend. In order to stabilize the stable operation of China's coal coking steel industry chain, on November 23, 2016, initiated by the national development and Reform Commission, China Coal Industry Association, China Iron and Steel Industry Association and China Railway Corporation jointly Shanxi Coking Coal Group Co., Ltd. signed a medium and long-term coking coal contract with six domestic well-known iron and steel enterprises, Baowu, Shougang, Hebei steel, Angang, Hualing steel and Masteel, which opened a new mechanism for the operation of China's coking coal production and transportation dominated by medium and long-term contracts. Since then, the main enterprises of coal, coke and steel have signed medium and long-term contracts in various forms, and the medium and long-term contracts have become the leading mode of supply and demand of coking coal in China. From 2017 to 2018, the signing and strict implementation of the medium and long-term contract for coking coal in China effectively led the price of coking coal in China to converge from 308 US dollars / ton CIF China on November 23, 2016 to the medium and long-term contract price in China, making brilliant achievements for the steel industry and coking industry, and stabilizing the market and price Grid and stable operation have made great contributions. In 2019, eight major coking coal enterprises in China's coking coal brand cluster signed annual medium and long-term contracts of 113 million tons, accounting for nearly 30% of annual sales of coking coal in China.

Chinese coking coal medium and long-term contracts have the characteristics of integrity, stability and coordination, which meet the requirements of high-quality development in the new era of China, and are generally approved by coking and steel enterprises. It can be said that it is the ballast and stabilizer of global coking coal price, the Chinese scheme of common destiny of coal coking steel industry chain, industrial collaborative practice and innovation, and the contribution of Chinese coking steel industry to the world 。 Honesty is the foundation and integrity is the most important. Integrity is reflected in the performance of brand cluster enterprises. China's coking coal brand cluster enterprise represented by Shanxi Coking Coal Group is the main force of China's coking coal medium and long-term contracts, and an actor who performs the promise and does what he says. In 2019, the medium and long-term contracts accounted for more than 75% of its own resources, and the contract fulfillment rate in the first 10 months of this year exceeded 95%, which strongly supported the development of China's iron and steel industry. Honesty is reflected in the increase of customers' viscosity to brand cluster enterprises. The survey of relevant departments shows that the purchasing intention index of brand cluster enterprises is generally higher than the market prosperity index; the customer density is at a historical high level, and shows a trend of gradually increasing, which reflects the increasing dependence of customers on brand cluster and the improvement of brand loyalty. Integrity is reflected in the standardized operation and provision of the data source of the middle price Xinhua coking coal price index. The annual trading volume of trading platform reaches 160 million tons, which can ensure sufficient trading volume.

Behind each index, there are real trading data to support. Stability is reflected in product quality, price and transportation guarantee. Cluster enterprises not only pursue high-quality supply guarantee, but also pursue stable quality as agreed in the contract. From 2018 to 2019, the range of product quality agreement is narrowed, and points outside the high-density price range are significantly reduced. From the second half of 2018 to this year, the medium and long-term contract prices of cluster enterprises have generally remained in a reasonable range, which is more intuitive and significant reflected in the trend chart of coking coal price index. Under the situation of the sharp rise in China's steel prices, cluster enterprises have maintained their strategic focus, effectively guiding and influencing the local coal and imported coal to maintain a relatively stable state. In the first 10 months of this year, due to weak international market demand, China's iron and steel production increased significantly, coking coal import increased more, and some downstream user enterprises proposed to reduce the benchmark contract price in the medium and long term. The original intention of user enterprises to reduce costs and increase efficiency can be understood, but the benchmark price cannot be changed at will. The benchmark price is neither the highest price in the market nor the lowest price in the market. It can not only look at the present, regardless of the long-term. In addition, thanks to the implementation of the policy of "transfer from the public to the railway", the sales volume of railway coal of cluster enterprises has been steadily increased, and the outsourcing volume of coking coal of some users has been fully realized by railway transportation. Synergy is embodied in trade, technology and culture.

The successful holding of the medium and long term contract negotiation meeting of coal, steel and coke in Chengdu and Nanning has realized the centralized ordering of Chinese coking coal enterprises, including coking coal brand cluster enterprises, and created the basic conditions for integrating resource varieties, unifying standards and standardizing services. The coal blending technology exchange and technology exchange among brand cluster enterprises can better provide customized services and personalized solutions for customers The plan can make all parties in the industry chain know China Coking Coal more comprehensively and protect China coking coal. In terms of cultural coordination, it is a common sense of community of common destiny to advocate the coal coke steel industry chain. The upstream industry should support the downstream industry to extend the business cycle, and the downstream industry should also plant the soil for the upstream industry to recuperate, support the upstream industry to accumulate a continuous resource base, and oppose the dried up fish. Coking coal is an important raw material of iron and steel industry, which is more precious in the world coal family due to its scarcity. Coking coal accounts for less than 10% of the world's coal reserves. Coking coal accounts for 26.63% of the proven coal reserves in China, which is higher than the world average, but relatively limited, in which the total of strong cohesive coking coal and fat coal only accounts for about 36% of the coking coal reserves. In recent years, due to the lack of understanding and practical application of its scarcity, coking coal accounts for about 35% of China's total annual coal mining volume, the mining intensity is too large, the over development of high-quality coking coal, especially in small and medium-sized coking coal production enterprises.

Coking coal resources have different degrees of waste and inferior tendency. In the coking coal output of our country, the proportion of coking fat coal is 46%. Compared with 36% of the resources, the mining is excessive, and the protective mining and utilization of coking coal is urgent. China's coking coal brand cluster enterprise is the representative of China's advanced production capacity in coking coal production, processing and sales. It has a long-term traditional and technical capacity in coking coal protective mining, and plays an exemplary role. China's crude steel production has led the world since 1996, breaking through 800 million tons since 2013, continuously occupying half of the world's total production, and will remain at a considerable level for a long time. In 2019, China's long-process steel production accounted for more than 90% of the total steel production, and the demand for coking coal remained stable, which could not be replaced in iron reduction technology. It is predicted that the proportion of short process steel-making will increase with the increase of steel reserves in China in the future, but the overall judgment is that even by 2035, about 70% of steel production will still be mainly provided by long process steel. Compared with the developed countries in the world, China has a vast territory and a huge population base, and has accumulated far-reaching and powerful energy for a long time. The firm action of the party and the government to lead the people to realize the Chinese dream and the strong desire of the people for a better and happy life will jointly burst out a huge development force, the great power effect of China, and the huge change of the party and the government's unbalanced development in the new era Great determination and confidence will lay the foundation for more sustainable long-term growth.

China will embark on a path of sustainable development with Chinese characteristics different from any other country, and steel will continue to make great achievements on the road of common prosperity. It will be a long-term task for China's coking coal resources to guarantee the supply of iron and steel industry. Since 2018, based on the protective development and utilization of scarce coking coal and to meet the needs of customers, the coal coke steel industry chain enterprises have jointly explored the establishment of a resource sharing mechanism, with the national coal blending laboratory and a number of large backbone coal blending bases that conform to the flow direction and adapt to China's economic strategic map as the carrier, to cultivate the growth pole of the cluster, promote the coordinated development of the coal coke steel industry chain, and constantly enhance cooperation To further deepen and innovate the research and utilization of coking coal characteristics, the construction of coal blending base and the green development of the whole industrial chain of modern logistics. With the joint efforts of all parties, Rizhao base started with high standards, high-quality intelligent coal blending, relying on technological innovation, changed the traditional mode of "big in and big out" into "high quality and good price, excellent in and excellent out"; gathered the world-class coal blending expert team, supported the "goods + service" strategy of coal blending demonstration base; absorbed global resources, supported the "buy and sell globally" strategy, and created a new inland opening up Highland, winning the initiative of development and international competition with an open attitude, has achieved remarkable results. In the past four years, coal and iron and steel, as the pilot industries of supply side structural reform, have undergone profound changes and achieved remarkable results. Excess capacity has been effectively resolved. Market supply and demand have achieved a basic balance, industry efficiency has rebounded, industry has continued to optimize, transformation and upgrading have been accelerated, and valuable experience has been accumulated.

Shanxi coking coal price index of "middle price · Xinhua" has become the market vane, the demonstration role of China's coking coal brand cluster is prominent, and the community consciousness of the fate of the upstream and downstream industrial chains of coal is gradually formed. In the future development process, the coal industry should adhere to the development concept of "Three Guarantees and three stabilities" of underwriting supply, safety and people's livelihood, market stability, price stability and stable operation, strive to improve the sense of gain, happiness and security of coal miners, firmly consolidate the achievements of supply side reform with steel and coking enterprises, strengthen industry self-discipline, honest operation and enhance the spirit of contract, We will unswervingly produce in accordance with laws and regulations, work together to build a community of common destiny for coal, steel and coke, work together to forge ahead with our peers, and achieve mutual benefit, win-win results and high-quality development.