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    Home > Analysis of Coal Market Operation in March and April

    Analysis of Coal Market Operation in March and April

    Echemi 2019-06-03


    In March and April, coal consumption changed from peak season to off season, and coal supply was relatively loose. From March to early and mid-April, with the Spring Festival holiday and the closing of the two sessions, Shanxi, Shaanxi and Inner Mongolia ceased production coal mines resumed, coal supply increased, while downstream coal consumption demand seasonally fell, and coal supply and demand gradually relaxed. In mid-late April, due to the improvement of port coal market and the upgrading of security inspection in Shanxi, Shanxi and Inner Mongolia, the supply of some high-quality coal is in short supply, the queue of coal-pulling trucks is congested, and the price of coal continues to rise.

    On the aspect of coal import, influenced by international environment, Australian coal import is restricted by policy, customs clearance time doubles, price plummets, supply of imported coal shifts, activity of low-card Indonesian coal market rises sharply, coal price rises sharply all the way, fluctuation of imported coal in other countries is relatively small, and total imported coal declines year-on-on-year.

    1. The proportion of raw coal production in Shanxi, Shaanxi and Inner Mongolia increased according to the data of the National Statistical Bureau. In March, the output of raw coal in China increased by 2.7% compared with the same period last year. In January-March, the total output of raw coal in China increased by 0.4% compared with the same period last year. The top three provinces in March were Inner Mongolia, Shanxi and Shaanxi, with a total output of 20.89 million tons, accounting for 69.7% of the country's raw coal output. Compared with the average in January-February, the coal output of Shanxi, Shaanxi and Inner Mongolia increased by 33.45 million tons, an increase of 19.2%. From the above data, it can be seen that coal production is further concentrated in Shanxi, Shanxi and Inner Mongolia. In March and April of this year, due to repeated mining accidents, the safety inspection of the production area has been upgraded. After the closure of the two sessions, the rate of coal mine resumption is lower than that of previous years, and most of the coal mines are in a low inventory state. As of the end of April, some small and medium-sized coal mines are still in a state of suspension and rectification. Strict control of coal management tickets in Shanxi and Mongolia, some small and medium-sized coal mines only suspended sales at the end of the month, resulting in demand gaps in ports and downstream chemical enterprises, unable to fully supply. The increment of coal production in Shanxi, Shanxi, Shaanxi and Inner Mongolia is different because of the different safety inspections in different provinces. Coal production in Shanxi and Mongolia increased year-on-year, while coal production in Shaanxi decreased year-on-year. The data show that in March, Inner Mongolia's raw coal output reached 83.887 million tons, an increase of 1.89 million tons, an increase of 2.3%, while Shanxi's raw coal output reached 82.828 million tons, an increase of 14.07 million tons, an increase of 20.46%. The output of raw coal in Shaanxi Province in March was 41.375 million tons, a decrease of 5.21 million tons, or 11.19%, compared with that in Shanxi and Mongolia. The main reason is that there were two accidents in Shaanxi coal mine at the end of January-March. The safety inspection was upgraded in an all-round way, and the production of large-scale coal mines was stopped or reduced. As of April 25, there were only 176 mines in 431 mines in Shaanxi province, with the regional supply of coal being too tight and the queuing congestion of pulling coal trucks at intervals.

    2. The stage of supply in the origin market is tighter after restraining and rising in March. Coal consumption began to turn from peak season to off season. The purchasing and pulling of coal production areas decreased significantly, the transaction activity declined. Some coal mines increased their prices too much in February. Rational callbacks were made in March. Railway transportation in Shanxi and Inner Mongolia was normal, land sales were relatively cold, and the overall coal price lacked the driving force to rise. The downturn in coal prices continued until early April. Since mid-April, coal prices in ports have continued to rise slightly, coal control tickets in Shaanxi and Inner Mongolia have been strictly controlled, and security inspection in Shanxi has been upgraded. Coal prices have continued to rise. The data show that as of April 26, 5500K power coal in Xinzhou, Shanxi Province, closed 409 yuan/ton, up 33 yuan/ton compared with the end of February, an increase of 8.78%; 5500K power coal in Yulin, Shaanxi Province, closed 425 yuan/ton, up 3 yuan/ton compared with the end of February, an increase of 0.71%; 5500K power coal in Erdos, Inner Mongolia, closed 390 yuan/ton, up 22 yuan/ton compared with the end of February, an increase of 5.98%. Coal prices in Shanxi and Mongolia are greatly affected by ports, and will still face safety supervision and environmental protection inspection in May-June. Shaanxi Coal Mines are relatively slow to resume production. From the fifth batch of coal mines approved to resume production to the end of April, Yulin only has two coal mines resumed production. From the above situation, there is little room for the increment of coal supply in the production area in a short time. From the demand side, as the weather warms up, some traders or power plants may be ready for peak summer in May. It is expected that the rise in coal prices in May will become a probable event.

    3. The limited price of Australian coal fell sharply from a year ago in March and April, the weather became warmer, the coal consumption demand of downstream power plants declined, the purchase rhythm of imported coal slowed down, and some power plants only kept rigid purchasing. From the point of view of coal types, the demand for low-calorie coal was higher, the price was stronger, the market for medium-high-calorie coal was cold and the price shocked down. According to the data of the General Administration of Customs, in March, the import of coal in China dropped by 23.482 million tons, a decrease of 3.218 million tons, a decrease of 12.05%, and an increase of 5.841 million tons, an increase of 33.11%. From January to March, China imported 746.28 billion tons of coal, a decrease of 787,000 tons, or 1.04%. The total coal import declined year-on-year, largely due to the reduction of Australian coal import and insufficient supply of other goods. In March and April, the import coal market fluctuated sharply, mainly because some Chinese ports began to impose restrictions on Australian coal imports at the beginning of the year. Since March, the customs clearance time of Australian coal imports doubled, and some ports stopped unloading Australian coal. As a result of increased policy risks and longer customs clearance time, the cost increased, and the enthusiasm of domestic traders to purchase Australian coal decreased significantly. Low, Australian coal was once unavailable, prices plummeted. 

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