Falling coastal spot prices into the blue zone

The long-term surplus of supply and demand in the coastal coal market has seriously damaged market confidence. Under multiple air control factors, the coastal coal price has entered a fast downward channel, falling into the blue area this cycle. In the late period of the week, the explosion of the same coal mine caused the market to worry about the coal supply. Under the over reaction of the market, the decline of spot price was narrowed, and the futures price showed a periodic correction. The spot price of power coal fell sharply on April 15, 2020. According to the latest data released by Qinhuangdao coal network, the price index of power coal around Bohai Sea closed at 530 CNY/ton, down 5 CNY/ton on a month on month basis. In terms of spot, the spot price of 5000 kcal thermal power coal is 422 CNY/ton, with a link down of 28 CNY/ton; the spot price of 5500 kcal thermal power coal is 493 CNY/ton, with a link down of 27 CNY/ton. In this cycle, the transaction price of power coal specification products in Bohai port fell comprehensively, with a decline range of 5-10 CNY/ton.

Among them, the price of 4500 kcal power coal in Qinhuangdao port is 415-425 CNY/ton, the price of 5000 kcal power coal is 460-470 CNY/ton, the price of 5500 kcal power coal is 525-535 CNY/ton, and the price of 5800 kcal heat generating power coal is 555-565 CNY/ton, with an average month on month decline of 5 CNY/ton. According to the analysis of the research and Development Department of Qinhuangdao coal network, the pattern of strong supply and weak demand in the coastal coal market continued to strengthen, the coal inventory in the Bohai Sea port rose and the demand for domestic trade coal fell, and the coal price entered the deep decline channel, falling to the blue range below the coal benchmark price. The following factors are the main reasons for the continuous downward exploration of the coastal coal price in this period: first, the sharp rise of the port inventory around the Bohai Sea offset the small downward impact of the downstream inventory, the domestic trade supply is sufficient, and the coal price is difficult to change the downward situation. The operation of port gathering around the Bohai Sea is relatively normal, and the inventory keeps rising, which has exceeded 27 million tons. As of April 15, the total inventory of qintangcang has increased to 27.7 million tons. On the contrary, the downstream power plant "purchases passively and consumes its own inventory actively", which decreases slightly. Supply growth is far greater than demand growth, and coal prices continue to bear downward pressure.

Import coal is still a strong supplement, but the price advantage is significantly reduced. According to the latest data of the General Administration of customs, China imported 27.833 million tons of coal in March, an increase of 19%. In the first quarter, China imported 95.778 million tons of coal, an increase of 28.4% year on year. The increment of foreign trade coal impacts the demand of domestic trade coal, and the enthusiasm of terminal purchasing in the north is poor. However, with the outbreak of the international epidemic, the customs clearance of imported coal has been affected to some extent. In addition, the current advantage of price difference between domestic and foreign trade is no longer available, and the supplement effect of imported coal may be weakened. Futures prices and shipping prices are both weak, and the market is still bearish. As of April 15, the lowest price of power coal futures zc05 contract was 470 CNY/ton, continuing to discount the spot price, and the market was pessimistic about future expectations. At the same time, the sea freight index of coal fell in shock, and the market coal trading can be seen. Both indicators are weak, and the market is bearish.

On the whole, it is difficult to change the pattern of coal supply and demand surplus in the coastal areas in the short term. Considering that various inspections in the production area will enter a critical period, under the dual influence of market regulation and administrative intervention, the coal supply may shrink significantly, to some extent, the pressure of railway and port operation will be relieved, and the coal inventory in the water port will be dominated by high shocks. However, it is still a long time before market confidence recovers and the downward pressure on coal price is still large. Once the price enters the red area, the relevant ministries and commissions will launch the response mechanism to stabilize the abnormal fluctuation of coal price, focusing on the subsequent policy changes. The divergence of international and domestic transport markets has increased the Baltic dry bulk composite freight index (BDI) in this cycle (April 9, 2020 to April 15, 2020) has risen sharply. On April 15, BDI closed at 706, up 99 points or 16.31% from the same period last week. In terms of the molecular index, the Baltic Capesize shipping price index rose strongly to 794 points, an increase of 369 points or 86.82% over the same period last week. Capesize daily earnings increased $2663 to $8666. Among the smaller ships, the super handy ship freight index increased 13 points to 818 points, or 1.61% compared with the same period last week.