Coal prices continue to fall as coal prices continue to fall?

Recently, the novel coronavirus pneumonia has reduced the demand for steam coal, and the supply of coal in China's thermal power market has been oversupplied. Although the daily consumption of power plants has increased in recent months, the number of days of inventory consumption is still at a historical high. At the same time, as the spot price falls below the long-term co price, the game between coal and power enterprises increases, and the coal price is under pressure. The average daily coal consumption of power plants improved on a month on month basis, and the inventory was still high. According to the data, the power generation in China fell 8.2% year on year from January to February, and the average daily coal consumption of six power generation groups fell 14% year on year. With the control of the epidemic situation and the increase of the return to work in the lower reaches of our country, the power generation capacity of our country increased from March to April. According to weekly data, the average daily coal consumption in the whole March was 531600 tons / day, up 36% from 395000 tons / day in February.

Up to now, the average daily coal consumption in April is 551800 tons / day, up 3.8% from March, but down 13% from 637300 tons in the same period last year. It can be seen from the historical figures that the coal consumption of this year is still in a low position compared with the same period of previous years. In addition, from the perspective of seasonality, the rainy season comes earlier this year, and it has entered the flood season at the beginning of April. With the increase of rainfall, the hydropower generation will rise, which will have a negative impact on the thermal power generation in the short term, which will affect the consumption of power coal. In addition, the port inventory is rapidly rising. Taking Qinhuangdao port, Jingtang Port and Caofeidian port as examples, the inventory has increased from 9.95 million tons in the middle of March to 14.63 million tons at present, with a monthly increase of 47%. Since 2019, the power plant has implemented the high inventory strategy. As of mid April, the inventory consumption days of the six major power generation groups have decreased from 33.28 days in March to 29.76 days at present, but they are still up 5.58 days compared with 24.18 days in the same period last year. From the same period over the years, such inventory consumption days are still at a historical high.

High inventory makes the price of power coal easy to fall and hard to rise. The spot price fell below the long-term cooperative price. On April 13, the game of coal and electricity increased. On April 13, the price of Shanxi Youhun of 5500 kcal in Qinhuangdao Port fell to 500.25 CNY/ton, which was lower than the long-term cooperative price of 543 CNY/ton. This situation began at the end of March, and has lasted for half a month. During this period, the price of coal was weak and fell endlessly. The supply and demand pattern of power coal market is changing, the balance is broken, and the game between coal and electricity is increasing. From the perspective of supply: in 2016-2018, the coal market carried out supply side reform, and the production capacity continued to decline; from 2019, the advanced production capacity gradually released; in 2020, the supply further increased. Novel coronavirus pneumonia is a major source of demand for energy consumption. The demand for energy supply structure adjustment has weakened the consumption ratio of thermal power, and the increase in capacity has reduced the transportation cost of coal. The new crown pneumonia epidemic is the fuse to break the balance of the coal market, which makes the consumption of steam coal at home and abroad decrease sharply. When "supply growth" meets "demand decline", the previous equilibrium market is bound to be broken. The purpose of Coal Electricity Association is to reduce the fluctuation of coal price and ensure the effective supply of coal and electricity. In the process of signing and implementing the long-term cooperative contract, the coal and power enterprises, as the two sides of interest, play the game mainly on the quantity, floating price and contract fulfillment rate of the long-term cooperative contract.

When the market is in short supply and the spot price is higher than the long-term cooperative price, the main strategy of electric enterprises is to keep high inventory and high cash ratio, so as to drive the floating price down; when the market supply is higher than the demand, the electric enterprises can reduce the long-term cooperative performance rate, so as to force the coal enterprises to reduce price and promote sales. For example, Shaanxi coal enterprises take the lead in price reduction in this wave of long-term coal power association game, and adopt the strategy of "quantity price binding". When the long-term cooperation rate of power enterprises exceeds 80%, 20-30 yuan per ton of coal will be preferential. The international coal price continues to fall, the increase of imported coal due to the spread of the epidemic in the world, all economies have been greatly affected, the price of crude oil has fallen sharply, and the price of coal, as the largest alternative of petrochemical energy, is equivalent to a small decline, so in the medium and long term, the demand for coal will further decline, which has a great pressure on the price of coal. Take the spot price of power coal at ara port in Europe as an example, it dropped by 21% to 45.13 USD / ton from 57 USD / ton in early April. According to the data of the National Bureau of statistics, from January to February 2020, China's total import of power coal reached 2004 million tons, up 37% from 12.64 million tons in the same period last year. According to our recent tracking data, the profit per ton of imported Indonesian coal in Guangzhou port is still very considerable, and the import of power coal is unstoppable, which undoubtedly makes the power coal market in China even worse, and the coal price will continue to fall under pressure.