Why is the upward space of power coal limited?

At present, the contradiction between pithead and port price inversion has eased, the enthusiasm of traders has increased, and the capacity of Zhangtang Railway has increased, which reduces the pressure of railway transportation on Daqin Railway, and the port supply will gradually improve. At present, the supply tension of power coal has not been alleviated, the overhaul of Qinhuangdao Railway and the release of cement demand have resulted in strong bidding psychology of port traders. However, due to the arrival of off-season demand for electricity and coal, the boost of industrial demand is limited, there are alternative advantages for different grades of coal, the upward basis of power coal prices is not strong, it is difficult to get out of the unilateral market. In the medium and long term, with the gradual resumption of production of coal mines in production areas, the National Development and Reform Commission and relevant departments have accelerated the release of high-quality production capacity, and the advantages of coal import in foreign trade have expanded, so there is limited space for upward price of power coal. Since 2019, major coal producing areas have carried out special coal mine regulation activities. Strict safety inspections will run through the year. Illegal acts such as overproduction will be curbed, and off-balance-sheet production will be tightened. At present, the inventory of origin is on the low side, and the market is sensitive to the change of supply side. Inner Mongolia held a teleconference on coal mine and industrial safety production last week, demanding that a serious inspection of production safety be carried out and all kinds of potential safety hazards be sorted out; the Qinyuan fire in Shanxi stopped the production of surrounding coal mines; and the Shaanxi area strictly controlled the coal tickets, restricted the overproduction behavior, and the supply was difficult to restore to the normal production scale before. At the same time, the Da-Qin line maintenance, the market anticipated that coal export will be affected, which boosted the market's bullish expectations.

However, sales in production areas are relatively light, downstream purchasing is not active, price fluctuations in Inner Mongolia and Shanxi are relatively limited, and with the acceleration of the resumption of production in Shaanxi, pithead quotations are rapidly lowered. Combined with the implementation of the tax and fee reduction for a period of time, as well as the impact of logistics costs, the contradiction between pithead and port price inversion has eased, the enthusiasm of traders has increased, and the capacity of Zhangtang Railway has increased, which reduces the pressure of Daqin Railway transportation, and the port supply will gradually improve. Since the first quarter of the year, the National Development and Reform Commission and relevant departments have approved several coal mines with a total capacity of more than 180 million tons. Obviously, the policy orientation to ensure the stability of coal supply has not changed, and the release of high-quality production capacity will gradually cover the contraction of off-balance sheet production.

From the international market point of view, in recent years, whether in Australia, South Africa or Europe, the price of high-calorie power coal declined rapidly. Domestic import advantage is expanding rapidly. It is known that some power plants have increased their purchasing of high-quality coal from other countries and regions. Although the transportation cycle is longer, in the long run, the shortage of high-quality coal due to the prolonged customs clearance time in Australia will be gradually compensated. It should be noted that China's coal inquiries to Australia have increased significantly in recent years. The general election in Australia will be over in May. The political environment is expected to improve. It is not excluded that Australian coal import restrictions or loosening.

Coal power demand comes in the off-season

At present, the downstream power plants mainly consume inventory, and the available days of inventory can basically cover to May. Meanwhile, in April, the power plant will arrange unit maintenance one after another, and the demand for electricity and coal will enter the traditional off-season of consumption. From the industrial point of view, April and May are usually the peak production season for cement and steel industries. Recently, the cement industry releases its capacity, to a certain extent, increasing the demand for high-calorie coal procurement and supporting the port quotation. However, at the end of April, Beijing will hold the second "one belt and one way" International Cooperation Summit Forum. Recently, Tangshan, Handan, Linfen and other places have issued the two or three quarter peak to peak production plan, which will curb the growth of industrial demand to a certain extent.

As of April 9, the price difference between CCI Daka Power Coal Price Index and 5000 Daka Power Coal Price Index is 98 CNY/ton, which is much higher than the usual spot price difference. In addition, according to the situation of power coal delivery substitutes demanded by Zheng Shang, the substitution of 5000 cards for 5500 cards is 90 yuan per ton, and the substitution advantage of 5000 cards appears, or the willingness of traders to sell delivery is enhanced. Overall,

In the case of weakening cost-side support and limited demand-side coordination, the upward space of power coal price is limited.