The power coal market in April may not fade in the off-season

Entering April, China's power coal market may soon enter the most critical time node of the year. Various factors play a role together. In April, the power coal market may appear in the off-season. On the one hand, the daily consumption of power plants remains at a high level. In terms of demand, the average daily consumption of coastal power plants of the Six Power Generation Groups in March was 664,800 tons, an increase of 4.2% over the same period last year, ending the seven consecutive months of year-on-year decline. The average daily coal consumption of key power plants in March was 3.7 million tons, an increase of 3.35% over the same period last year. Relevant data show that the expected low daily consumption did not appear. According to past years'experience, the power plant will be fully stocked up before the start of peak summer. After a period of time to inventory, the six major power generation groups coastal power plant inventory has fallen below 16 million tons, in April will usher in the wavelet replenishment inventory. On the other hand, there is a gap in the supply of high-calorie coal. Due to the slow resumption of some coal mines producing high-calorie coal and the prolonged customs clearance time of some imported coal, there is a shortage of high-calorie coal both at home and abroad, which may be further highlighted in April and May. The early response and speculative demand of peak summer, together with the structural shortage of inventory and the factors of double-control of energy, are the core driving forces of the rising price of power coal in April and May. In addition, there are some factors that boost the profit margin.

Firstly, from the aspect of non-electric coal consumption, the centralized start-up time of cement plant is obviously later than that of previous years, but it also returns to normal in April, and coal consumption basically returns to normal. There is an increase in demand compared to February and March.

Secondly, April 1 is the time point for the reduction of VAT tax rate in China, and some demand that is not urgently needed in March will be moved to April. Although there is also the possibility of a backward supply, due to site constraints, demand releases in April will be more than supply releases.

Next, from April 6 to April 30, the Daqin Line will be overhauled and the daily transportation volume will be reduced by 150,000 tons to 200,000 tons during the overhaul period. In addition, upstream platform inventory has suppressed demand for replenishment. In Inner Mongolia, some delivery platforms have been replenished to the previous year's level due to the need to ensure the delivery volume. However, due to the serious upside-down and buy-up-not-buy-down mentality of Shanxi platform, inventory is still at a low level in recent years, once the port price rises, there is also a certain demand for replenishment.

In addition, UHV will face maintenance immediately. Daily consumption will rise after coastal power plants lose the supplement of purchased electricity, and the demand for sewage coal will also be increased.

Moreover, April is one month before the delivery of the main power coal futures contract 1905. At this time, there are more than 270,000 hands in the position, which is on the high side in previous contracts. According to the author's calculation, the ratio of the final delivery volume to the first month before delivery is generally 7% to 8%, and at the end of the month it is about 62%. Therefore, according to the warehouse holdings at this time, the author estimates that the delivery volume may be about 900,000 tons. In addition to the demand of each new link, it is difficult to get together the 900,000 tons of deliveries under the premise of stable prices (for example, large price changes in the later period, the delivery volume may also change considerably).

Therefore, the author thinks that the power coal market will be more prosperous in April and May. But there are also three points to be concerned about, one is the shortening of customs clearance time for imported coal; the other is that hydropower power generation may be ahead of schedule; and the third is the suppression of sufficient supply of low-calorie coal.