Power coal market, optimistic or not optimistic?

After entering May, the price of coal in the main producing areas has been rising all the way and remains high; the cost of port traders is hanging upside down, and the price of coal is under pressure; the demand of downstream power plants is weak, the stock is high, the daily consumption is low, and the enthusiasm of purchasing power coal in the market is not high.

Recent coal price and market outline

This week, the power coal price index around Bohai Sea closed at 579 CNY/ton, the ring ratio was flat. Coal mines in Yulin area, Shaanxi Province, with coking coal as the main source of sales, prices remained stable and moderately rising, while coal mines with electricity coal as the main source of sales, due to high end-user inventory and high sales pressure, this week's price cut by 10-20 yuan per ton.

Since May 15, coal transport prices from Tanghu Line of Hutie Bureau to Hong Kong have been adjusted as follows: Hohhotnan, Wanshuiquan, Xinjie, Wulan Taolegai, Daniu. Coal from the ground station to Caofeidian West Railway Station via Tanghu Line can float by 10% at a single price. Coal price fluctuates slightly in northern ports. The downstream inquiries are mainly low-calorie coal, and the demand for high-calorie coal is relatively weak. The mainstream price of Q5500 large-calorie coal is 615-620 CNY/ton, and the mainstream price of Q5000 large-calorie coal is 525-530 CNY/ton. Analysis of the causes:

1. Coal prices in the producing areas are firm and supply and release are limited. Under the influence of coal pipe ticket and safety production inspection, the supply and demand of pithead power coal market is relatively tight, and the price fluctuation is strong. In early May, the Party Group of the State Coal Mine Safety Supervision Bureau formed three inspection groups, which were stationed in three coal mine safety supervision bureaus in Shaanxi, Shanxi and Jilin to carry out inspection, formally launching the first round of inspection work of the Party Group. In addition, Yulin Energy Bureau took the lead in "looking back", demanding that at least one mine with major potential safety hazards be found every month, and ordered to rectify it indefinitely after verification. In addition, Yulin area, coal pipe tickets are issued monthly strictly according to the approved coal mine production capacity. The coal production capacity and output in the main producing area are limited, and the supply is tight, which supports the pit price. However, after nearly half a month's rise in pithead coal price, there have been some high and cold spots. There is a strong sense of resistance and wait-and-see attitude towards high coal price customers. Recently, the growth rate of power coal market in the main producing areas has narrowed down, and coal prices in some regions have declined.

2. Port stocks are increasing and coal prices are running under pressure. In the first half of May, the average daily coal consumption of the main coastal power plants was 587,000 tons, a decrease of 89,000 tons compared with the same period last year. The anchorage ships in Qin and Tang ports decreased by nearly half compared with the same period last year, and the weak demand appeared. At the same time, the inventory of Qin and Tang ports and power plants has broken through 21 million tons and 16 million tons respectively, increasing by more than 3 million tons year on year. In the coal market, the supply and demand pattern of downstream nodes is relatively relaxed. However, due to the continuous rise of coal prices in the producing areas, the shipping cost increases. It is estimated that the cost of transporting Q5500 Dakameng coal to northern ports is 665 CNY/ton, and the price hangs upside down about 45 CNY/ton, which restrains traders from sending to ports. The enthusiasm of transportation, downstream pulling more inactive, port coal price pressure, in the short term, whether rising or falling coal prices are restricted.

3. The downstream demand is weak, and the rise of coal price is short of support. As of May 16, 2019, coal stocks in six major power plants along the coast were 16.322 million tons, an increase of 856,000 tons over the same period last week; daily consumption was 6.62 million tons, an increase of 69,000 tons over the same period last week; available days were 26.3 days, a decrease of 1.7 days over the same period last week. From the demand side, the enthusiasm of coal purchasing in power plants is weak.

At the same time, according to the data analysis published by the National Statistical Bureau, the national thermal power generation has shown a downward trend, the hydroelectric power generation has steadily increased, and the hydroelectric output has increased. It is expected that the hydroelectric power generation will still grow at a high speed in the later period. Specifically as follows: In April 2019, the absolute power generation of 544 billion kWh increased by 3.8% compared with the same period last year, and decreased by 25.8 billion kWh annually, by 4.53%. Among them, the absolute thermal power generation in China dropped by 0.2% compared with the same period last year and by 6.59% compared with the previous year, while the absolute thermal power generation in China increased by 18.2% compared with the previous year and by 2.47% compared with the previous year, with a decrease of 27.4 billion kWh and a decrease of 82.9 billion kWh. According to the latest data released by the National Bureau of Statistics, the output of raw coal in China was 1.111 billion tons in April 2019, an increase of 0.4% over the same period of last four months, and that of imported coal was 9.999 million tons, an increase of 1.7% over the same period of last four months. The total supply of domestic coal and imported coal reached 315.3 million tons, with an average daily supply of 105.1 million tons, which is at a historical high. However, considering that the current coal enterprises need to strictly comply with the approved production capacity of the mine production and subject to safety checks and restrictions on coal pipe tickets, coal production is difficult to effectively release in the short term, pit price may continue to maintain high volatility. However, considering from the demand side, the overall power coal market is not optimistic because of the low demand.