If the NDRC starts again, the coal price will not move!

Looking forward to this issue

Recently, market news said that six major power generation groups are jointly inviting the Development and Reform Commission to coordinate the signing of medium-term and long-term contracts for power coal in 2019, demanding the lifting of the bundling sales policies of the four major mines (China Coal, Tongshan Coal, Shenhua, Yitai). In the current situation of weakening power coal market as a whole, if this policy can be lifted, the procurement demand of large coal enterprises on the spot market will be greatly reduced, which will undoubtedly become the last straw to crush coal prices!

Today think tank learned that facing the joint submission of the six power generation groups, the NDRC proposed two alternative paths to the coal mine side: one is to reduce the annual price of the long association from 535 CNY/ton to 520 CNY/ton; the other is to reduce the monthly price of the long association of power coal to yellow interval, that is, to reduce the price of the big power coal of 5500 cards around the Bohai Sea port to less than 600 CNY/ton. Faced with the recommendations of the Development and Reform Commission, the relevant coal enterprises are currently under discussion. It can be foreseen that large state-owned coal enterprises will take the lead in price reduction in the future.

According to today's think tank, the above information is true, and the NDRC is not only to reduce the annual long-term and monthly long-term price to the Yellow range, but also to reduce the overall price of power coal, including spot market prices. At present, the spot price of 5500 Kcal power coal around Bohai Port is about 610 CNY/ton, which is not far from the Yellow range.

Why does the National Development and Reform Commission demand that the price of power coal be lowered as soon as possible at this time? Today think tanks believe that an important reason should be related to the country's demand for a further reduction in electricity prices. The government work report of the State Council in 2019 made it clear that the reform of electricity market should be deepened, the additional charges of electricity price should be cleared up, and the cost of electricity consumption in manufacturing industry and commerce should be reduced by another 10%.

In 2018, the state mainly reduced the charges and transmission and distribution prices of power grid links. In order to complete the task of reducing the average electricity price of industry and Commerce by 10%, some provinces also adopted the method of eliminating the subsidy of desulfurization and denitrification, which in fact reduced the electricity price of power grid in disguised form. And the country hopes to promote the overall reduction of electricity prices through bidding, which requires that coal-fired costs should not be too high, otherwise power generation enterprises have no power to obtain electricity generation indicators by reducing electricity prices on the grid.

Of course, to solve the problem of high coal price fundamentally, we still have to rely on increasing the effective supply of the market. At present, with many uncertainties in the international market, think tanks today think it is necessary to continue to increase domestic power coal production, especially in the main production areas of Shanxi, Shaanxi and Inner Mongolia. Otherwise, it will be difficult to control the price of power coal in the Yellow zone. After all, the peak of summer power consumption will soon arrive.