Power Plant Inventory Decline Peak Loop in Coastal Coal Market

With the increasing daily consumption of power plants in coastal areas and the approaching peak of coal consumption in summer, the market is gradually active, and the number of ships pulling coal to harbor is increasing. At the same time, coal storage in power plants has finally declined; as of June 10, 86.64 million tons of coal were stored in key power plants nationwide, down by 500,000 tons from the end of May, with 22 days available. Six major power plants along the coast have a total coal storage of 17.24 million tons, and the available days have been reduced to 25 days. With the formal beginning of peak season, the demand of coal market continues to be optimistic, coal prices at ports are supported, and the coastal coal market finally turns around.

1. The days available for coal storage in power plants will decline sharply when the enthusiasm for downstream haulage increases and the number of ships dispatched increases

the daily consumption of power plants recovers. In order to cope with the upcoming peak of coal consumption, especially in the case of high temperature and little rain which lasts for many days, the daily consumption of coastal power plants will remain high. Therefore, some power plants in coastal areas need to continue to increase the number of coal storage, promote the enthusiasm of coal haulage, and the number of coal haulage ships arriving at northern ports is increasing.

Although coal transportation is busy and in full-load operation at major ports around the Bohai Sea at present, there are not many anchor ships and forecast ships, and the phenomenon of waiting for cargo is not serious. With the continued improvement of the coal market, it is expected that the follow-up forecast ships will show a growth trend.

2. With the decrease of port yard stocks and the support of coal price influenced by environmental protection, safety, black cleaning and evil removal, the stocks of many coal yards in Yulin and Inner Mongolia increased, while the control of coal pipe tickets was strict, and some coal mines stopped production. In addition, with the decrease of pithead coal price in the earlier period, some coal mines were not actively shipped, which had an impact on coal production and transportation. At the same time, shipment efficiency of Qinhuangdao, Huanghua and Guotou Jingtang ports around the Bohai Sea has been improved and coal turnover has been accelerated; however, due to the inverted shipping cost, the upstream shipping situation is not ideal, the daily shipment volume of Daqin Line and Mengji Line has decreased, and the amount of coal transferred out is higher than that transferred in, which has led to the decline of coal storage in the port. With the arrival of the traditional peak season, the demand of coal market is optimistic. But at this time, the overall storage of coal around the Bohai Sea port decreased, which supported the price of coal to remain strong; however, influenced by the national policy, the price of coal in the port market will not rise significantly. It is expected that in summer, the price of coal in the port market will remain between 590-610 CNY/ton, with little increase or decrease.

3. Inventory of power plant and second-way port will decrease slowly

Under the circumstances of increasing daily consumption of power plant and resuming downstream haulage enthusiasm, the number of arriving coal-drawing vessels will increase sharply. This is in sharp contrast to the decrease of import volume along Daqin and Mengji lines. After the decrease of coal storage in the ports around Bohai Sea, some high-quality coal species may appear the phenomenon of equal cargo, which promotes the active atmosphere of coal trading.

With the continuous high temperature weather, the daily consumption of power plants continues to increase. It is expected that the inventory of power plants and second-way ports will decline slowly, and the pressure of supply exceeding demand in the coal market will be eased in the early stage.