Weak End in the First Half of the Year, How to Develop in the Second Half Year

Looking at the market in the first half of 2019, the trend of power coal price is still greatly affected by environmental protection and safety inspection. Shortly after the weakness entered 2019, Shenmu accident happened in Shaanxi area. The scope of local production stoppage has gradually expanded, and it is in the sensitive period of stockpiling goods before the Spring Festival. Quickly increased, the cumulative increase can reach 30-200 CNY/ton, until the eve of the Spring Festival, stockpiling work is basically over, rising sentiment before cooling down, market prices stepped into the Spring Festival. After the festival, coal prices began to fall, and some coal mines returned to the prices before the Shenmu accident. But at the end of February, there was another Yinman accident in Inner Mongolia. With the approaching of the March 2nd meeting and the re-escalation of environmental security, the progress of coal production almost stagnated. Under the tight supply, coal prices were pushed up all the way again before the Spring Festival. Until the end of the two sessions, the speed of resumption of production and the coming of off-season, coal prices again fell to the price before the rise, weakly into the traditional off-season in April, when the heating period has ended, the demand of downstream power plants is flat, although Daqin Line entered the maintenance period, it has little impact on the market, the main actors below the market, to the middle of the month, along with the Shaanxi region. Coal pipe tickets are becoming more and more tense, many coal mines can only operate at low output, or even temporarily suspend production and marketing, resulting in a shortage of coal supply in the region. Shanxi local coal prices go up, which also drives sales in Inner Mongolia. This wave of increase has been affected by active purchasing and security inspection of downstream customers until early May, with a cumulative increase of 30%. - About 85 yuan per ton, the price is too high for some downstream customers to bear, and the weak demand situation in the off-season under the cover of supply-side tension has begun to show gradually. Under the pressure, the prices of many coal mines have dropped about 5-40 yuan per ton, and the market has weakened. Then in June, because the stocks of power plants and ports are far higher than the historical average, the daily consumption growth rate is relatively slow, the demand is not high, and the downstream customers are conflicting with high prices, so although the situation of resumption of production is still not as expected, the whole June market is running in a weak position, and coal prices in the main production areas have been gradually lowered, basically by the end of the month. Falling back to previous year's prices, the weak end of the first half of the year. Forecast for the second half of the year:

Macro aspect: The Sino-US trade war in the first half of the year has not yet had a definite result, and under the background of the slowdown of world economic growth, the strong US dollar and the great external pressure, although China's economy continues to maintain a steady and positive trend, there is also a slowdown phenomenon of growth. The instability of macro market makes domestic market. Market sentiment is low, downstream enterprises start to reduce, coal consumption has also been reduced.

Supply: At the end of June, the State Development and Reform Commission and the Energy Administration jointly issued the Notice on Completing the Work of Energy Summer in 2019, proposing to accelerate the release of high-quality coal production capacity. Although no coal mine has yet shown signs of loosening the coal pipe ticket, it is expected that even if there is loosening, it will mostly be aimed at coal mines with high-quality production capacity. It is expected that the release of the supply side will take some time, and will be tight in the short term. At the same time, the environmental security inspection has become normal. October will also usher in the 70th anniversary of the founding of the People's Republic of China. The environmental security inspection in various provinces and municipalities is expected to be more stringent, and the release of the supply side will be hindered. On the import side, the Australian coal import policy is still unclear, but it is reported that the number of Chinese ships and coal shipments from Newcastle port have increased, and the annual import volume is expected to be levelled.

Demand: Although hydropower is in force in July and August, the peak season demand can also support coal prices to a certain extent. After the peak season, the market demand will weaken for a period of time. After the end of the winter heating season, the daily consumption of electricity will further increase, and the demand for power coal will rebound. In conclusion, Zhongyu Information predicts that coal prices will be relatively stable in the second half of the year, that there will be a limited increase under the policy of guaranteeing supply and stabilizing price in peak season, that there will still be a narrow fluctuation, that there will be no clear trend in low peak season, or that it will gradually return to the reasonable range of the market, but the dynamic impact of safety, environmental protection and accidents on coal prices will become more important. It also needs attention.