Short-term stabilility and rebound of power coal in the medium term is negative

After entering late June, the power coal market has rebounded obviously under the support of multiple factors. But as a whole, the improvement of the short-term market does not mean the improvement of the overall market demand. The author does not think that the rebound peak of spot peak season can reach the level of 640 yuan per ton at the end of March, and is expected to be between 610 yuan and 620 yuan per ton. In mid-late July, market prices are expected to oscillate again. After entering late June, the power coal market rebounded obviously under the support of multiple factors. On June 25, the open warehouse price of 5500 large cards in the North Port of the Easy Coal Index was 602 yuan per ton, up 8 yuan from the beginning of the month. Under the expectation of peak season, the structure of coal supply and demand has improved, and the market price has stopped falling and stabilized.  

Firstly, from the domestic supply point of view, the management of super-capacity production in the production area and the reduction of market household transport volume make the import volume of northern ports decrease significantly. On April 1, the General Office of the People's Government of Inner Mongolia Autonomous Region issued the Implementation Plan of the Three-year Action Plan for Promoting the Adjustment of Transport Structure in Inner Mongolia Autonomous Region (2018-2020). It is proposed that by the end of 2020, Inner Mongolia Expressway will carry out the weighing test at toll station entrance in an all-round way. The average rate of illegal overload of Expressway freight vehicles is not more than 0.5%, and the overload of ordinary highway freight vehicles will be effectively curbed. Under strict inspection, the coal efficiency on the production platform is reduced and the transportation rhythm is slowed down. At the same time, railway transport capacity has turned loose since this year. Under the background of long-term inversion between pit mouth and northern port prices, marketers have abandoned the practice of losing money to send "Baodao Railway Plan". Since mid-May, the market household transport volume has decreased significantly, and the import volume of the northern port has dropped dramatically, from an average of 1.9 million tons per day to 1.75 million tons, which has tightened the supply of coal resources in the port market.

Secondly, under the circumstance of limited upstream inflow, the port dredging behavior started at the end of May, which further shifted the inventory of the northern port to the port of the Yangtze estuary and further reduced the coal stock in the market. After the opening of the northern port, the stock of Qinhuangdao port and Caofeidian port decreased significantly. On June 25, the stocks of Qinhuangdao Port and Caofeidian Port were 5.38 million tons and 3.82 million tons, respectively, which were 1 million tons and 1.3 million tons less than the high level in late May. The total inventory of each port area in the northern port is 2.08 million tons, which is about 3 million tons less than the high level in late May. In addition, the National Energy Group launched the "Hundred Days'Battle" in Huanghua Port, aiming at overfulfilling the target of sewage coal in three months, and further shrinking the coal stock in the northern port market.  

Thirdly, the contraction expectation of imported coal was strengthened, which made the bullish sentiment of the market warmed up obviously. Coal imports grew by 5.6% in the first five months of this year and 22% in May. In this case, market expectations for the next contraction in coal imports are further enhanced.

Finally, near the peak season, the daily consumption of power plants is rising in stages, and the market is boosted by the muffler of traders. Since mid-June, the daily consumption of coastal power plants has gradually recovered. From the data of previous years, the daily consumption level of coastal power plants will begin to rise significantly in early July, and the peak season is expected to begin to warm up. Due to the continuous inversion of coal prices between Hangkou and North Port in the first half of this year, traders are generally in a state of floating and losing, and their willingness to sell goods before the peak season is low.

Therefore, in the peak season expectation, the demand for coal resources in the market has improved, coupled with strong bullish expectations, short-term prices will maintain a strong trend of oscillation. But in the medium term, the overall supply and demand situation in the coastal market is not optimistic.

First, Xi'an Railway Administration has recently further lowered the freight charges of some lines, and the latter market delivery is expected to improve. Among them, the freight rate from Cao's Ground to Cao's West was adjusted from 224.2 yuan per ton to 161.43 yuan, down 62.77 yuan, a 28% decrease; the freight rate from Shenmuxi to Cao's West was adjusted from 214.42 yuan per ton to 162.96 yuan, down 51.46 yuan, a 24% decrease; the freight rate from Zhongji to Cao's West was adjusted from 210.94 yuan per ton to 189.85 yuan, down 21.09 yuan, a 10% decrease. The reduction of freight will effectively improve the inversion of market shipping costs and increase the supply of market resources.

The second is that the decline of port inventory around the Bohai Sea has not been digested, but actually transferred to the Yangtze Estuary market. On June 21, a total of 8.08 million tons of stocks were held in the main seven ports of the Yangtze Estuary, a new high under this statistical caliber, and the stocks of power plants were also at a high level. On June 26, the total inventory of coastal power plants in the Six Power Generation Groups was 17.56 million tons, with 29.1 days available.

Third, from the consumer side, the daily consumption of the coastal market is still uncertain. In May, the PMI of manufacturing industry fell below the dividing line between prosperity and decline, and the growth rate of fixed assets investment declined again, which shows that the pressure of macroeconomic downturn in China is still great, resulting in a relatively obvious downward trend in the growth rate of social electricity in coastal areas. In addition to the impact of the "dual energy control" policy, the substitution of foreign electricity and new energy for local thermal power has increased, which has led to negative growth of thermal power growth in some provinces (autonomous regions, municipalities directly under the Central Government). Overall, the improvement of coal supply and demand structure in the short-term market does not mean the improvement of overall market supply and demand. The author does not think that the rebound peak of spot peak season can reach the level of 640 yuan per ton at the end of March, which is estimated to be 610 yuan to 620 yuan per ton. In mid-late July, market prices are expected to oscillate again.