Signs of 'High Season' in Power Coal Market

Recently, under the influence of high temperature weather, daily consumption of six major power plants along the coast has increased significantly, rising to more than 750,000 tons, a new high since mid-January this year, and the power coal market has finally shown signs of a "peak season".

China Coal Resources Network data show that as of July 25, the daily consumption of the six major coastal power plants was 768,000 tons, an increase of 38,000 tons compared with the previous day, an increase of 143,000 tons over the same period last week, but still a decrease of 0.5 million tons over the same period last year.

With the soaring daily consumption, the available days of coal storage in power plants have dropped significantly. As of July 25, the available days of coal storage in six coastal power plants have decreased by 22.9 days, 0.9 days compared with the previous day, 5.5 days less than the same period last week, and 3.7 days more than the same period last year.

The decrease of coal storage is also obvious, which is more than 1 million tons less than the previous peak of 1863, but still in the high of 17.5 million tons.

As of July 25, the coal reserves of the six coastal power plants were 17.56 million tons, an increase of 201,000 tons over the previous day, a decrease of 203,000 tons over the same period last week, and an increase of 26.82 million tons over the same period last year.

It is known that due to the rising daily consumption of coastal power plants, sellers expect future market growth and offer firm or wait for shipment next week. But the demand for release of downstream power plants is less, the waiting time for high daily consumption is longer, although the number of inquiries increases, but most of them are based on Changxie coal delivery, the market coal purchasing willingness is not strong, the pressure price is low, the actual transaction is still cold, and the overall market turnover is less.

Current (CV5500) Mainstream quotation is about 590-595 yuan, (CV5000) Mainstream quotation is 510-515 yuan.

On July 24, the latest CCI power coal price of China Coal Resources Network showed that CCI5500 power coal price quoted 593 CNY/ton for three consecutive periods, with a steady operation, down 9 CNY/ton from the same period last month; CCI5000 power coal price quoted 512 CNY/ton, up 1 CNY/ton from the previous period, down 11 CNY/ton from the same period last month.

According to the China Meteorological Network, in the next three days, high temperature weather above 35 degrees Celsius will occur in Western Liaoning, central and southern North China, Huanghuai, Jianghuai, Jianghan, Jiangnan and South China, with the highest temperature above 37 degrees Celsius in parts of southern Hebei, western Huanghuai, Jianghuai and central and Western Jiangnan.

In this case, it is expected that the coal consumption of power plants in the later period will be further increased, which will boost the replenishment inventory expectation and spot price. At present, coal stocks in power plants and ports are on the high side, while coal stocks in pithead are on the low side. It is difficult for the price of power coal to trend because of the inventory structure. In addition, the release of advanced production capacity is significantly higher than expected, the supply side is stable, and the price of Changxie Coal in large coal enterprises will be in a green range under the influence of policy, which is not conducive to the rise of power coal prices.