Why did Shenhua Monthly Long-term Bargain Steadily Decline in August?

According to market news, Shenhua Group recently announced that in August 2019, the price of the Monthly Long Association has dropped steadily.

August 2019 Shenhua Monthly Changxie Price (compared with before July 31, 2019): 1-5500:599 (unchanged), 2-5200:566 (unchanged), 5-5000:514 (-10), 3-4800:493 (-10), 4-4500:463 (-9), 5-4300:442 (-9), 1-5500:599 (unchanged), and 3-4800:493 (-10), respectively. Buy Carbon 2-5200:566 (unchanged), Buy Carbon 5000:514 (-10), Buy Carbon 3-4800:493 (-10), Buy Carbon 4-4500:463 (-9), Buy Carbon 5-4300:442 (-9). Special coal price (spot price, August 1-7, 2019, compared with before July 31, 2019): ultra-low ash: 654 (-11), Shenyou 1:644 (-11).

Among them, 599 CNY/ton of 1-5500 big-calorie coal was purchased, which was the same as last month, while 10 CNY/ton to 514 CNY/ton of -5000 big-calorie coal was purchased.

Recently, due to the continuous high temperature weather, coal consumption of downstream power plants has increased significantly, the characteristics of coal market in the peak season have appeared, market sentiment has improved, and port coal prices have increased slightly.

The Central Meteorological Observatory continued to issue high temperature yellow warning at 18:00 on July 31. It is expected that the highest temperature will reach 35 degrees Celsius in the daytime of August 1 in southern Huanghuai, Jianghuai, Jianghan, Jiangnan, Eastern Hebei, southwestern Shanxi, western Inner Mongolia, central and Northern Gansu and southern Xinjiang. Among them, the highest temperature will reach 35 degrees Celsius in eastern Jianghan, central and Western Jianghuai, and the Middle East in southern Jiangnan. The highest temperatures in some areas, such as the southern Xinjiang Basin, the Turpan Basin and other areas, are 37-39 C, with local temperatures above 40 C.

High temperature weather has led to a sharp increase in civil power consumption, and the daily consumption of major power plants along the coast is high. Data show that as of August 1, the average daily coal consumption of the six coastal power plants was 806,000 tons, an increase of 38,000 tons over the same period last week, with a total inventory of 17.479 million tons, a decrease of 81,000 tons over the same period last week, and the available days for coal storage of 21.7 days, a decrease of 12 days over the same period last week. Under this circumstance, the large release of electricity and coal consumption prompts some small and medium-sized users to open the replenishment plan ahead of time, which leads to a better market sentiment than before.

However, in the case of high inventory at terminal and port side, Changxie coal still dominates the power plant, and the demand for coal in the market is weak, and the spot purchasing is still on the lookout. At the same time, the trend of regional differentiation of coal price also hinders its further rise. High inventories at terminals and ports play the role of reservoirs, hedging and blocking the upstream transmission of consumer demand to a certain extent, while coal prices in major production areas are still declining in a large area, and also suppressing coastal coal prices.

It is known that the quotation of some traders in ports has risen tentatively, but the downstream demand is still weak, the buyers and sellers are in a state of deadlock, the turnover is scarce, and the overall market is running steadily. (CV5500) mainstream offer 595-600 yuan, (CV5000) mainstream offer 515-520 yuan.

CCI power coal price shows that the CCI5500 card quotation ended six consecutive periods of stable operation on July 30, up 2 CNY/ton from the previous period, but remained stable again on July 31; CCI5000 cards remained volatile upward, closing at 516 CNY/ton on July 31, which was the same as the previous period, with a recent cumulative increase of 5 CNY/ton. At present, the sales situation of coal mines in the producing areas is more stable than that in the earlier period, the overall inventory level is in the middle and low level, and the start of coal mines is more stable than that in the earlier period. The main reason for the stable production is that most of the coal mines in the producing areas have normal production except for some coal mines suspended production in the earlier period affected by accidents and flood season. Salesmen think that the demand for inland power plants is still acceptable, while the demand for ports is weak, TRADERS'enthusiasm for purchasing is not high, coal price rise is difficult to support, most coal mines' normal inventory is low, and prices will remain stable temporarily or adjust slightly.

On August 1, 20 coal mines in the main producing areas were surveyed, including 4 coal mines with rising prices, with an increase of 5-10 CNY/ton, 8 coal mines with a decrease of 5-30 CNY/ton, 7 coal mines with stable prices, and 1 coal mine without production. On the port side, the northern port traders' quotations rose tentatively, and some of the quotations CCI rose by 2-3 yuan, but the downstream demand was still weak, the buyers and sellers were in a stalemate state, and the transaction was scarce.

Therefore, in the overall market showing a weak and stable operation, Shenhua and other large coal enterprises in August, the price of the CPPCC is also expected to decline steadily.

As for the price trend of power coal in August, the latest research report of Huachuang Securities points out that on the quarterly level, power coal is in the stage of low import and export, small real estate cycle is facing inflection point, and industry is still actively de-stocking, resulting in obvious pressure on power production and consumption, and the demand for power coal in peak season is significantly lower than expected. In the relationship between supply and demand, the consumption of malignant stocks in the previous mine disaster reappeared in the depressed demand. Coal users basically fully grasp the initiative of pricing. The price center is facing a quarterly decline in Q3. Q4 depends on whether the price is protected in policy. At the monthly level, with the El Nio effect fading at the end of July, the demand margin improved. However, due to the expectation of high inventory and the end of peak season, the procurement margin improvement of coastal power plants to Beigang and inland power plants to pit entrance was not enough to support an effective rebound, and the power plants basically took over the procurement rhythm. Or the rhythm of port price is at the stage of passive depot. Price Forecast: It is expected that August prices will show a downward trend of pithead + port resonance. Spot prices are expected to fall near 560 CNY/ton in the short term. The monthly range is estimated to be 560-600 CNY/ton, and the central axis is 580 CNY/ton. This will continuously generate fluctuations and arbitrage space between coal and the monthly long-term association.