The coastal market is in good shape in August as the high temperature hits.

Since the beginning of the year, the coastal dry bulk market has been underperforming due to multiple negative factors. Under the influence of such factors as the escalation of Sino-US trade frictions, the increase of domestic macroeconomic downward pressure and the emergence of import shocks of second-hand transport capacity last year, the market has generally shown a low volatility and wandering trend. From January to July, the average CBCFI of the Coastal Coal Freight Index was 694 points, down 21.4% from the same period last year, and the freight rates of the main coastal routes also fell sharply from the same period last year.

But with the high temperature weather in summer, the load of power grids has reached a record high, and the coastal market is expected to change its previous decline and usher in a hot market. The favorable factors are as follows:

High temperature weather drives the demand of peak season

Since late July, both north and south of China have witnessed high temperature weather processes. The Central Meteorological Observatory has continuously issued high temperature warning. In some areas, there may be high temperature and humidity "sauna days", which can reach above 40 degrees centigrade. Affected by the high temperature weather, the level of civil electricity continues to rise, which becomes the most direct reason. With the arrival of high temperature weather, the coastal coal market will really open to summer demand.

At present, most parts of the country have entered the baking mode in an all-round way. Continuous high temperature weather has promoted the rapid rise of the whole society's electricity load. The national multi-site electricity load has refreshed the historical records. Tianjin, Hebei Southern Power Network, Shandong, Jiangsu, Zhejiang, Anhui, Fujian, Liaoning, Mengdong, Xinjiang The electricity load of 10 provincial power grids reached a record high. According to the forecast of the Central Meteorological Observatory, in the future, many parts of the country will still face continuous high temperature weather. The situation of power supply and demand is tighter than that of the previous two years, and the structural contradiction between supply and demand is more prominent. The daily consumption of power plants has rebounded rapidly.

With the rise of temperature and the increase of residential electricity consumption, the coal consumption of main coastal power plants has risen rapidly in stages, reaching the highest level since this year. As of August 1, the six coastal power plants had 17.479 million tons in stock, with a reduction of 81,000 tons in circumferential ratio, a daily coal consumption of 806,000 tons, an increase of 38,000 tons in circumferential ratio, and 21.7 days in usable days, a decrease of 1.2 days in circumferential ratio.

The policy of importing coal has been tightened in an all-round way. At present, the country has more restrictions on importing coal, and the attitude towards coal import control has not changed obviously. In June, the General Administration of Customs issued a letter from the General Administration of Customs on the situation of coal import. Recently, the Development and Reform Commission sent another letter to the General Administration of Customs, requesting additional additions. We should strengthen import management, earnestly supervise the import of coal and strictly control the import of inferior coal. Entering July, the policy of import coal restriction was rebounded. Ports such as Caofeidian and Jingtang Port notified trading enterprises that import coal was not allowed to pass customs. The policy will further strengthen the restrictions on imported coal in the context of domestic supply and price weakening, and the risk of imported coal will be significantly reduced. With the coming of typhoon season, the turnover efficiency of transport capacity decreases.

In August, the southern and southeastern coastal areas of China ushered in the concentration period of typhoon, which will seriously affect the efficiency of ports and ship turnover in the southeastern coastal areas, possibly resulting in partial and periodic shortage of transport capacity. Since June, the international dry bulk market has risen rapidly. The average rent level of Panama and Dalingfen has risen by more than 60%. The price gap between domestic and foreign markets is obvious, attracting a large number of part-time vessels to be released and left to operate in the international market, diverting the available operational capacity of the market.

Overall influence

With the continuation of large-scale high temperature weather, the peak season of coal demand was officially opened, and the daily consumption of power plants rose rapidly. In this case, the demand for power plant depot replenishment increased, the pull plan was generally launched, and the market pallets began to release. Supported by favorable factors such as tighter import coal policy, lower efficiency of capacity turnover caused by weather factors and a large number of part-time capacity to foreign trade routes, the coastal market in August is expected to reverse its earlier decline and gradually rebound.