Coal market in August may maintain weak operating coal price fluctuation

The domestic coal market remained weak in July. The steel market declined slowly, the coke market stopped falling and rebounded, the coking coal market weakened and stabilized, and the power coal market fell slightly. With regard to the coal market in August, the market judgment of "maintaining weak coal market and narrow fluctuation of coal price" is given.

Firstly, from the macro level, although the manufacturing PMI rose by 0.3 percentage points in July, it still operates below the line of prosperity and decline, and the downward pressure of the economy is still large. At the same time, the Sino-US trade war is still cloudy, and it is difficult for the economy to recover.  

Second, downstream demand has improved. For steel coke: in July, the new steel order index was 45.8%, down 2.1 percentage points from the previous month, running in the contraction zone for three consecutive months, the demand off-season characteristics are more obvious. It is expected that with the wide range of high temperature and rainstorm weather gradually receding, the pre-restrained demand will be released; for coke, the decline will stop in late July. The rebound is expected to rise moderately in August; Electricity: Since the summer season, rainy weather has led to weak demand for electricity and coal, which has improved since the end of July. The average daily consumption of the six coastal power plants has risen from 600,000 to nearly 800,000 tons, but its sustainability remains to be observed. From the previous situation, this year. The demand for power coal in summer is generally worse than that in previous years.

Third, the pressure of environmental production restriction has been reduced. In August, Tangshan's environmental protection management and control plan relaxed the production restriction requirements of steel and coke enterprises, which was conducive to increasing coking coal consumption. From the point of view of supply, coal production has risen at a high level, and the pressure of excess supply has become prominent.

In January and June, China's coal output reached 333 million tons, an increase of 21 million tons over May, reaching a new monthly output this year, with a substantial increase in output for two consecutive months. Obviously, at the request of the relevant state departments, coal production capacity will be released rapidly in the short term.

Coal stocks remain high. As of July 31, the total inventory of the ports around the Bohai Sea was 23.43 million tons, an increase of 3.38 million tons compared with the end of last month; the inventory of the six coastal power plants was 17.49 million tons, a slight decrease of 410,000 tons compared with the end of last month. In the peak season of traditional consumption, the social inventory of coal does not decrease but rises, which indicates that the supply pressure is huge. There are tightening expectations for the coal import policy in March and July. In the second half of the year, coal imports are expected to decline significantly, but in the face of the huge domestic supply, the reduction of imports has limited effect on alleviating the contradiction of excess resources.

Comprehensive analysis, preliminary judgment: In August, the domestic coal market will maintain a weak operation, coal prices fluctuate narrowly. Specifically, the steel market maintains off-season operation, price fluctuation is weak, and the rebound of coke market will help ease the downward pressure of coking coal market. The demand for coking coal has improved slightly and the price is basically stable. The demand for power coal will remain at a relatively high level, but the rapid release of production capacity has greatly strengthened the loose supply and demand. It is anticipated that the price of power coal is also easy to fall and difficult to rise.