Will the price of coal fall below 580 CNY/ton?

On the one hand, the prices of some coal mines in Yulin area of Shaanxi Province were lowered by 20 CNY/ton yesterday. Among them, the prices of Hanglaiwan and Jinjitan coal mines were lowered by 20 CNY/ton, while those of Mahuangliang coal mine were also lowered by 20 CNY/ton. On the other hand, the prices were lowered because most coal mines are now in the stage of increasing production, and the coal output is increasing gradually. On the other hand, due to the lower start-up rate of downstream coking enterprises, weak demand, loose supply and demand pattern, resulting in pressure on mine sales, price downward. The overall coal price in the Ordos region of Inner Mongolia has also maintained a steady downward trend. Influenced by the continuous downward trend of power coal in the northern ports, producer traders are less motivated to transport, coal mine inventory has increased, and price downward pressure is high. Some mines have lowered their prices by 5-10 CNY/ton this week. In addition, on August 7, the State Administration of Coal Mine Safety issued a circular requiring all coal mines throughout the country to start a major safety inspection, which will take place from late August to the end of September 2019. More attention should be paid to the impact of the security inspection on coal mine production.

On the port side, port closure continued, transfer operations were limited, inventory increased substantially. The four port areas around the Bohai Sea had 25.472 million tons of storage, an increase of 964,000 tons compared with yesterday, and the pressure of port evacuation increased in the later period. Affected by typhoon weather, the loading and unloading of ships at various ports in the north are affected to a certain extent. The second, seventh and ninth companies of Qin Port are blocked and all unloading and loading operations are stopped because of the strong convective weather caused by typhoon. Huanghua Port is under continuous blockade with wind force at anchorage level 9. The blockade is expected to last until 13-14 days, and there is no ship plan. Taking Qinhuangdao Port as an example, as of August 12, the coal import and export volume were 267,000 tons and 167,000 tons respectively, and the inventory increased to 6.43 million tons. In addition, due to the influence of rainwater weather, the phenomenon of coal cards dropping in port is serious, and the calorific value of some kinds of coal declines about 100-200 calories.

Downstream power plants, inventory is still high, port closure is superimposed in the process of depot, power plants have basically no procurement demand. As of August 13, coal stocks in six coastal power plants decreased by 554,000 tons compared with the same period last week; daily consumption is 709,000 tons, an increase of 24,000 tons compared with the same period last week; available days are 237 days, up from the previous period. Decreased by 1.6 days in the same period of the week. At the same time, the quality of water coal has declined and the quotation of traders has been under pressure. The mainstream quotation of power coal (CV5500) is 580-585 CNY/ton, and the mainstream quotation of power coal (CV5000) is below 510 CNY/ton. In the aspect of importing coal, domestic terminal stocks are high recently, coupled with tightening import coal policy, poor demand for imported coal procurement, and traders are mainly on the lookout, with less operation. It is understood that in the 32nd week of 2019, China's foreign trade coal arrived at port at 6.69 million tons, a 1.5% decrease over the previous week.

In the later period, due to the continued decline of northern port prices, poor procurement demand of platform traders, fewer coalmine tractors, and pressure on coal mine sales in the short term, the overall price is expected to fall steadily and moderately. After autumn, the temperature tends to cool gradually, and the duration of "Autumn Tiger" is limited. It is estimated that the daily consumption of power plants will not increase much. At present, the daily consumption of six power plants in the downstream coastal areas will drop to less than 700,000 tons, and the demand will not be supported in the short term. It is expected that coal prices in northern ports will continue to decline, and the possibility of price falling below 580 CNY/ton is greater.