Coking coal: policy dividend subsides and price focus moves down

After three years of policy dividend in 2016-2018, the coking coal market enters 2019. The contradiction between market supply and demand begins to highlight, the policy dividend of supply side structural reform begins to fade, and the price focus begins to move down, especially from the fourth quarter. The situation of coking coal market in the later period is still severe. On the domestic side, 2012-2015 is the industry low period of coking coal market, in which the market price of coking coal fell to the bottom at the end of 2015. 2016-2018 is the policy bonus period of coking coal market, with prices rising all the way and staying high. After entering 2019, the policy dividend began to fade, the contradiction between market supply and demand began to highlight, and the price focus began to move down. Taking Jining gas refined coal as an example, the price dropped to 540 CNY/ton at the end of 2015. Since 2016, affected by the supply side structural reform, the situation of market supply exceeding demand has been effectively alleviated, and the price has been rising steadily, from 540 CNY/ton in 2015 to 1200 CNY/ton at the end of 2018, an increase of 122%. After entering 2019, the price began to decline at a high level, from 1200 CNY/ton at the beginning of the year to 950 CNY/ton at the beginning of November, a decrease of 17.4%.

In the international aspect, the FOB long-term price of Japan Australia international hard coking coal quarter has a great influence on the international coking coal market. Under normal circumstances, Nippon Steel and Australian coking coal suppliers implement quarterly contract price, which is the vane of international coking coal price. The quarterly contract price of Australian coking coal before 2017 has always led the trend of international coking coal market. However, due to the sharp rise and fall of China and the international coking coal market in 2016, the quarterly long-term cooperative pricing mode of Japan Australia international hard coking coal was cancelled and changed to the market-based pricing mode. The trend of spot price in international coking coal market is basically in step with that in domestic coking coal market. At the end of 2015, it was also the low point of international coking coal market price. The supply side structural reform of China's coal market started in 2016 also boosted the international coking coal market.

From 2016 to 2018, the international coking coal market price continued to run at a high level. After entering 2019, due to the weakening of China's coking coal demand, international coking coal prices also began to decline significantly. Review of domestic coking coal market trend. During this period, the coking coal market price showed a sharp decline, mainly due to the serious overcapacity of the coal industry in 2012-2015, the phenomenon of supply exceeding demand in the industry was obvious, and the coal price fell all the way. In 2015, it reached the bottom, the coal industry was struggling, and the industry shrank by more than 80%. In 2016, the price of coking coal kept rising. Taking Jining gas refined coal as an example, the price of coking coal increased from 465 CNY/ton at the beginning of 2016 to 1030 CNY/ton at the end of December 2016, with a total increase of 565 CNY/ton, or 121.5%. During this period, the price of coking coal continued to soar, mainly because since the beginning of April 2016, the coal industry began to implement the supply side structural reform.

The coal mine must organize production in strict accordance with the approved production capacity, with a working day of 276 days. Affected by this, the coal production began to decline, the supply began to tend to be tense, and the price began to rebound. In 2017-2018, the coking coal market price is mainly high, and the space for price fluctuation is relatively limited. This is mainly because after the coal supply side structural reform in 2016, the backward coal production capacity has been gradually withdrawn from the market, the phenomenon of supply exceeding demand in the coal industry has been gradually eased, and the operation environment of the industry is more rational and healthy. After entering 2019, the supply and demand pattern of coking coal market began to change, the contradiction between market supply and demand began to appear, the price center began to decline, and the market as a whole was weak. Due to the frequent price fluctuation in Shandong clean coal market, which is generally the wind vane of price adjustment in the national coking coal market, the price of gas clean coal in Jining District, Shandong Province, for example, dropped from 1150 CNY/ton at the beginning of 2019 to 950 CNY/ton at the beginning of November 2019, with a cumulative drop of 200 CNY/ton in the year, a drop of 17.4%