The price focus of coal market will continue to move down in 2020

In the first 11 months of this year, the supply and demand of the national coal market changed from a general balance to a loose direction. The price of coal fell steadily, the growth rate of coal consumption slowed down, and the coal market showed the characteristics of "not prosperous in the peak season and not too weak in the off season". At the beginning of this year, when the coal market is not prosperous in the peak season and not weak in the off season, the low position of the coal market is fluctuating, and coal enterprises have many mine accidents: on January 12, a huge mine accident occurred in Baiji mining industry of Yulin, which killed 21 people; on February 23, a huge safety production accident occurred in yinman mining industry of Inner Mongolia, which killed 22 people; on December 17, a coal and gas accident occurred in Guanglong coal mine of Anlong county, Guizhou Province, which resulted in 14 people died The continuous mine accidents caused a sharp rise in the attention of safety production, and the production of coal production areas was greatly affected, resulting in the supply side driving to become the leading role of coal market in the first half of the year, the price of coal rose, but the rise of port coal price was less than that of production areas.

Port coal prices were the first to fall due to low demand. Northern port spot prices continued to fall until mid June. The coal market is not prosperous in the peak season due to the failure of the expectation to spend the summer in front of the peak. In summer, due to the high level of coal inventory and small demand of power plants, the trend of coal market against the seasonal cycle is obvious. In the third quarter, a large number of low-priced imported coal entered the domestic market, and downstream users pressed prices to purchase. Although the coal price rebounded from 3 CNY/ton to 6 CNY/ton for three times, the overall trend of coal market operation still fell, and the coal price fell from 614 CNY/ton in early July to 587 CNY/ton in early October. Since then, the coal market has maintained a low hovering, relatively stable operation. In the fourth quarter, the number of imported coal decreased, which weakened the impact on the domestic market; the inventory of power plants decreased, the periodic replenishment of the warehouse, and the enthusiasm of coal pulling increased. At the same time, the south is gradually entering the dry season, and the demand for coal for hydropower is weakening; the purchase of electricity outside Zhejiang and other places has decreased, and the local thermal power generation has increased.

From the perspective of macro-economic operation, the implementation of a series of policies, such as the national short board and strong infrastructure construction, has led to the recovery of investment growth, the recovery of industrial power consumption, and the increase of market coal haulage. At the same time, due to the arrival of heating season, the coal consumption of power plants has increased significantly, and the coastal coal transportation tends to be busy. Especially in December, the coal consumption increased, the daily coal consumption of six coastal power plants further increased, and the "north to South Coal Transportation" became more busy. Although the phenomenon of high inventory of power plants still exists, the number of days available for coal storage has decreased significantly due to the increase of daily coal consumption; in addition, the role of imported coal supplement has been weakened, and the superposition of favorable factors has promoted the corresponding increase of domestic coal demand and the improvement of market demand fundamentals. The coastal coal market has changed from supply exceeding demand in the previous stage to balance supply and demand.

In the last week of November, the domestic power coal and coking coal markets were in stable operation as a whole, and the market rose in some regions. In December, the coal market may usher in a rebound, the "double high" of coal supply and demand will reappear, and the coal price will usher in a wavelet rebound. Five factors affect the coal market in 2020. For the coal market in 2020, the author believes that in the future, with the continuous release of new coal production capacity and the continuous improvement of the level of new energy development, the supply of coal market will further change to a loose direction. At the same time, there is downward pressure on the operation of coal economy. In the cold winter, the increase of coal price is limited. Next year, the coal price will not rise and fall sharply, and narrow fluctuation is the normal situation. On the whole, it is more likely that the price center of coal market will continue to move down next year. Recently, at the 7th international power coal resources and Market Summit Forum held in Guangzhou, the industry insiders predicted that the average price of cci5500 power coal price index in 2019 would be 593 CNY/ton, 61 CNY/ton lower than the average price in 2018; the price focus of power coal in 2020 will continue to move down to 540 CNY/ton, 53 CNY/ton lower than that in 2019.

The specific influencing factors are: first, national energy policy. On October 11 this year, Premier Li Keqiang chaired a meeting of the National Energy Commission, deliberated and adopted the implementation opinions on promoting high-quality energy development, and deployed the work of keeping warm this winter and next spring. Li Keqiang pointed out that according to China's coal based energy resources endowment, we should scientifically plan the coal development layout, speed up the construction of coal transmission and power transmission channels, promote safe and green coal mining and clean and efficient development of coal power, and effectively develop and utilize coalbed methane. Li Keqiang said that we should pay close attention to the work of heat preservation and supply protection. Based on the reality, we should ensure that electricity is suitable for electricity, gas is suitable for gas, and coal is suitable for coal. We should focus on the three northeastern provinces to ensure that the heating coal is used well. We should take multiple measures to ensure that the people are warm for the winter. At the macro policy level, the demand for heating coal will increase, which plays an important supporting role in the operation of the coal market. Second, the linkage mechanism of coal and electricity prices was closed, and the market mechanism of "benchmark price + fluctuation" was changed. Recently, the executive meeting of the State Council decided that from January 1, 2020, for the coal-fired power generation that has not yet realized market-oriented trading, the linkage mechanism of coal-fired power price will be cancelled, and the current benchmark feed in tariff mechanism will be changed to a market-oriented mechanism of "benchmark price + fluctuation".

According to the new deal, the benchmark price shall be determined according to the current benchmark feed in tariff of coal-fired power generation in each region, with the floating range of no more than 10% and no more than 15% respectively. The specific tariff shall be determined through negotiation or bidding by power generation enterprises, power selling companies, power users, etc. With the introduction of the new deal, the historical mission of the coal power linkage price coordination mechanism, which has lasted for 15 years, has been basically completed. The setting of the benchmark price is conducive to guiding the supply and demand of the coal market, shaping the expectation for market negotiation or bilateral contract signing. The government will not interfere with the benchmark price any more, and will speed up the clearance of backward coal power production capacity. In the future, a large number of coal power enterprises with insufficient competitiveness will be integrated or out of the game. Third, China's coal supply and demand regions have changed from the past decentralized to block centralized. China's coal supply area can be roughly divided into three blocks: according to statistics in 2018, the first coal production block is Shanxi, Shaanxi, Inner Mongolia, Ningxia and Xinjiang, with the total coal output accounting for about 71% of the total national output; the second coal production block is Shandong, Henan, Hebei, Anhui, Jiangsu and northeast provinces, with the total coal output accounting for 14.27% of the total national output; and the third coal production block is Sichuan In Chongqing, Yunnan, Guizhou, Gansu, Hunan, Hubei, Fujian, Guangxi, Jiangxi, Qinghai and other places, the total output of coal accounts for 8.3% of the total output of the country.

According to the analysis, in the future, the coal production of the second and third coal production blocks will gradually decrease, while the coal production of the first coal production block will gradually increase. It can be concluded that the situation of coal supply and demand blocking and reverse distribution in China has become a foregone conclusion. The gradual improvement and consolidation of "soft" and "hard" conditions, such as the quantity guarantee of coal production capacity, the construction of large railway transportation channel network, and the matching of policy control tools, will greatly guarantee the stable operation of China's coal market for a long time in the future. In the future, there may be regional and time-based contradictions between supply and demand of coal, but generally speaking, in the future, the relationship between supply and demand of coal will be controllable, and there will be no large-scale and long-term fluctuations in the relationship between supply and demand of coal market and large fluctuations in market coal prices. Fourth, the community consciousness of the fate of the upstream and downstream industrial chain of coal is gradually formed. Improving the medium and long-term trading system of coal and promoting the win-win and sustainable development of upstream and downstream are effective ways to promote the modernization of the governance system and governance capacity of the coal industry.

On November 19, the medium and long term contract negotiation meeting of 2020 coal steel coke was held in Nanning, Guangxi. At the meeting, eight coking coal enterprises proposed to be firm executors of the medium and long-term contract system and practitioners of deepening the supply side structural reform. They worked together to build a cooperative and upgraded version of the coal, steel and coke industry chain. At the same time, they protected the exploitation and utilization of scarce coking coal resources and accelerated the coking coal production and technological revolution. The demonstration role of China's coking coal brand cluster is prominent, and the community consciousness of the fate of the upstream and downstream industrial chains of coal is gradually formed. From the second half of 2018 to 2019, the medium and long-term contract price generally remained in a reasonable range, which effectively guided and affected the local coal and imported coal to maintain a relatively stable state. Fifth, there is downward pressure on the operation of coal economy. At the 2020 National Coal Trade Fair held on December 4, Liang Jiakun, Secretary of the Party committee and President of China Coal Industry Association, said that at present, the bottleneck problem of high-quality development of the coal industry is still prominent, the difficulty of coal emergency supply guarantee is increased, there is downward pressure on the operation of the coal economy, the synergy effect of system and mechanism innovation and supply side structural reform needs to be improved, and coal enterprise tax The problem of heavy cost is prominent, and the transformation and development of coal enterprises in old mining areas are facing many difficulties.