Coal market pressure still exists this year

On January 3, the power coal industry finance integration development forum jointly sponsored by Inner Mongolia coal trading center and SDIC Anxin futures was held in Ordos, with the special support of Zheng Shang. The experts attending the forum discussed the coal price this year. Liu Yongli, a researcher at Inner Mongolia coal trading center, said at the meeting that two aspects should be paid attention to for this year's coal market. One is that in 2019, the coal market supply agencies will shift down the price center of the leading market and stop falling after encountering the support of winter demand. In 2020, the coal market price still faces downward pressure, but the reduction is expected to be limited. Second, the diversified operation pattern of the export of the origin supports the price operation of the origin. In Liu Yongli's opinion, the factors that hinder the price decline in the near future include the small amount of production plan at the end of the year and the beginning of the year, no inventory at the pit mouth; the insufficient share of imported coal, which has been declining for months; the inventory of transfer and terminal links has been declining, and the demand for replenishment of some enterprises has been released; the decline of hydropower and the increase of demand for thermal power have contributed to the increase of coal consumption of power plants; and the demand for replenishment of parks before the Spring Festival has been released.

In terms of supply, Gao Mingyu, chief energy analyst of SDIC Anxin Futures Co., Ltd., believes that after five consecutive years of negative growth, the coal mining and washing industry Fai increased by 5.9% year on year in 2018, the first time it has risen. From January to October 2019, the FAI of coal mining and washing industry increased by 26.9% year on year. Data shows that from January to October, the output of raw coal in China increased by 4.5% year on year; it is estimated that the output of generalized power coal in 2019 will increase by 2.2% year on year. Taking into account the launch of new capacity, the withdrawal of capacity of about 25 million tons and the low base in the first half of the year, it is estimated that the production will increase by 2.9% year on year in 2020. The peak of environmental protection and security inspection has been verified, and the marginal impact is gradually weakening. "In the future, supply will be more relaxed." Gao Mingyu said that the growth of domestic production is expected to be on a year-on-year basis, with the supply of power coal expected to increase by 2.7% this year. The coal consumption recovery of thermal power is offset by the negative growth of building materials and bulk coal consumption. It is estimated that the demand for power coal, including exports, will increase by 1.4% year on year. However, in 2018, the active replenishment of inventory will transit to the passive accumulation of inventory in 2019. This logic will continue in this year. It is estimated that the average price of this year is about 540-550 CNY/ton, and the fluctuation range is 500-600 CNY/ton.

According to Liu Yongli, the factors affecting market operation in 2020 can be divided into two aspects. In terms of negative factors, the supply of domestic coastal market turns loose and will continue in 2020. The pressure of global economic operation is still great, the growth rate of domestic macro-economy slows down, and the demand for coal consumption may grow at a low speed this year. After the production is stable and the transportation bottleneck is eliminated, the downstream power plant inventory reduction conditions are available, which limits the procurement pace. The international coal market is surplus, and the price advantage of imported coal is still large. At the same time, the approval of new domestic production capacity is accelerated, and the output is increased. As for the positive factors, Liu Yongli believes that the market pressure is still on, the coal enterprises in the origin market still need to forge ahead, the transformation volume of the origin continues to grow, and the coal chemical products still have profits. At the same time, the domestic trans regional power transmission increases year by year, and the direct sales have growth space and profits. Therefore, the operation pressure of coal market continues in 2020, and the market price still has a great probability of going down after the Spring Festival. The approximate rate of port market coal price fluctuates in the green range, and the annual coal price fluctuates between 500-600 CNY/ton.