Adjustment of coal power industry aggravates the weak foundation

The situation of safety inspection in the production area is severe, and snowfall has been intensified. Private coal has the intention to stop production in advance. Meanwhile, the rapid consumption of port inventory has intensified the market's worries about supply, and the quotation is stronger. However, the demand gradually weakens, mainly to digest the inventory, the enterprise purchases cautiously, and the price of power coal is weak. Since the fourth quarter of last year, the short-term supply has been tightened, and the safety inspection in coal mine production areas has been further strict, which has restricted the enthusiasm of coal mine production. In recent years, heavy snow has fallen in Shaanxi, Inner Mongolia, Shanxi and other places, and the export of coal is not smooth. Private coal mines are willing to suspend production in advance and have holidays, and the supply of production areas is further tightened. From the point of view of the port inventory, the winter climate factors restrict the railway transportation capacity, the port quotation hangs upside down, and near the Spring Festival, the enthusiasm of traders for shipment decreases, and the port inventory drops sharply, among which the coal inventory of Qinhuangdao Port drops rapidly to the level below 5 million tons, down about 700000 tons compared with last weekend.

The decline of port inventory further aggravates the expectation of tight supply, forms a strong boost to the market, and increases the willingness of traders to raise prices. However, under normal circumstances, most of the private coal mines will also be shut down for holidays in mid January. Although the recent snowfall has brought the shutdown ahead of schedule, it has limited impact on the supply. In the later stage, we need to pay more attention to the coal mine's resumption after the Spring Festival, which may support the market in the near future. Medium term analysis: according to the production data of the first 11 months of 2019, the domestic raw coal production is growing rapidly, the high-quality production capacity is released rapidly, the supply capacity is enhanced, and after the normalization of safety inspection, the marginal role of supply constraints is weakened, and the supply situation tends to be stable. The demand peak season is not prosperous due to the influence of warm winter. In recent years, the temperature in most areas of South China and South China is obviously on the high side, the pressure of heating power is not large, and the industrial enterprises are going to stop production and have holidays, so the power load is reduced. As of January 8, the daily coal consumption of six coastal power plants has dropped to 701000 tons, with a significant decline year-on-year and month on month.

According to the analysis of historical data, the daily coal consumption will plunge rapidly in the week before the Spring Festival, and the demand for coal will not be prosperous due to the Spring Festival or peak season. According to the inventory analysis, the coal inventory of the power plant has also been consumed. As of January 8, the coal inventory of six coastal power plants was 15.2 million tons, and the weekly to environmental ratio decreased by about 280000 tons, but it was higher than one million tons on a year-on-year basis. The available days of coal inventory were more than 21 days, basically covering the Spring Festival. The power plant mainly digested the inventory. In addition, in January, the import restrictions were released, the power plant actively carried out import coal bidding, planned to expand the import volume in the first quarter, and the demand for domestic trade coal procurement was limited. At the end of December last year, the first dam section of the arch dam of Wudongde Hydropower Station was first poured to the top, marking that the construction of the main works of Wudongde Hydropower Station will enter a new stage. Wudongde Hydropower Station is the fourth largest hydropower station in China with a total installed capacity of 10.2 million kilowatts. It is expected that the first batch of units will be put into operation in July 2020 and all units will be put into operation in 2021. In addition, the construction of Baihetan Hydropower Station, the second largest hydropower station in China, is progressing smoothly. The installed capacity of the hydropower station is 16 million kilowatts, and it is expected to be put into operation in July 2021.

Hydropower will grow rapidly in the next two years. At the same time, in the near future, nuclear power, offshore wind power, solar thermal power and other projects have been approved, and clean energy has developed rapidly, which will further occupy the market share of coal power. On the other hand, competition in the coal-fired power industry has intensified. Since the national development and Reform Commission issued the guiding opinions on deepening the reform of the formation mechanism of coal-fired power generation on grid price in October 2019, some provinces have issued the coal-fired power generation on grid price scheme. Except for a small number of provinces' adjustment in the detailed rules, most of the other provinces' schemes are consistent with the guiding opinions of the national development and Reform Commission. General industrial and commercial power The price will not go up but down. Therefore, the pressure of coal and power industry is increasing, which forces the adjustment of industrial structure. In this context, coal power group is more cautious about upstream cost side procurement, especially at present, large-scale power enterprises have not reached an agreement on the annual long-term benchmark price negotiation, and the cautious situation of domestic trade coal procurement will continue. In a word, the contract trend of power coal in May is relatively strong. The pressure near 560 CNY/ton is high before the recent exploration. Once it breaks through, it will be strong or continue. However, due to the lack of demand coordination, the upward risk of power coal price gradually increases.