Why does power coal go against the market?

On February 3, the domestic futures market generally fell sharply after opening, with only a few varieties such as power coal and precious metals bucking the trend. By the end of the day, the main contract of power coal rose 2.05% to 557.2 CNY/ton. At the same time, the port spot CCI index, following the opening red on February 3: 5500 kcal 565 (+ 4), 5000 kcal 505 (+ 3), 4500 kcal 454 (+ 3); on February 4, it continued to rise: 5500 kcal 568 (+ 3), 5000 kcal 508 (+ 3), 4500 kcal 457 (+ 3). Coal industry researchers said that in recent days, the national energy administration and other two departments have successively issued documents on coal supply and coal mine safety. In the short term, the coal supply is weak, and the recent demand for replenishment of coal storage is increasing, which is a positive factor for coal price in the short term. On February 1, the National Energy Administration issued the notice on ensuring the coal supply during the epidemic prevention and control period, which proposed to release the high-quality and advanced coal production capacity in a strong and orderly manner to ensure the stable operation of the coal market during the epidemic prevention and control period.

The notice on relevant matters concerning the resumption of coal mine production after the Spring Festival issued by the State Administration of coal mine safety on February 2 requires that coal mines with fewer actual employees on duty must reduce production, reduce the arrangement of footage, and reduce the number of working faces. At the same time, it is clear that for the mines listed in the plan of capacity elimination and exit in 2020 and closed in the near future, in principle, they will not return to work and production, and there will be no "transition period" or "withdrawal period", and someone will be assigned to watch. According to the analysis, although the relevant policies require to ensure the supply of coal, the guarantee content is more inclined to long-term cooperative coal. In the short term, there may be resistance for the private coal mines to return to work and the transportation after the resumption of production. In the near future, the supply of coal in the market will be relatively short. From the perspective of supply, the inventory of northern ports was low before the Spring Festival. During the festival, the coal transfer in fell, but the long-term cooperative coal hauling continued, resulting in a further decline in the inventory. There are also some changes in the customs declaration policy for imported coal, which makes the bullish sentiment of foreign mines stronger. From the perspective of demand, some power plants in Hunan, Hubei, Jiangxi and Shandong have been affected by the epidemic in the near future, with reduced transfer in and continuous consumption of inventory. There is a demand for power coal replenishment, and the price acceptance is also increasing. Recently, the receiving price of some power plants in Shandong has increased by about 50 CNY/ton. Therefore, the spot price of coal futures has risen.