There is a high probability of power coal going down in the second quarter

Amid novel coronavirus pneumonia and two oil price wars, the global financial market has been in turmoil. At present, the domestic epidemic has been basically controlled, but the overseas epidemic is still spreading. Given that the downstream demand recovery is less than the supply increase, it is expected that the power coal price will continue to decline in the second quarter. Novel coronavirus pneumonia is spreading globally. China has basically controlled the epidemic, while the European and American countries have become the worst hit areas. The number of new infections has increased exponentially, with an average mortality rate of 4.7%. From the experience of anti epidemic in China, we have carried out a series of measures to seal the city, seal the road, isolate and mobilize medical resources in various areas. Until the end of March, we gradually controlled the epidemic, which lasted about three months. In the next two to three months, with the spread of the epidemic, its impact on the global economy is increasingly serious. At present, global consumption is expected to shrink, and overseas orders have been cancelled or contracted, which makes the foreign trade industry in China's coastal developed regions, which has just returned to work, once again fall into a freezing point. China's economic growth is facing difficulties.

After the U.S. stock market triggered the circuit breaker mechanism for the first time in 23 years on March 8, the U.S. stock market blew four times in just 10 days, which is different from the subprime crisis caused mainly by family risk debt in 2008. At present, the main risks in the United States are enterprise debt and sovereign debt risks. Affected by the epidemic and energy market, many enterprises will face unprecedented crisis. For China, consumption, investment and export are the three driving forces of economic growth. Among them, the main components of residents' consumption, catering, tourism and public activities, affected by the epidemic, have not yet fully returned to normal. In terms of investment, 25 provinces have launched 47 trillion yuan of infrastructure investment plans. However, due to the time required for the transformation of new and old momentum, and the effectiveness of new infrastructure investment has a certain period, it is difficult to make a big improvement in a short period of time. On the export side, affected by the spread of the global epidemic, overseas demand declined sharply. The National Energy Administration issued two notices on February 1 and 5 to ensure the coal supply during the epidemic prevention and control period, and implemented the coal output monitoring and key issues feedback mechanism.

According to the announcement of the national energy administration, as of March 3, all coal producing provinces except Hubei Province have resumed production. The coal production capacity of the country is 3.431 billion tons / year, with a capacity recovery rate of 83.4%, and the output of the day is 9 million tons. All three data have more than doubled compared with February 1, basically reaching the production level of the same period last year. As of March 19, the coal consumption of the power plant of the national unified dispatching only recovered to 90% of the same period, and the demand recovery of the power coal industry chain was less than the supply increment. In addition, the second quarter is the off-season of traditional thermal power generation, mainly due to the abundant rainfall in summer and the increase of hydropower generation. On March 28, China entered the flood season, four days ahead of the average value of the same period in previous years. Affected by the epidemic and economic downturn, the downstream demand in the second quarter is difficult to return to the normal level in the same period of previous years, and the supply is greater than the demand. However, with the continuous increase of the whole society's power coal inventory, the price will continue to decline. It should be noted that after the third quarter, the cost of power coal increased due to the cancellation of the preferential policies for the reduction and exemption of miscellaneous charges at the railway port. In addition, Inner Mongolia has announced that it will inspect all coal mines, involving a production capacity of 1.28 billion tons, benefiting the market.