Price Trend
According to the monitoring of SunSirs, the price of thermal coal fell last week. On March 16, the average port price of thermal wer coal was maintained at about 558.75 RMB/ ton, and on March 20, the average port price of thermal coal was maintained at about 550.25 RMB/ ton, with the overall price declining by 1.52%. On March 19, the thermal coal commodity index was 66.48, down 0.24 points from the previous day, down 35.46% from 103.01 (2011-11-15), the highest point in the cycle, and up 48.72% from 44.70, the lowest point on January 20, 2016. (Note: cycle refers to 2011-09-01 to now)
Analysis of Influencing Factors
Products: with the control of covid-19 in China, the resumption of work in various regions has accelerated significantly. The railway transportation has been restored to about 70-80% previously. At present, the upstream coal supply has been basically restored to normal. The coal recovery has been increasing, and the overall coal output has been gradually increasing. According to the data, the inventory of Beigang has recovered to over 18 million tons, and the daily average transfer in volume has reached about 1.55 million tons. The release of production from the main producing areas was accelerated and the supply gradually recovered. But now it is in the off-season of coal consumption and the terminal is running at low load, which leads to poor overall delivery of coal mines, high inventory operation and continued downward trend of coal prices. In terms of production area, the price of coal fell.
Industrial chain: according to the data, the total inventory of thermal coal storage of six coastal power plants on March 19, 2020 was 17.6958 million tons, the daily consumption was 5,500,300 tons, and the available days were 32.16 days. At present, the situation of weak downstream demand remains unchanged. On the whole, the downstream power plants are still in recovery period and the daily consumption growth is relatively slow, which fails to drive the demand of coal price, and the port transaction is weak.
Macro: influenced by the global situation, the financial market in Europe and the United States continued to fall sharply, and the systemic risk pressure increased. The sharp drop in crude oil price brought coal plate value revaluation and maintained a weak position in the short term. The production in the main coal producing areas has been greatly improved, while the operating rate of the downstream industrial enterprises is relatively low, and the demand for electricity for residents has entered the slack season. According to the Statistics Bureau, from January to February, China's raw coal output decreased by 6.3% year on year, imported coal by 68.06 million tons, a year-on-year increase of 33.1%, and social power generation by 8.2% year on year. In addition, China imported 68.06 million tons of coal from January to February, a year-on-year increase of 33%. The import volume increased rapidly, overdrawn the import quota. Xinsha customs orally informed that ships arriving at the port after March 16 were prohibited from discharging Xinsha, because the declared amount of imported coal in Xinsha as of March 16 has reached the quota of 6.5 million tons set by the customs years ago. Whether the follow-up regulatory policy is adjusted will wait for the notice of the customs.
Market Forecast
SunSirs believe that: coal supply has increased steadily, and the situation of oversupply has not changed. With the temperature rising, the heating period in the north is coming to an end, the substitution of hydropower and new energy power generation is increasing, and the consumption of electricity and coal will maintain a medium and low speed growth, but the growth rate is slower than expected. When the coal market rebounds depends on the recovery of the downstream and the consumption of electricity and coal. As well as controlling imported coal, the overall supply of thermal coal is expected to be loose, while the downstream demand is still far behind the same period of previous years, and it is expected that the short-term thermal coal will continue to be weak.
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