SunSirs: Energy, Domestic Themal Coal Supply Continues to Increase and Prices Fall

Price Trend

According to SunSirs, thermal coal prices have fallen. On March 2, the average price of thermal coal ports remained at about 572.75 RMB/ ton, and on March 9, the average price of thermal coal remained at about 569.5 RMB/ ton, with the overall price falling by 0.57%. The thermal coal commodity index on March 9 was 68.61, a decrease of 0.25 points from the previous day, a 33.39% decrease from the highest point of the cycle at 103.01 (2011-11-15), and was an increase of 53.49% from the lowest point of 44.70 on January 20, 2016. (Note: Period refers to 2011-09-01 to present)

Analysis of Influencing Factors

Products: The domestic thermal coal supply was once tight since the beginning of the year, but with the resumption of work by coal companies and the restrictions on road transport have been gradually lifted, the overall tight supply situation has been significantly eased. As of March 4, Shanxi Province announced that it had resumed production of 569 coal mines, with a capacity of 927 million tons/ year and a recovery rate of 92.97%. Up to now, more than 60 coal mines in Yulin, Shaanxi have resumed production, and 166 coal mines have been produced in Ordos, with a total capacity of 558 million tons. After a month of production resumption, the tightness of coal supply has eased significantly. Coal mines in Shaanxi and Mongolia continue to improve production and supply, but the downstream end-use coal is mostly rigid demand, downstream companies resume work slower than the release of upstream production capacity, the price of coal in the producing area fell. Compared with the recent decline in the origin market price, the port market also maintains a weak operating trend.

Industrial chain: At this stage, the inventory of the six major power plants along the coast is still high, and the daily consumption has risen slightly. The average daily shipping volume of the port coal price is 800,000 tons. Inquiry for goods continues to be sluggish, transactions are relatively small, and shipments are relatively general. A small number of transaction prices are close to monthly long-term association prices, and there is still some pressure on the port coal market in the short term. The data shows that the inventory of the six major power plants along the coast on March 9 was 17.6825 million tons, the daily consumption was 521,800 tons, and the available days were 33.48 days. The power consumption of power plants across the country was less than expected, and the demand for replenishment in the market was weak. In the early stage, due to tight thermal coal supply and downstream replenishment demand, thermal coal rose slightly. However, as downstream enterprises resumed production, port inventory remained low compared to the same period. The daily consumption of the six major coastal power plants rose slowly, and they were all in high inventory. At present, it is mainly to consume its own inventory. Under the weak supply and demand, coal prices are weak. With the resumption of thermal coal resumption and production increasing, companies in many places have started construction, highway regulations have been lifted, and China's economy has gradually recovered. The progress of the resumption of production at the main producing area has accelerated, coal production has steadily increased, the supply of coal at the producing area has been relatively loose, and inventory at the mine entrance has increased. The resumption of work in downstream industrial enterprises continued to advance, but the load and daily consumption of coal and coal increased slowly, the inventory of power plants was at a high level, and the procurement demand for power plants was weak.

Market Forecast

SunSirs analysts believe that: coal supply has increased steadily, and the logistics process has become more common. Resumption of production and production will promote a rapid rise in demand for electricity. In March, as coal mines in various places continued to resume work and production, the tight coal supply pattern will be eased, and daily consumption is expected to pick up, but it is temporarily below the normal level of previous years. As the temperature rises, the northern heating period is coming to an end, and hydropower and new energy generation substitutes are increasing. Electricity and coal consumption will keep growing at a low and medium speed. It is comprehensively estimated that at the current stage when the supply is relatively loose and the demand is still weak, it is expected that short-term thermal coal may continue to be weak, depending on the downstream market demand.

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