The current thermal coal market presents a dual pull pattern of weak supply recovery and fluctuating demand. The recovery of the supply side continued to be lower than expected: the main production area was doubly restricted by the strengthening of safety supervision and environmental protection (the National Energy Administration required that the investigation of overproduction be completed before August 5) and the regional rainstorm (the daily rainfall in Inner Mongolia and northern Shaanxi was more than 100mm), and the capacity of the open pit mine was restricted by more than 30%, which led to the month on month growth of the average daily coal output of Shanxi, Shaanxi and Inner Mongolia in July, which was only 6.7% -19.4%, and the capacity utilization rate fell to a five-year low of 69.3%. The replenishment effect of imported coal has weakened synchronously, with a year-on-year decrease of 25.9% in import volume in June. The rise in international mining prices combined with the increase in shipping costs has led to a month on month increase in landed prices of $4.2 per ton, and a forward cargo premium of over 8%, which has suppressed domestic terminal purchasing willingness.

The peak summer season has pushed coal consumption to its peak, with power plants in 8 coastal provinces exceeding 2 million tons per day for 18 consecutive days. The available days of terminal inventory have been compressed to 15.9 days (a year-on-year decrease of 3.2 days), triggering a rigid replenishment demand of about 8 million tons. Non electric fields are supported synchronously, with a steel blast furnace operating rate of 82%, a daily output of 2.42 million tons of molten iron, and a year-on-year growth rate of over 15% in chemical coal consumption. However, the sustainability of demand is facing challenges. Under the dual influence of cold air from the north moving southward and typhoons from the south, the high temperatures in the central and eastern regions have significantly eased since the 21st. Meteorological models show that the probability of heavy rainfall in Northeast and South China in the next ten days is 70%. The daily consumption of power plants continues to rise and kinetic energy declines. Although the water level of the Three Gorges Reservoir at 150 meters (20 meters lower than the previous year) temporarily supports thermal power, the increase in new energy power generation will squeeze the space for thermal power.

The expected increase in supply is fermenting. Against the backdrop of policy requirements for stable and increased production during the peak summer season, three major coal mines in Yulin have taken the lead in lowering coal prices by 5-15 RMB/ton to test the market. The pace of new capacity release in Shanxi, Shaanxi, and Inner Mongolia is expected to accelerate. The high-pressure inventory situation has not changed, and the inventory of ports around the Bohai Sea has risen to 25.18 million tons (12% higher than the same period last year). The daily port clearance volume of Caofeidian Port has increased to 680,000 tons to prevent the risk of coal spontaneous combustion. The procurement structure has also undergone a transformation, and the resistance of power terminals to the current market coal price of 639 RMB/ton (5,500 kcal) has intensified. The coverage rate of long-term coal contracts has increased to over 90%, resulting in a 15 percentage point increase in the market coal bidding rate. In the early stage, hoarding traders began to take profits.

Northern ports are expected to face pressure after inertia surges to 650 RMB/ton, with a structural shortage of high calorific value coal (5,500 kcal accounting for less than 30%) providing short-term support. However, the absolute high inventory and the expectation of daily consumption decline will suppress the increase; Inland markets such as Henan may experience a slight increase of 20-30 RMB/ton due to delayed transmission of transportation costs and the release of replenishment demand, but terminal acceptance of prices above 640 RMB/ton is limited. The core contradiction lies in the reshaping of supply and demand balance by weather disturbance - if the rainstorm in the main production area continues, the capacity constraints may aggravate the gap of high-quality coal in the port; On the contrary, the accelerated southward movement of cold air will trigger a decrease in daily consumption rate, leading to a concentration of high inventory port traders selling goods. It is recommended to focus on the implementation of the August overproduction control policy and the progress of the Three Gorges Reservoir water level rebound, as both will determine the actual evolution path of the supply-demand gap.

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