This week, the domestic electricity coal market has shown a trend of tight supply and demand, with major price indices generally rising. The spot prices of high calorific value coal in the CECI coastal index have shown a significant increase, while the Caofeidian index has not only maintained its upward trend but also further expanded its increase. The unit price of imported standard coal has also continued to rise slightly. The CECI Purchasing Managers' Index, which reflects the industry's prosperity, has been in the expansion range for 9 consecutive months. The price and shipping sub indices have significantly increased month on month, while the supply and inventory sub indices have continued to contract and decrease month on month, highlighting the pressure on the market supply side.
Affected by the continuous high temperature weather, the thermal generation and coal consumption of coal-fired thermal plants in China have significantly increased. Coupled with factors such as heavy rainfall in major production areas and stricter safety supervision, the electricity coal market is showing a tight balance, and spot prices are accelerating upward.
Supply side: Due to heavy rainfall, some open-pit mines in Shaanxi, Inner Mongolia, and northern Shanxi have been restricted in production and transportation, resulting in low inventory levels at the mine mouth. As a result, mining companies have increased their willingness to raise prices, and some coal types have been raised by 5-10 RMB/ton. The continuous increase in the purchase price of large groups has further boosted market confidence. In terms of ports, due to the contraction of production supply and the inversion of shipping costs, high-quality spot resources are tight, and traders' quotations continue to rise. The actual transaction price of 5500 kcal thermal coal has approached the benchmark price of medium and long-term contracts. Although the inventory of terminal thermal plants is still relatively high and their acceptance of high priced coal is limited, the high temperature is driving up daily consumption, and the demand for essential purchases is supporting the market. Occasional transaction prices continue to rise, intensifying the supply-demand game.
Demand side: The continuous high temperature weather has driven a surge in electricity load, with the daily electricity generation of coal-fired thermal generation enterprises in China increasing by 6.0% month on month. The northwest (+14.4%) and east China (+10.0%) regions have become the main drivers of electricity consumption growth. As a result, the daily coal consumption of thermal plants increased by 6.2% month on month, with coal consumption growth rates exceeding 9% in the northwest, east, and central regions. It is worth noting that although the thermal generation of sea transportation thermal plants increased by 5.4% month on month, it still decreased by 3.6% year-on-year, reflecting regional differences in energy structure adjustment. There has been a significant depletion in inventory, with coal storage in thermal plants across the country decreasing by 2.9 million tons to 116.13 million tons as of August 7th compared to last week, and the available days of inventory shortened by 1.2 to 21.1 days. The supply-demand pattern is shifting from loose to balanced tightness. This change is driven by seasonal peak electricity consumption and reflects the strengthening transmission effect of transportation and regional resource allocation on market prices.
This week, the daily electricity generation of coal-fired thermal plants increased by 6.0% compared to the previous week, with significant growth in the northwest (+14.4%) and east China (+10.0%) regions, driving a 6.2% increase in daily coal consumption compared to the previous week. The inventory of thermal plants has started to deplete. As of August 7th, the coal inventory of thermal plants nationwide has decreased by 2.9 million tons to 116.13 million tons compared to last week, and the available days of inventory have dropped to 21.1 days, which is 1.2 days shorter than last week. Although the thermal generation of sea transportation thermal plants increased by 5.4% month on month, it still decreased by 3.6% year-on-year, reflecting regional energy structure differences.
The CECI index has risen across the board, with strong market expectations
The spot transaction prices of the CECI Coastal Index 5,500 kcal and 5,000 kcal have both increased by 21 RMB/ton compared to the previous period, with sample price ranges of 662-672 RMB/ton and 606-607 RMB/ton, respectively. The Caofeidian Index continues to rise and the increase has expanded, and the landed price of imported coal has also slightly increased. The CECI Purchasing Managers' Index has been in an expanding range for 9 consecutive periods, with price and shipping sub indices rising month on month while supply and inventory sub indices continue to contract, indicating a tightening market supply and demand pattern.
Overall, under the combined effects of extreme weather, stricter safety supervision, and peak demand season, the electricity coal market has maintained a strong short-term operation. In the future, attention should be paid to policy regulation and the impact of extreme weather on supply and demand.
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