Recently, the performance of the thermal coal market has been strong, with prices rising for two consecutive months, with a cumulative increase of nearly 100 RMB. Multiple factors such as tight supply, high temperatures, and declining inventory have collectively pushed up coal prices.

Price trend: Significant increase, positive market sentiment

As of August 12th, the guidance prices for 5,500K, 5,000K, and 4,500K thermal coal at Qinhuangdao Port were reported at 710 RMB/ton, 626 RMB/ton, and 570 RMB/ton, respectively, up 92 RMB/ton, 108 RMB/ton, and 97 RMB/ton from the low point on June 19th. Since mid June, coal prices have continued to rise, and the market's bullish enthusiasm is high.

Supporting factor analysis

1. Continuous tightening of supply:

The main production areas have been hit by continuous heavy rainfall, causing some open-pit coal mines to experience disruptions in production and transportation, and even suspending operations. At the same time, the National Energy Administration is conducting inspections on overcapacity, and some coal mines have stopped production due to rectification, which has constrained production growth. In addition, as important events in September approach and safety supervision becomes stricter, it is difficult to significantly release supply in the short term.

2. High temperature drives up demand:

Continuous high temperatures in many parts of East and South China have pushed the daily coal consumption of power plants in the eight coastal provinces to remain at a high level of 2.4-2.5 million tons. According to the meteorological forecast, the high temperature weather in Jiangnan, North China and other areas will continue in the next ten days, and the consumption of thermal coal is expected to continue to rise.

3. Low inventory and traders reluctant to sell:

The coal inventory in the ports around the Bohai Sea is rapidly declining, especially with a tight supply of high calorific value coal. Due to the inverted shipping prices and limited availability of spot goods in the market, traders' quotes continue to strengthen, providing strong support for coal prices.

In the short term, thermal coal is still in the peak consumption season. However, after the beginning of autumn, the national temperature gradually drops, and the demand for electric coal may weaken seasonally. On the other hand, the advantage of imported coal prices is gradually emerging, and end users' purchasing strategies are becoming more cautious, which may to some extent suppress the upward space of domestic coal prices.

Overall, the thermal coal market is expected to remain strong in the short term, but the subsequent trend requires close attention to temperature changes and policy regulation. It is recommended that market participants track information in a timely manner and dynamically adjust their business strategies.

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