The price difference between port and production is significant: Taking 5,500 kcal as an example, the price difference between the port price (707 yuan/ton) and the origin price (about 525 yuan/ton) is as high as 180 yuan/ton or more. This mainly reflects the high logistics transportation (railway, road) costs and port charges.

The price difference between the production areas is small: the prices of coal with the same calorific value in Ordos, Inner Mongolia and Datong, Shanxi are close, indicating strong price linkage in the main production areas.

Supply side: Core factor: The main production areas are affected by the "strict control of overproduction" policy, and some coal mines are forced to reduce or stop production, resulting in a slight tightening of coal supply sources. This is the most fundamental factor supporting the current coal price.

Demand side: Electricity coal demand: Entering the traditional off-season of autumn, the electricity load of residents has decreased, the daily consumption of power plants has fallen, and the demand for market coal procurement has weakened.

Non electricity demand: The coal demand in industries such as chemical and building materials is relatively stable, becoming an important support for current market demand.

Pre holiday stocking: As the National Day holiday approaches, some end users have a need to replenish inventory, providing short-term momentum for the market.

Port link: low inventory, intensified game

Low inventory: Northern port inventory remains low, exacerbating market concerns about tight supply.

Shipping inversion: Due to the strong prices in the production area and limited acceptance downstream of the port, traders face a situation of "inversion" where shipping costs are higher than sales prices, which suppresses the flow of coal to the port and leads to a shortage of coal resources in the market.

Buying and selling game: Traders have a strong willingness to raise prices due to high costs, but downstream users (especially power plants) have low acceptance of high priced coal and weak purchasing intentions. Market transactions are mainly based on rigid demand, with average activity.

Short term (pre holiday): Stable to strong operation.

Supporting factors: tight supply, low port inventory, and pre holiday stocking demand.

It is expected that the price will remain at the current level or increase slightly.

Mid term (post holiday): Faced with downward pressure.

Risk factor: After the National Day holiday, if the pre holiday stocking demand is fully released and the demand for electricity coal is not effectively followed up, the market may face a price correction due to a lack of sustained driving force.

Long term: The price center of gravity may shift upwards.

The fundamental logic is that supply constraints (strict control of overcapacity policy normalization) and the resilience of non electricity demand will provide long-term support for coal prices, which may maintain the price center (average) at a relatively high level compared to previous years.

The current power coal market is intertwined with both bullish and bearish factors, and the supply constraints of policies are the key to determining the bottom of prices. The intensity of actual demand (especially electricity coal demand) will determine the upward space of prices. Market participants need to closely monitor policy trends and the recovery of demand after the holiday.

If you have any enquiries or purchasing needs, please feel free to contact SunSirs with support@sunsirs.com.