Recently, the domestic thermal coal market has shown an overall stable to strong operating trend, but there has been differentiation between ports, production areas, and downstream demand, and the market supply-demand game has intensified.
- Core market dynamics
Port market: Trading deadlock, prices stabilizing
The comprehensive price index of Bohai Rim thermal coal closed at 698 RMB/ton, stabilizing after experiencing consecutive increases in the early stage. The current port market is characterized by intense competition between buyers and sellers, resulting in low trading activity. On the one hand, the stable supply of coal in the long-term agreement provides a solid foundation for the market; On the other hand, the rapid accumulation of port inventory (such as the significant increase in inventory at Qintangcang Port compared to last week) has suppressed the potential for price increases. Taking Qinhuangdao Port 5,500 kcal thermal coal as an example, its market price fluctuates around 827 RMB/ton.
Main production market: sentiment improves, stable with some gains
The market sentiment in major production areas such as Shanxi, Shaanxi, and Inner Mongolia has significantly improved, with an increase in the number of coal mines raising prices. Due to the possible reduction in production of coal mines in some areas due to the completion of annual tasks, as well as the expected impact of environmental and safety factors, there are concerns about tightening supply in production areas, which has supported coal prices. The coal prices of some coal mines have been raised by 10-20 RMB/ton, for example, the price of 4300 kcal of thermal coal in the Ordos area ranges from 370 to 410 RMB/ton.
Downstream demand: performance differentiation, cautious procurement
The downstream demand presents the characteristics of "weak electricity and weak non level". The daily coal consumption of power plants in coastal areas has decreased due to suitable temperatures, and inventory levels are at a high level. Therefore, the acceptance of high priced coal in the current market is low, and procurement is mainly based on rigid demand, with a cautious attitude. In terms of non electricity industries, the coal consumption of chemical, cement and other industries has not shown significant improvement, and the demand support is insufficient.
- Market depth analysis
Supply and demand game: The market is in a "weak equilibrium" state. On the supply side, there are expectations of high inventory at ports and tight supply from production areas; On the demand side, the current weakness contrasts with the potential strength of the future winter coal peak.
Market sentiment: Strong wait-and-see sentiment. As the end of the year approaches, market participants are closely monitoring signals related to the annual coal ordering fair, while also waiting for clear demand guidance from weather factors.
Key variables: The future direction of the market mainly depends on two key factors: first, the intensity and scope of the cold wave weather, which will directly trigger the demand for heating electricity; The second is whether the current high port inventory can be quickly digested.
Overall, the thermal coal market lacks strong unilateral upward or downward momentum in the short term and is expected to enter a period of interval oscillation.
Short term: Port prices are hindered from rising due to inventory pressure, but there is limited downward space supported by long-term agreements; The origin price may remain relatively strong due to tight supply.
Medium to long term: The peak season for coal consumption in winter is the decisive variable. As temperatures continue to drop and hydropower output weakens, the daily coal consumption of power plants is expected to significantly increase. Once inventory consumption accelerates and downstream centralized replenishment demand is activated, coal prices are expected to usher in a new round of upward trend.
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