SunSirs: The Supply and Demand Pattern Remains Loose, China Thermal Coal Price Is Under Pressure and Declining

Origin price: This week, Shaanxi Q5800 coal is priced at 550-580 RMB/ton, and Q6000 is priced at 526-590 RMB/ton. Compared with last week (Q5800 reported at 550-580 RMB/ton, Q6000 reported at 526-590 RMB/ton), the price range is basically unchanged, but the actual transaction price is under pressure to decline.

The prices of coal mines in the Ordos region of Inner Mongolia have been lowered, for example, the Q5800 washed coal from Xinzhen Mine has been lowered by 9 RMB/ton to 528 RMB/ton, and the Q4600 fine coal from Matehao Mine has been lowered by 15 RMB/ton to 415 RMB/ton.

Reason for price reduction: Coal mines have reduced prices to stimulate sales (by 5-10 RMB/ton), but the downstream mentality of "buying up and not buying down" has led to a shortage of transport vehicles and inventory backlog.

Auction situation: The starting price for the Shaanxi Coal Mine auction has been lowered by 15-25 RMB/ton compared to the previous period, and the purchase price of Shenhua has been lowered by 7-10 RMB/ton (Batuta platform), further exacerbating the downward pressure on prices.

The price has weakened in July, but the range of price reductions in August has expanded (Shaanxi, Inner Mongolia, and Shanxi have all lowered prices), and the daily decline of state-owned large-scale mines has reached 20-30 RMB/ton, deepening the decline.

Port market

The price of 5,500 kcal thermal coal in northern ports is 700-710 RMB/ton, 5,000 kcal is 620-630 RMB/ton, and 4,500 kcal is 540-550 RMB/ton. Traders are eager to ship and have lowered their prices, but end users (power plants) prefer long-term contract coal and imported coal, with low interest in market coal, large buying and selling price differences, and dismal transactions.

Inventory situation: The overall inventory of ports around the Bohai Sea is high (such as 6.1 million tons at Qinhuangdao Port and 5.63 million tons at Jingtang Port), similar to July 27th (port inventory is not high), but inventory pressure is greater in August due to weaker demand.

Price trend: Port coal prices have slightly decreased (compared to the transaction price of 700 RMB/ton in July, with a similar price range but weaker transactions in August), indicating an increase in bearish sentiment.

Imported coal market

The FOB price for Indonesia's Q3800 low calorie coal (Panama ship type) is $45.5/ton, and the FOB price for Australia's Q5500 (Panama ship type) is $73/ton.

Compared with July (Indonesia Q3800 quoted at about $45.5/ton, Australian coal Q5500 quoted at $73/ton), prices are basically the same, but external quotes have loosened and traders' willingness to ship has increased.

On the demand side: There is a strong bearish sentiment in China, and buyers only make sporadic purchases. The bidding price has decreased, for example, when Fujian Power Plant bids for Indonesian Q3800 coal, the lowest bidding price is 412 RMB/ton (equivalent to FOB 43.2 US dollars/ton), which is inverted by 1-1.5 US dollars/ton compared to the foreign market.

Overall situation: The imported coal market is operating weakly, with sluggish transactions due to the impact of domestic coal price reductions and exchange rate fluctuations. Compared with July, the phenomenon of inversion is more pronounced in August, and traders are under greater pressure.

Performance on the demand side

Electricity demand: This week, the national temperature has further declined, the load of thermal power units has decreased, and the supply of new energy generation has increased. The inventory of terminal power plants is high (higher than the same period in previous years), mainly due to the replenishment of essential needs.

Compared with July, there were persistent high temperatures in Jianghuai and Jiangnan in July, with higher daily consumption; But in August, the temperature generally fell, the demand for refrigeration electricity decreased, and the demand for electricity entered the seasonal off-season. The demand for industrial electricity was also weak.

Non electricity demand: Industries such as cement and building materials are affected by the seasonal off-season, resulting in low operating rates. Procurement is mainly based on essential needs, similar to the situation in July.

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