SunSirs: Long Short Game, China Thermal Coal Market Is Stable but Slightly Strong

5,500 kcal high calorie coal: quoted at 690-700 RMB/ton, but actual transactions have climbed to a high of 695-698 RMB/ton. The transaction price closely follows or even touches the upper limit of the quotation, indicating a prominent structural shortage problem of high-quality resources for high trucks. Sellers occupy an absolute dominant position in negotiations, and the market has the strongest bullish sentiment.

5,000 medium calorie coal: quoted at 600-610 RMB/ton, actual transaction falls within the range of 602-607 RMB/ton. The transaction price is at the midpoint of the quotation range, indicating a relatively balanced power between the buyer and seller, and a fierce price game is underway. This is the most concentrated manifestation of the supply-demand contradiction in the current market.

4,500 kcal low calorie coal: quoted at 530-535 RMB/ton, but the actual transaction was only 528-530 RMB/ton, resulting in a slight price inversion. This clearly reflects the strong resistance of downstream towards high priced coal. The purchaser is more inclined to seek resources with higher cost-effectiveness and has successfully lowered the price of low calorie coal, indicating a high degree of demand fragility and price sensitivity.

Analysis of driving factors: coexistence of strong support and strong suppression

Supply contraction is the primary driving force: the continuous inspection of production safety in the production area has limited the growth of coal supply at the source, and the firm prices at the pithead have provided cost support for the port market.

The transportation bottleneck has intensified tension: the key factor of the autumn maintenance of the Daqin Line has directly led to a reduction of about 200,000 tons in daily port imports, and the inventory of major ports in the north continues to decline, exacerbating market expectations of tight supply. Traders' reluctance to sell their goods has heated up.

Short term essential demand support: Despite being in the off-season for electricity consumption, the rigid replenishment demand before the National Day holiday provides a stable purchasing support for the market, preventing a significant decline in prices.

The seasonal decline in demand is a tough issue: the cooling temperatures have led to a significant decrease in the daily coal consumption of power plants nationwide, and the demand of major power plants has entered a low season mode, reducing their dependence on market coal.

The acceptance of high prices is the biggest obstacle: Faced with the high price market coal of around 695 RMB/ton, end users generally adopt the strategy of "refusing high and mining low", and their purchasing willingness is extremely low. The vast majority of demand is met by long-term contract coal with stable prices, and the actual trading activity of coal in the market is low, with a clear characteristic of "price but no market".

In summary, the current thermal coal market is in a fluctuating stalemate of "top and bottom". The expectation of tight supply has supported the bottom of prices, while weak real demand has blocked the room for price increases.

In the short term, looking at post holiday demand: After the National Day holiday, if the demand for replenishing inventory ends and the demand for winter heating and stocking is not timely continued, the market will lose important support and prices will face downward pressure.

Mid term assessment of weather and policies: Whether the expectation of a cold winter this winter can be fulfilled will determine the intensity of demand for coal during the peak winter season. On the other hand, it is necessary to pay close attention to the national level supply guarantee policy. Any regulatory measures that encourage increased production and strengthen long-term contract compliance may quickly change market expectations and guide prices back to rationality.

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