Coal prices still have room for decline in the middle and late quarters

Since the beginning of this year,Coal priceMore falls, less rises, and the rising market occurs eight times. The first time started on Valentine's Day, which rose 12 days. The other seven rises lasted for 3-4 days; the other two rose for 1 day, and then fell in a hurry. ShowncoalThe demand is relatively weak, and the market lacks support for coal prices. The fundamentals of the coal supply and demand situation this year have quietly changed. Coal needs are weak and strong, forcing the central price of coal (5,500 kcal port market thermal coal) to drop from 1,200 yuan/ton to 1,000 yuan/ton, and then to 760 yuan/ton in early June, and the center of coal price has continued to decline. In mid-to-late June, as the downstream restocking came to an end, coupled with the staggered production of the non-electric industry, demand declined, and the focus of coal prices is expected to decline.

First, my country's raw coal production maintained a growth trend, especially the main production areas such as Shanxi, Shaanxi, Mongolia and New Zealand increased significantly year-on-year. In addition, the external transportation of major coal transport channels remained unobstructed, and the transfer of coal transport railways and ports was smooth, which compressed the time when vehicles and ships stopped at the port. The supply is timely and the connection is smooth, which will make the coal use in power plants not tight, and coal prices will naturally lose momentum to rise.

Secondly, from January to May, my country imported 182 million tons of coal, an increase of 89% year-on-year. In addition to traditional Australian coal, Russian coal and Indonesian coal, low-priced South African and Colombian coal has also poured into the domestic market. Imported coal is of good quality and low price, and domestic coal prices are still at a relatively high level. The influx of imported coal has a certain substitute effect on domestic coal, suppressing the rebound in domestic coal prices.

Again, inventory in all links is at a high level. Since the upstream supply increment is higher than the downstream demand increment, and there is a dual supply guarantee of long-term contracts and imports; high-energy-consuming enterprises will produce at a staggered peak production before the arrival of summer and winter, reducing coal consumption and electricity consumption, and promoting the formation of a pattern of oversupply, coal prices often decline in summer and winter.

Fourth, in May, the manufacturing purchasing managers index was 48.8%, which was in the contraction range and 0.4 percentage points lower than the previous month, reflecting that the downward pressure on my country's economy is still relatively large. As the peak of coal use approaches, the daily consumption of major power plants is lower than expected, and demand and procurement are not active.

Last month, after the maintenance of the Daqin Line was over, coal supply increased significantly. At this time, downstream demand was weak and there were few coal ships to pull the port, which prompted the inventory of the Bohai Rim port to continue to rise. The coal prices in the port market were no longer supported, and a straight decline occurred. The prices of the main production areas also moved downward with the fluctuations in the port market prices. In June, although daily consumption of power plants rebounded, social inventory remained high and imported coal continued to pour into the Chinese market. After mid-month, the non-electricity industry will carry out staggered production; coupled with the arrival of the plum rainy season, energy consumption increases are limited. The coal price in mid-to-late June is likely to fall sharply and rise slightly, and coal prices will continue to bottom out.