Economic recovery accelerates, coal market expectations are improving

Electricity consumption is called a "barometer" that measures economic development level and corporate confidence. After the New Year, the electricity consumption in equipment manufacturing, food processing, agriculture, forestry, animal husbandry and fishery industries has increased significantly, and everyone is busy with production and ensuring delivery, showing the economic recovery trend of various industries. Starting last Tuesday, driven by the gradual recovery of rigid procurement demand and speculative demand after a short-term sharp decline, the sentimental coal market continued to improve. In the short term, under the influence of factors such as tightening safety supervision in the place of origin, improving consumption expectations, and drying water inlets, the prices of Bohai Rim ports and production areas usher in a comprehensive recovery.

As downstream demand gradually recovers, port powerCoal priceAfter falling below 1,000 yuan/ton, the decline stopped and rebounded. In the early stage, the demand that was suppressed was released one after another. Recently, the domestic thermal coal market has shown a situation where both production and port prices have risen. In terms of production, driven by the first rebound of port prices, the price of pits stopped falling, and some coal mines rose slightly; the non-electricity industry resumed production one after another, demand increased, and the number of coal trucks pulled by some coal mines with large price declines increased, and traders were in high spirits, and there was a phenomenon of hoarding and selling. And as the cost further increases, the upstream quotations are getting higher and higher, and the actual transaction prices are also rising.

The purchase price announced by the large group has been raised, coupled with the notification from the open-pit coal mines, conducting self-inspections on slopes, and strictly prohibiting production operations before the self-inspections are eliminated, which undoubtedly increases confidence in the pit market with a slight rebound. Coal mines carry out self-inspection and self-correction, pay more attention to safety, and coal mines in the region basically maintain normal production. Downstream users are actively transporting their vehicles under the mentality of "buying up, not buying down", with more coal mine vehicles and good sales. In terms of Bohai Rim ports, with the rebound of port prices, the inversion phenomenon with the origin price has improved; however, due to the small early delivery, traders have limited resources, especially many of which are high-priced sources of goods, traders do not take action easily and keep the quotations firm. The transfer inlet and outflow volume of Bohai Rim ports maintained a medium-to-high level, and the port's destocking was slow.

Since the beginning of this year, the rainfall in the upper reaches of the Yangtze River has been significantly less than in previous years, and the hydropower generation has been suppressed. As of now, the average daily outflow of the Three Gorges Reservoir this year has decreased by 9.6% year-on-year. Due to the lack of precipitation and insufficient hydropower generation, Yunnan, my country's second largest hydropower province, has required some high-energy-consuming enterprises to reduce production. At the same time, the disturbances of the epidemic have receded, coupled with the increased policy efforts, the economy has returned to a normal development track, and market confidence has increased, greatly boosting the thermal coal market. As market expectations improve, coal mine production is also accelerating; however, important meetings are approaching, safety supervision is tightening, and overall supply is temporarily limited. As some small and medium-sized power plants accelerate the pace of replenishing warehouses, coupled with the resumption of work and production in a large number of non-electric industries, the demand for the Changsha Association and the market increased, prompting thecoalMarket expectations are positive.

(Source: Ordos Coal Network)