Zhitong Finance App learned that the China Coal Transportation and Marketing Association issued a document stating that in September 2021, coal companies will go all out to increase coal production, ensure supply and stabilize prices, and tap the potential to increase production under the premise of ensuring safety to ensure the fulfillment of medium and long-term contracts. High-quality coal production capacity continues to be released, coal consumption has weakened, market supply and demand continue to be tight, and coal market prices continue to rise. From October 1-13, the association focused on monitoring coal enterprises’ daily average coal output of 6.93 million tons, an average daily increase of 4.5% over September. The coal production and sales momentum of key enterprises is good, and the effect of increasing coal production and supply is gradually showing.
1. Operating characteristics of the coal market in September
(1) The safety supervision is relatively strong. In September, various policies and measures for increasing coal production and guaranteeing supply continued to be exerted. The formalities for coal mines, the verification of production capacity, and the approval of subsequent land use were steadily advanced, and various localities accelerated the release of advanced coal production capacity. Relevant departments have made every effort to promote direct insurance and full coverage of medium and long-term coal contracts for power generation and heating enterprises, organize and coordinate coal sources to supplement the signing of medium and long-term contracts to ensure the need for coal for power generation and heating, and adhere to the bottom line of coal for people’s livelihood. However, due to multiple factors such as the holding of large-scale events, the frequent occurrence of coal mine accidents, and the approach of double festivals, the safety supervision of coal mines in the main producing areas is relatively strong. According to the association’s monitoring, the average daily coal output of key coal enterprises in September was 6.63 million tons, a decrease of 3.4% month-on-month and 0.5% year-on-year.
(2) Coal imports have increased significantly, and the cumulative decline has been significantly narrowed. In September, relevant parties continued to increase coal imports. China’s coal imports from Indonesia, Russia and other countries have grown strongly. The demand for imported coal in the market is strong. The market transactions are relatively active. The country’s coal imports have increased significantly from the previous month. According to the Customs Express, in September, the country imported 32.88 million tons of coal, an increase of 17.2% month-on-month and a year-on-year increase of 76.1%. From January to September, the country’s cumulative coal imported was 230 million tons, a year-on-year decrease of 9.03 million tons, a decrease of 3.6%, and a decrease of 1-8. The month narrowed by 6.7 percentage points.
(3) Coal consumption has weakened but is still significantly higher than last year’s level. In September, China’s macro economy continued to recover steadily, the summer coal-use season basically ended, and large-scale high temperature weather continued in the southern region. In September, the electricity consumption of the whole society fell by 8.7% month-on-month and increased by 6.8% year-on-year. The output growth rate of major coal-consuming products declined. Among them, thermal power generation decreased by 13% month-on-month and 8% year-on-year in September, pig iron output of key steel companies fell by 5% month-on-month and 7% year-on-year, and the production of the building materials industry also continued to fall. situation. Affected by this, the growth rate of China’s coal consumption continued to fall in September.
(4) The coal inventory in the whole society is low. In September, supply and demand in the coal market were generally tight, and coal inventories in various links were low; coal stocks in ports slowly recovered, and the situation of coal supply and demand in ports gradually improved.
(5) The coal market prices are operating at a high level. In September, the macroeconomic recovery of the world‘s major economies continued, international energy and coal demand was strong, while market supply was still tight, and international coal prices rose sharply. The demand for replenishment of domestic power plants is relatively strong, coupled with the rigid coal demand of coal-consuming industries such as building materials and chemicals, the market price of thermal coal continues to rise. In October, the medium and long-term contract price of 5,500 kcal launching thermal coal at Qinhuangdao Port was 754 yuan/ton, which was significantly lower than the spot market price.
Second, the prediction of the trend of the coal market in the later period
(1) Coal supply will maintain growth
Increasing coal production and supply will accelerate. From October 1st to 13th, the association focused on monitoring coal enterprises’ daily average coal output of 6.93 million tons, an average daily increase of 4.5% compared to September. The coal production and sales momentum of key enterprises is good, and the effect of increasing coal production and supply is gradually showing. In the later stage, coal enterprises will stick to the bottom line of safety, accelerate the work of increasing coal production and ensuring supply, and make every effort to increase coal supply. Relevant departments will jointly promote coal mines with the potential to increase production to release advanced production capacity as soon as possible, and promote the stable production of coal mines in accordance with laws and regulations. With the joint efforts of all parties concerned, it is expected that China’s coal production will maintain growth.
Coal imports will continue to increase. In the later period, relevant parties will continue to increase coal imports to meet the needs of key domestic users and people’s livelihood coal. The cumulative increase in coal imports across the country is expected to turn from negative to positive.
(2) The growth rate of coal demand will fall
The macro economy is expected to recover steadily. In the later period, the production and operation activities of Chinese enterprises will continue to resume, and the macro-economy is expected to maintain a stable recovery trend. All regions and departments will strengthen inter-cyclical adjustments, strive to maintain economic operations in a reasonable range, and promote the stability and improvement of the economy. It is expected that China’s energy demand and development Electricity consumption will maintain rapid growth, which will support coal demand.
Seasonal thermal coal demand will fall. October is the low season for coal consumption in China. As the temperature drops, the coal consumption level of power plants will continue to fall. At present, the level of coal storage in all links is low. In the later stage, power plants will speed up coal storage and coal preparation. It is expected that the demand for replenishment of electric coal will increase.
Hydropower output will gradually decline. Since October, China’s hydropower output has remained poor. In the later period, the major rivers in the south will gradually enter dry periods, and hydropower generation will gradually decline. It is expected that the substitution effect of hydropower on coal power will be weakened.
To curb the blind development of the “two highs” projects and the “double control of energy consumption” continue to restrict production in some industries. Affected by this, production in the steel, building materials, and chemical industries will continue to be restricted, and coal demand in related industries may decline.
(3) Coal supply and demand will gradually improve
On the whole, with the accelerated release of coal production capacity in the main producing areas, it is expected that coal supply will continue to grow in the future, coal demand growth will decline, the coal market supply and demand situation will gradually improve, and market coal prices will fluctuate at high levels.
This article is selected from the WeChat public account “China Coal Transportation and Marketing Association”; Zhitong Finance Editor: Xu Wenqiang.