Original title: Thermal coal futures fell by nearly 50% due to frequent regulatory policies
The recent mood of the coal market has undergone a major reversal. The thermal coal futures, which have been “halved” within 8 days, may have not bottomed out, and coal stocks have also ushered in a new wave of stoppages.
Judging from the news, the National Development and Reform Commission has issued dozens of notices and announcements in a row recently, uniting multiple departments to regulate and rectify multiple links in the coal industry. For the severely setback coal market, the current overall price is still at a historically rare high, and the National Development and Reform Commission may plan to introduce more stringent control measures.
The fiery coal market turns off
Under the strong deterrence of regulatory policies, the coal market, which had previously been “excessively overwhelmed, was completely shut down.”
On the afternoon of October 28, the main contract for thermal coal futures of the Zhengzhou Commodity Exchange opened its limit-limit, and the decline quickly narrowed to 7%. After that, the decline expanded again to 11.49%, closing at 1051.8 yuan/ton.
On the evening of October 27, the main thermal coal contract of the Zhengzhou Commodity Exchange plunged 13% to close at 1033.8 yuan/ton; after hitting a historic high of 1982 yuan/ton on October 19, thermal coal futures plummeted 47.8 in just 8 days %, close to “cut in half.”
Coking coal and coke, which are also the “three brothers of coal,” fell 11.99% and 12%, respectively, to close at 2,503 yuan/ton and 3,201 yuan/ton, which are more than 1,300 yuan/ton from the previous historical high.
In terms of the stock market, the three major A-share stock indexes opened low and went low and fluctuated. The coal sector suffered a heavy setback and led the decline of A-shares, reappearing a trend of stop-down. Among them, Yunmei Energy (600792.SH), Lanhua Science and Technology (600123.SH), Yanzhou Coal (600188.SH), Pingmei Co., Ltd. (601666.SH), Jinkong Coal (601001.SH), etc. Individual stocks have dropped their limits. Wind data shows that the coal index fell 6.45% to 6,176.53, and fell 21.40% in the past 20 trading days.
As the most prosperous investment area in the second half of the year, coal’s frenzied rise came to an abrupt end after October 19. The National Development and Reform Commission issued more than 20 notices in a few days to regulate and control multiple links in the coal market. The crazy coal market is returning to rationality and rationality. The control policies are still being introduced intensively.
On October 27, the Shanghai Banking and Insurance Regulatory Bureau issued the “Notice on Issues Concerning the Normal Production of the Coal Power Industry and Orderly Circulation of the Commodity Market Financial Services to Ensure the Stable Operation of the Economy”, proposing to protect coal power, coal, iron and steel, and non-ferrous metals. The reasonable financing needs of other production enterprises are strictly prohibited from misappropriating credit funds or bypassing financial management, trust and other methods, illegally participating in coal, steel, non-ferrous metals and other bulk commodities speculation and making huge profits; illegal bancassurance funds are strictly prohibited from flowing into the stock market, bond market, and futures. Market, affecting the prices of bulk commodities, avoiding arbitrage from real to virtual and idle.
More stringent policies or brewing
On October 27, the National Development and Reform Commission convened the China Coal Industry Association and some key coal companies to discuss specific measures to intervene in coal prices. The National Development and Reform Commission listened to the China Coal Industry Association and some key coal production companies on the current coal market and prices, combined with the coal production cost survey conducted in the previous period, and discussed relevant measures to intervene in coal prices, including price interventions. Specific issues such as scope, method, price level, implementation time and safeguard measures.
On October 28, the National Development and Reform Commission stated that it has invited economic and legal experts, as well as some coal and power industry associations and companies, to study how to define the criteria for determining coal companies to drive up prices and make huge profits.
According to the National Development and Reform Commission, the meeting listened to reports on coal production and operation by relevant industry associations and enterprises in recent years, and focused on discussing the reasonable price range and profit margin level that should be maintained to promote the coordinated and sustainable development of the coal industry and downstream power industries. The specific standards and methods for identifying coal companies for driving up prices and making huge profits have been established.
According to market news, the meeting held by the National Development and Reform Commission further clarified the details of the thermal coal price limit, and implemented the “base price + floating range” price limit on the pit-mouth price of thermal coal. The unified benchmark price was set by the National Development and Reform Commission at 440 yuan/ton. (Including tax), the highest floating rate is 20%, that is, the highest price is 528 yuan/ton. The Cinda Futures team pointed out that according to this standard, the price of coal arriving in Hong Kong will remain around 800-900 yuan/ton.
However, this plan has not yet been approved, and the price of 5,500 kcal thermal coal pits implemented by coal production companies in many places is still more than 1,000 yuan.
In addition, the National Development and Reform Commission has also cleaned up and rectified coal storage sites in coal production areas, and formed four inspection teams with the General Administration of Market Supervision to go to the main coal production areas in Shanxi, Shaanxi and Mongolia and Qinhuangdao Port and other major northern coal ports to carry out coal Special supervision of spot market prices.
The coal market is back
The spot market is also cooling down simultaneously. According to a reporter from the 21st Century Business Herald, the price of thermal coal at Qinhuangdao Port has dropped rapidly from above 2500 yuan/ton, and the current price of 5,500 kcal thermal coal has fallen below 2,000 yuan/ton.
Since the end of September, under the control of the National Development and Reform Commission and other relevant departments, the national coal supply and demand and coal supply from power plants have improved significantly.
According to the National Development and Reform Commission, since October 5, the coal supply of power plants nationwide has exceeded coal consumption for 20 consecutive days. Since October 19, the coal supply of power plants has exceeded coal consumption by more than 1 million tons, and it has reached 2 million on October 23. Ton. As of October 24, the power plant supplied 7.14 million tons of coal, and the power plant’s coal storage reached 95.69 million tons, an increase of 17 million tons from the end of September, and it can be used for 17 days.
The National Development and Reform Commission stated that the level of coal storage in power plants has increased rapidly, and the safety guarantee capacity of thermal coal has also been greatly improved; as coal production capacity is further released, the Daqin line is overhauled, and the power plant’s coal supply will be further improved.
However, it is worth noting that, in the context of current supply and demand, the spot price of futures, which has fallen sharply, is still at a historically high position compared to the same period in previous years. Xiao Jianxin, deputy director of the Economic and Development Strategy Research Center of the Energy Research Institute of the National Development and Reform Commission, pointed out that the fall of coal prices requires a process.
Xiao Jianxin said that in the first three quarters, the domestic coal inventory decreased by more than 100 million tons; in the fourth quarter, under the premise of ensuring heating, power generation companies still need to replenish inventory. With the solid implementation of the policy, it will be Replenishment will be realized.
The black building materials research team of CITIC Securities pointed out that with the continuous advancement of the supply guarantee policy, approximately 78 million tons of new production capacity approvals in the main production areas have been released. The superimposed demand has entered the off-season. The policy control pit prices continue to fall, and coal prices are under downward pressure as the market’s wait-and-see sentiment spreads and the fundamentals are well-oriented. It is expected that policy regulation will still affect the market structure, and coal prices are expected to show a volatile and weak pattern in the short term.
The China Coal Industry Association predicts that coal supply will continue to grow this winter and next spring, and coal demand will be relatively strong, but the fundamentals of coal market supply and demand will develop from tightness to a basic balance, and coal prices will gradually return to a reasonable range.
(Author: Peng Qiang, Editor: Zhang Weixian)
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