SunSirs: The Accumulation of Inventory is Significant, and the Mentality of China Thermal Coal Market is Weakening

https://www.chemnet.com   Nov 27,2024 SunSirs

Recently, the price of thermal coal market has indeed shown some fluctuations. Regarding whether it shows signs of stabilization and recovery, the following aspects can be analyzed:

Price fluctuations in the thermal coal market

Spot price:

According to data released by the National Bureau of Statistics, in early November 2024, coal prices across the country experienced a comprehensive decline. Among them, the price of Shanxi Dahua (with a calorific value of 5,000 kcal) was 754.9 RMB/ton, a decrease of 2.7 RMB/ton from the previous period; The price of Shanxi Youhong (calorific value 5,500 kcal) is 855.7 RMB/ton, a decrease of 4.1 RMB/ton from the previous period.

Since 2024, the average spot closing price of 5,500 kcal thermal coal at Qinhuangdao Port has been reported at 863.43 RMB/ton, a decrease of about 10% compared to the annual average price of 965.34 RMB/ton in 2023. As of November 14th, the spot closing price of 5,500 kcal thermal coal at Qinhuangdao Port was reported at 841 RMB/ton, a year-on-year decrease of 11.66%.

As of November 22, the spot reference price of Bohai Rim thermal coal was 833 RMB/ton, with a weekly change of -1.77%; Guangzhou Port Shanxi Youhui 840 RMB/ton, weekly variation -9.68%.

On November 25th, the transaction price of 5000 large trucks was between 725 and 730 RMB/ton; The transaction price of 5500 kcal is between 825 and 830 RMB/ton.

Market dynamics and influencing factors

Supply situation: The domestic coal supply is sufficient, and the import volume has reached a new high. According to data from the National Bureau of Statistics, in the first three quarters of 2024, China's coal production reached 3.48 billion tons, a year-on-year increase of 0.6%; The import volume of coal reached 390 million tons, a year-on-year increase of 11.9%.

In terms of production areas, state-owned coal mines in Shanxi region still focus on ensuring long-term cooperative shipping and internal supply, with low market activity; Some coal mines in Inner Mongolia have started to reduce production for maintenance, and the market coal supply will gradually tighten; Most coal mines in Shaanxi region are producing and selling normally, and the market coal supply is basically stable.

Demand situation: As winter approaches, daily consumption in some areas has slightly increased, and coal consumption has also increased. However, the average available days of power plants remain at a high level, making it difficult to concentrate and release demand. In the long run, with the implementation of stable economic policies and a substantial increase in heating demand, it is expected that there is still room for growth in the demand for heating coal and non electricity coal.

Inventory situation: Port inventory is high, the market continues to be stagnant, and actual transactions are limited. Coal imports from northern ports continue to exceed exports, leading to an increase in port inventory. As of November 22, the total coal inventory in northern ports was 26.99 million tons, with a weekly change of +2.55%; The coal inventory in the eight ports of the Yangtze River is 6.34 million tons, with a weekly change of 1.93%.

Other factors: International coal prices have risen, the price difference of imported coal is not high, and the expected increase in imported coal is still variable. Due to limited transportation capacity and lower temperatures, coastal freight rates have rebounded, which has had a certain impact on coal transportation.

Multiple institutions hold a cautious and optimistic attitude towards the future trend of the thermal coal market. Shanxi Securities stated that looking ahead to the later period, it is expected that stable economic policies will continue to be implemented during the important conference in the late fourth quarter. Coupled with the substantial increase in heating demand in the later period, it is expected that there is not much room for domestic thermal coal prices to fall. At the same time, international coal prices have also risen, and the expected increase in imported coal is uncertain.

In summary, although the price of thermal coal market has shown some fluctuations recently, the overall trend has not clearly shown signs of stabilization and recovery. The future market trend will be influenced by multiple factors such as supply, demand, inventory, and international coal prices. Therefore, investors and practitioners should closely monitor market dynamics and related policy changes to make reasonable decisions.

If you have any enquiries or purchasing needs, please feel free to contact SunSirs with support@sunsirs.com.

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