Review of my country's Thermal Coal Market in the First Half of the Year and Prospects for the Second Half of the Year

Volume and price rise, demand fluctuates, market structural contradictions to be resolved

——Review of my country's thermal coal market in the first half of the year and outlook for the second half of the year

　　Reading Tips　The trend of thermal coal prices in the first half of this year is roughly divided into three stages: rising, falling, and a slight oscillation after a recovery rebound
.
It is expected that the price of the long-term association will operate within a reasonable range in the second half of the year, and the market coal price is more likely to run strongly when the supply is tight
.

　　If the thermal coal market in the first half of 2021 is described as "not weak in the off-season" and "more prosperous in the peak season", then the performance of the coal market in the first half of 2022 will be more dramatic, with "price increase in off-season" and "price reduction in peak season"
.
At the end of 2021, under the force of the policy "combination punch", supply and demand are temporarily in a state of tight balance, and the market is stable
.
It has to be said that the hot market in the coal market in 2021 will make the downstream nervous, and the market sentiment will change immediately as soon as there is trouble
.
Entering January 2022, Indonesia, a major coal exporter, suddenly announced a ban on coal exports, which caused a thousand waves, and the ups and downs of the coal market in the first half of the year kicked off
.

　　Steady supply increases epidemic impact on demand

　　The trend of thermal coal prices in the first half of this year can be roughly divided into three stages: rising, falling, and oscillating slightly after a recovery rebound
.

　　From January to the end of March, coal prices rose, and the spot price of 5,500 kcal thermal coal at Qinhuangdao Port rose from 790 yuan per ton to 1,675 yuan
.
This is not only affected by the uncertainty of Indonesia's coal exports, but also more affected by the increase in coal storage in power plants in the eight northern provinces (autonomous regions and municipalities) and the increase in the number of available days
.
Next, the epidemic severely affected the Yangtze River Delta region and other coastal areas, and downstream demand was sluggish
.
From the end of March to mid-April, the spot price of 5,500 kcal at Qinhuangdao Port fell from 1,675 yuan per ton to 1,140 yuan per ton
.
From mid-April to mid-June, when the peak season was replenished and downstream work resumed, coal prices rebounded
.
Then, the coal price oscillated downward.
From mid-June to June 23, the spot price of 5,500 kcal in Qinhuangdao Port fell from 1,350 yuan to 1,250 yuan, and then the price stabilized and rose slightly
.

　　Wind economic database data shows that the average market price of 5,500 kcal thermal coal in Qinhuangdao in the first half of 2022 is 1,187 yuan per ton, an increase of about 36% over the same period in 2021; Above, the annual long-term association price increased by 21.
6% year-on-year
.

　　Since the beginning of this year, driven by measures to increase production and ensure supply, the rapid growth of national raw coal production has remained unchanged
.
Data from the National Bureau of Statistics shows that since the beginning of this year, the national average daily output of raw coal has exceeded 11.
6 million tons.
From January to May, the country has produced a total of 1.
81 billion tons of raw coal, an increase of 170 million tons or 10.
4% year-on-year
.
Affected by the economic downturn and the epidemic, the start-up of various industries is not ideal, and the growth of electricity consumption and power generation in the whole society is limited
.
Data show that in the first five months of this year, the growth rate of electricity consumption in the whole society slowed to 2.
5%, and the national power generation growth rate was only 0.
5% year-on-year
.
At the same time, the output of hydropower and other new energy sources is more than in previous years, which makes the coal-fired power generation decline
.

　　The steady increase in supply, prolonged sluggish demand, and rising coal prices, analysts say, are due to a combination of factors
.
Driven by the short-term centralized replenishment, there is also the impact of rising international energy prices, as well as the favorable support of the decline in the proportion of coal in the market and the increase in demand for non-electric coal
.

　　Rapid accumulation of inventory in off-season, higher downstream inventory

　　Affected by the tight coal supply in 2021, the coal inventory in the whole society was low at the beginning of this year, and this trend continued until March
.
Statistics show that in March, the whole society stored about 130 million tons of coal
.
Then, under the combined influence of the supply guarantee policy and the sluggish downstream demand, the inventory gap was gradually made up
.
By the end of June, the coal stock in the whole society was about 180 million tons, an increase of 50 million tons in three months
.
Taking the northern port as an example, on June 30, the coal storage in the northern ports totaled 25.
56 million tons, an increase of 3.
604 million tons from the end of 2021
.
Jiangnei port inventory has also recently hit a new high since early June 2020, and Guangzhou port inventory has also climbed to a new high since late March 2021
.

　　Generally speaking, downstream users in May and June will focus on replenishing their inventories before the peak summer season
.
Judging from the inventory situation of the whole society at the end of June, the overall inventory level is relatively high, but there are also structural problems
.
First, the newly increased coal production capacity in China is mainly concentrated in Inner Mongolia and Xinjiang, where the proportion of low-calorie coal is relatively high.
At the same time, it is mainly supplemented to imported coal types in coastal areas, and the proportion of low-calorie coal is also relatively high, which leads to a high calorific value in the coal inventory.
Coal is relatively scarce
.
Second, the power plant inventory level is relatively high, and the port inventory is relatively low compared to the power plant inventory, which is at an intermediate level
.
Third, the inventory of inland power plants is sufficient, and the rebound trend of coastal power plants is not as obvious as that of inland power plants, which is at an intermediate level
.

　　At the same time, some analysts said that with the increase in downstream coal consumption during the peak summer period, a tight balance between supply and demand may emerge, and the inventory gap may expand again
.

　　Structural problems still exist, and the trend depends on demand

　　For the trend of the thermal coal market in the second half of the year, it is necessary to comprehensively analyze the supply, demand, transportation and other aspects
.

　　Look at supply first
.
Under the circumstance of tight global energy supply and high prices, China's coal "guaranteed supply and stable price" measures will continue to be implemented, and domestic thermal coal supply will continue to remain high
.
However, it is difficult to maintain high production in the fourth quarter of 2021
.
Judging from the capacity utilization rate of coal mines in the main producing areas of Shanxi, Shaanxi and Inner Mongolia, it is currently stable at a high level of around 84%, which is already in a relatively saturated state, and it is expected that it will be difficult to make breakthroughs in the later period
.
At present, the increase in nuclear production capacity is mainly concentrated in the open-pit coal mines in Inner Mongolia and Xinjiang, while factors such as land acquisition and weather restrict the substantial increase in the increase
.
While the total amount has increased steadily, there are still structural problems such as the squeezed market share of coal and the decline of the share of high calorific value coal
.

　　From the perspective of imported coal, under the influence of various factors, imported coal will continue to decline in the second half of the year, and the import volume will hardly increase significantly, prompting more downstream users to increase their purchases of domestic trade coal
.
Coal prices at home and abroad are upside down, import enthusiasm is weakened, and the downstream is more inclined to low-calorie coal with better economy
.
It is expected that the quantity and calorific value of imported coal will be in a steady decline in the second half of the year
.

　　Next, look at demand
.
There is great uncertainty in downstream demand in the second half of the year.
Recently, the measures to stimulate the economy in various places have not achieved obvious results, and the boosting effect on electricity consumption is still difficult to estimate.
At the same time, the impact of temperature on the daily consumption of power plants still needs to be observed.

.
However, the peak-to-peak winter has always been the period of the year with the largest coal consumption, and the downstream demand remains to be further observed
.

　　Finally look at the transport
.
Starting from the second half of 2021, coal mines will release a large amount of output, and the demand for railway transportation will increase significantly
.
From a regional perspective, about 30% of the current increase comes from the Xinjiang region, and it is difficult to transport coal from Xinjiang to the outside world, making it difficult to form an effective supplement to the coal market
.

　　Overall, under the influence of the policy, it is expected that the center of gravity of thermal coal prices will not follow the trend of last year in the second half of the year
.
(Reporter Zhou Juanjuan)

From: China Coal News