Thermal coal near-term outlook

2023-11-14 11:20

The heating season has begun in northern China as temperatures drop. Electricity demand is expected to increase seasonally, the overall mood of thermal coal is better, and the CCTD spot reference price of Bohai Rim thermal coal 5500K rose by 30 yuan within the week. However, at present, the number of days available for coal in power plants is relatively high compared with the same period last year, and the daily consumption is still rising, and the demand has not reached its peak, so the terminal acceptance is not high after the price increase.

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In terms of supply, Since the strengthening of the safety supervision situation in August, domestic supply has also undergone a stage contraction, including the decline in marginal production caused by enterprises and safety supervision. This stage contraction has not yet fully recovered, from various data dimensions, the previous high (April- May) level fell by 5%-10%. In addition, the gap between domestic mining plants and the completion of the production target for the whole year is not large, so the follow- up domestic supply pressure is not large. On the other hand, given the import profit in the early period, the overall import volume of thermal coal is higher this year, so the overall domestic situation is not short of coal.

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Historic levels of port inventories also limit the upside. At present, the port throughput around the Bohai Sea is still in a neutral position, but the demand for anchorage ships is weak. Therefore, at present, the rise of this round of thermal coal is still due to the improvement of sentiment caused by falling temperatures, and the actual demand is not so optimistic at present. However, in the long run, although the current power plant inventory is high, the pressure of available days is not so large, and with the further decline in temperature and the gradual rise in daily consumption of power plants, there is no need to be too pessimistic about thermal coal.