It is expected that the supply and demand of coal will be tightly balanced in the first half of 2018

The supply and demand of coal will directly affect the price of coal. Experts expect that the supply and demand of coal will be tightly balanced in the first half of 2018, while the inventory in recent days will be at a low level. The large-scale coal enterprises' price cuts can play an exemplary role.

On January 17, the Bohai Rim thermal coal price index closed at 578 yuan/ton, unchanged from the previous month, and coal prices stabilized and stabilized. Recently, with the large-scale coal enterprises such as the National Energy Group concentrating on price cuts, the market’s cautious and wait-and-see mood has been heating up. From the market outlook, analysts said that subject to the slow release of advanced production capacity, bottlenecks and other factors, supply and demand will be a tight balance. Coal prices will remain high and oscillate, and the market will be ready in the first quarter.

The Bohai Bohai Thermal Coal Price Index shows that among the 24 specifications, the number of specifications for price increases during the reporting period was maintained at 3, with an increase of 5 yuan/ton, and the remaining 21 were flat.

The latest issue of the Qinhuangdao thermal coal price index stopped rising. Among them, 5500 kcal of coal reported at 617 yuan / ton, 5,000 kcal of coal reported at 598 yuan / ton, both with the price of the previous period.

Since January 10, several large coal companies in Shanxi Province, including the seven major coal companies, the National Energy Group, China Coal Group, and Yitai Group, have lowered their coal prices by about RMB 10 to RMB 20/ton. According to incomplete statistics, up to now, there have been more than 20 large coal enterprises that have announced the reduction of coal prices.

Coal companies stated that the supply and demand in the coal market has recently tightened and prices have fluctuate greatly. The price adjustment is aimed at maintaining the stability of prices in the electric coal market and giving full play to the exemplary role of large-scale state-owned enterprises.

This is the second time since the price cut on the eve of the National Day in 2017, large coal enterprises collectively lowered their prices. After the previous price cuts, steam coal prices fell for about a month.

Expert Pan Hanxiang told reporters at the China Securities Journal that this round of large coal companies will take the lead in cutting prices, which will play a definite role, prompting the market price to stabilise.

Some analysts said that as large coal enterprises have announced price cuts, the market’s cautious and wait-and-see sentiment has been heating up, putting pressure on spot steam coal prices in the Bohai region.

“The weak supply pattern before the Spring Festival is difficult to effectively improve.” Pan Hanxiang predicted that “coal prices cannot be adjusted by the collective price adjustment of coal companies, and coal prices cannot be significantly reduced.”

Pan Hanxiang said that the 2017 production target has been completed, coupled with production safety considerations before the Spring Festival, starting in January 2018, the start of the upstream coal mines began to decline. As the Spring Festival approached, the mines will cease production for a while and the overall supply will be limited. On the demand side, the demand for electricity in the society during the Spring Festival fell. However, the inventory level of coastal power plants is only maintained at about 10 million tons. The available days are only 13-14 days, and the inventory level is low. It is expected that there will be one round of centralized restocking operations in the downstream power plants in late January and early February.

Some analysts said that the spot dynamic coal prices face downward pressure. In the past month, the volatility of spot coal prices has clearly exceeded the supply and demand fluctuations, and there has been an “excessive increase”. With the weakening of the stimulus, the market is expected to face a turn.

A number of industry insiders told the China Securities Journal that the high probability of coal prices in the first quarter was relatively stable and maintained high volatility. CITIC Construction Investment analyst said that optimistic about the performance of the coal sector in the first quarter. The thermal coal market is still in peak season. Recently, the large-scale rain and snow conditions have aggravated supply and demand. In 2018, due to factors such as slow release of advanced production capacity, bottleneck of transport capacity, and low overall volume of imported coal, and the inventory of the coal industry is at historically low levels, it is expected that the supply and demand of coal will be tightly balanced in the first half of this year.