Industry trends

"Now the port has to wait at least five days for the No. 3 coal to be loaded, and the waiting time for the No. 4 coal is longer." Li Jian, a Jiangsu trader who has been waiting for four days at the Shenhua wharf of Tianjin Port (600717, stock bar), lamented that the scene of coal overcrowding in the past no longer exists, and most coal types at terminals such as Huanghua Port and Tianjin Port are currently out of stock.

Under the situation of sharp decline in inventories and "tight coal" in ports, the four giants that have led the decline in the coal market in the past two months have begun to jointly guarantee prices. The reporter of Economic Information Daily learned from many parties that four coal companies, including Shenhua, China Coal, Tongmei and Yitai, recently negotiated the price of coal launched around the Bohai Sea in April and reached a consensus to maintain price stability. Industry insiders generally believe that other coal companies will follow the "wind vane" to determine prices, and domestic thermal coal prices are expected to stabilize.

After the Spring Festival, the coal giants who had been raising prices frequently "turned down" one after another, and the Bohai Rim Thermal Coal Index fell for seven consecutive weeks. When the decline gradually narrowed and stabilized, Shenhua suddenly cut prices sharply again, and China Coal, Tongmei and other giants followed suit, making the domestic thermal coal market enter a new round of downward channels.

As of March 26, the new Bohai Rim Thermal Coal Price Index closed at 530 yuan per ton, narrowing the month-on-month decline from 5 yuan per ton in the previous period to 3 yuan per ton. This is the 11th consecutive week of decline in the index, and the cumulative decline has reached 101 yuan per ton, or 16.0%.

This was accompanied by a sharp increase in the coal launching volume of the four giants in March. "Shenhua exceeded the monthly plan in March, and its subordinate Huanghua inventory has dropped from nearly 2.50 million tons at the end of February to the current 930,000 tons, and now the port has seen a situation of tight coal supply and ships pressing the port. In addition, the Daqin Line will start to be overhauled on April 6, and the coal arriving at the port will be further reduced," Wang Xufeng, an energy analyst in Shanxi Fenwei, told the Economic Information Daily.

In fact, this situation of supply outstripping demand is not limited to ports. According to the reporter, due to the continuous price cuts of the giants, some coal mines in Shanxi have not resumed work since the Spring Festival, and the shutdown rate of small and medium-sized coal mines in Yulin, Shaanxi, Ordos, Inner Mongolia (600295, stock bar) and other places has approached or even exceeded 80%. Although some large coal mines are still producing, their output cannot keep up with demand at all.

It is worth noting that the current coal price is already lower than the cost line of the same coal and other enterprises, and the pressure to pay back is relatively large. It is understood that Shenhua's payment situation is better, all of which are cash, while the acceptance ratio of China Coal and Tongmei accounts for 40% and 30% respectively.

However, since April is the traditional low season for power generation demand, many power plants have plans for unit maintenance in April. In this case, the four coal giants held a symposium under the leadership of the China Coal Industry Association to negotiate the price of coal launched around the Bohai Sea in April. Due to the different pricing mechanisms of each company, the prices of Shenhua and Yitai in the second quarter have not yet reached the price adjustment conditions, while the monthly adjustment mechanisms of Tongmei and China Coal have reached the price adjustment conditions.

"Everyone reached a consensus to stabilize the coal price in April, Shenhua, Yitai and others kept the sales policy unchanged in March, while China Coal and Tongmei met the price adjustment conditions and connected with users as soon as possible to maintain price stability, and at the same time try to reduce the acceptance ratio," Wang Xufeng revealed.

According to data from the Fenwei Energy Research Institute, the output of Shenhua, China Coal, Tongmei and Yitai coal companies currently accounts for about 24% of the total coal market. "After Shenhua stabilizes prices this time, it is expected that other domestic coal companies will follow suit to stabilize prices. The possibility of domestic coal prices stabilizing is greatly increased, while the situation of imported coal traders will still be more difficult due to the lack of price advantages," judged Deng Shun, an analyst at Anxun Sixiwang Energy. Wang Xufeng also believes that prices are expected to stabilize temporarily in the first half of April, but to really stabilize, it is still necessary to reach the peak period of summer electricity consumption.