The price of thermal coal in northern ports has continued to decline in the past two months, occurring during the traditional peak winter season, which is unprecedented in history.

Market dynamics:

The lowest bidding price for Q3800 power plants in the South China region has dropped to 464 RMB/ton, which has already reached the bottom price of the year.

The price of thermal coal in the Beigang market has remained stable for the time being. On December 20th, the transaction price of Q5000 was between 670-685 RMB/ton, and the focus of transactions continued to shift downwards.

The price of thermal coal in the Ordos region is running weakly, coal mines are maintaining normal production, the overall supply level is stable, and inventory levels in various links of the market are high.

Price Trend:

From September 23 to December 24, 2024, the price of 5,500 kcal thermal coal in northern ports dropped from 870 RMB/ton to 767 RMB/ton, a cumulative decrease of 103 RMB/ton; The price of 5,000 kcal coal has dropped from 773 RMB/ton to 666 RMB/ton, a cumulative decrease of 107 RMB/ton; The price of 4,500 kcal coal has dropped from 685 RMB/ton to 563 RMB/ton, a cumulative decrease of 122 RMB/ton. Market changes and impacts

Spot price lower than long-term contract price: Currently, the spot price of port thermal coal has completely fallen below the long-term contract price, reflecting a significant change in the market supply and demand relationship.

Long term contract coal bottoming out: As spot prices fall below the long-term contract price, nearly 80% of the long-term contract coal in the market will play a role in bottoming out spot prices.

Improvement in downstream procurement enthusiasm: In the future, the enthusiasm of downstream end users to purchase spot goods may increase, and the inquiry and transaction heat of market spot goods will also correspondingly increase.

Terminal procurement preference: As the weather gradually cools down, the advantage of spot prices will become more apparent, and terminal procurement may prioritize imported coal and spot goods.

Market sentiment and dynamics

Pessimistic sentiment: Currently, the number of ships anchored in Bohai Sea ports is relatively small, and the expected number of ships is also not high, which reflects the pessimistic sentiment in the market.

Downstream wait-and-see: Most downstream users tend to wait and see or postpone purchases, and their enthusiasm for sending ships to the north is not high.

Future forecast:

It is expected that the coal prices at the pithead will continue to show a weak trend in the short term, and the market needs to pay attention to the changes in inventory in the middle and lower reaches. There is currently no sign of a halt in coal prices, and it is expected that no variables will change the current weak pattern until before the Spring Festival.

Influencing factors:

Supply side: In November, both import volume and domestic production reached historic highs, leading to a rapid increase in social inventory to absolute highs.

On the demand side, the year-on-year growth of thermal power generation was only 1.9%, indicating that the growth on the demand side is difficult to meet the pressure on the supply side

In summary, the decline in the price of thermal coal in northern ports has brought new changes and challenges to the market, but at the same time, it has also provided opportunities for the spot market. The future market trend will depend on the combined effects of multiple factors, including weather, policies, supply and demand relationships, etc.

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