1. Market price
Qin Port Closing Price: The closing price of thermal coal in Qin Port is 768 RMB/ton, an increase of 1 RMB/ton or 0.13% compared to last week.
Origin price:
The quoted price for the Q6000 pit mouth in Ordos is 680 RMB/ton, an increase of 5 RMB/ton month on month, or 0.74%.
The quoted price for the Q 5500 pit mouth in Yulin, Shaanxi is 580 RMB/ton, unchanged from the previous month.
The quoted price for the Q 5600 pit mouth in Datong, Shanxi is 585 RMB/ton, an increase of 10 RMB/ton month on month, or 1.74%.
Annual long-term contract price: The long-term contract price of thermal coal in January 2025 slightly decreased. The annual long-term contract price of CCTD Qingang thermal coal Q5500 was 693 RMB/ton, a decrease of 3 RMB/ton compared to the previous month, with a decrease of -0.43%.
2. Reasons for sluggish demand
Temperature factor: This week may still be in winter, but the temperature is significantly warmer, reducing the demand for coal for heating. At the same time, without the impact of severe weather, there is no significant fluctuation in daily consumption, resulting in insufficient demand for thermal coal.
Impact of imported coal: The sustained high volume of imported coal and its high cost-effectiveness in some periods have had an impact on the domestic thermal coal market. According to data from the General Administration of Customs, China's coal imports have continued to grow in recent years, which to some extent meets domestic coal demand but also intensifies competition in the domestic market.
Performance of downstream industries: Although some downstream industries such as electricity and chemical industry maintain a growth trend, the growth rate may slow down, and the demand growth for thermal coal is limited. In addition, some companies are gradually taking a holiday near the Spring Festival, and daily consumption may also decline.
3. Reasons for oversupply
Coal mine production situation: Within this week, some coal mines may have completed their annual production tasks and started to gradually reduce or stop production. However, before the reduction in production, coal mine production remained at a high level, leading to oversupply in the market. At the same time, some coal mines have adopted price reduction and promotion strategies to stimulate sales, but the effect is not significant.
Stable realization of long-term cooperative coal: The stable realization of long-term cooperative coal has also exacerbated the oversupply situation in the market. Long term cooperative coal usually has a price advantage and stable supply, which to some extent suppresses the demand for coal in the market.
4. Market impact
Inventory backlog: Due to insufficient demand, coal mining enterprises have serious inventory backlog. This not only increases the operating costs of the enterprise, but may also affect its normal operation.
Market expectations: Market participants generally have pessimistic expectations for the thermal coal market. This pessimistic sentiment may further exacerbate the downward trend of the market, forming a vicious cycle.
In summary, the sluggish demand and oversupply of thermal coal this week are the result of multiple factors working together. The future market trend will depend on the comprehensive impact of multiple factors such as policy regulation, changes in market demand, and adjustments in supply structure.
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