SunSirs: No Significant Change in Fundamentals, China Thermal Coal Market is currently Stable

This week, the thermal coal market maintained a relatively stable operating trend. The following is a detailed analysis of the temporary stable operation of the thermal coal market this week:

Market supply and demand situation

Supply side: Most coal mines maintain normal production, mainly implementing long-term contract shipping, and the overall coal supply level is stable.

In terms of production capacity, although the pace of approving new coal production capacity has slowed down, the existing production capacity is still sufficient to meet the current market demand. At the same time, coal production capacity in some provinces such as Xinjiang has grown rapidly, further supplementing market supply.

On the demand side: Currently, the temperature in various regions of the country is suitable, and the daily consumption of power plants has not significantly increased. Coupled with long-term agreements and imported coal replenishment, most downstream enterprises have not had the need to replenish inventory according to scale.

As the main consumer group of thermal coal, power generation enterprises have relatively stable demand and have not experienced significant growth or reduction. The demand for non electric industries such as steel and chemical industry has also remained stable, and has not had a significant impact on the thermal coal market.

Market price performance

Spot market: This week, the spot market price of thermal coal remained stable without significant fluctuations. Most traders adopt a wait-and-see attitude, cautious in purchasing goods, average transportation at the mine mouth, and average sales of coal mines.

Qinhuangdao Port: Taking Q5500, Q5000, and Q4500 specifications of thermal coal as examples, prices have remained relatively stable this week. According to previous data, the closing price of Q5500 is 855 RMB/ton, Q5000 is 755 RMB/ton, and Q4500 is 665 RMB/ton.

The overall stability of coal mine prices in the region has not shown a significant upward or downward trend.

Futures market: The thermal coal futures market has also shown a relatively stable trend. Futures prices fluctuate within a certain range without experiencing significant fluctuations.

Investors' expectations for the thermal coal futures market are relatively stable and have not formed a clear long short trend.

Port thermal coal inventory

Inventory of the Eight Ports around the Bohai Sea: As of November 5th, the total inventory of the eight ports around the Bohai Sea was 24.098 million tons, an increase of 282000 tons on a daily basis. This data indicates that the inventory of thermal coal in the Bohai Rim region has been on the rise recently.

Compared to northern ports, the level of thermal coal storage in southern ports has also increased. This may be related to timely supplementation of imported coal and long-term cooperative coal.

Market influencing factors

Policy factors: The impact of relevant national policies on the thermal coal market continues to exist. Policies such as supply guarantee and environmental protection will have an impact on the supply and demand of thermal coal.

The recent policy orientation has focused on stabilizing the market, and there have been no significant policy adjustments or changes.

International factors: The improvement of the supply and demand situation in the international coal market may lead to a reduction in China's imported coal price advantage. However, considering the current abundant domestic coal supply and stable demand, the impact of the international coal market is relatively small.

The global growth rate of new energy generation is relatively fast, and its role in replacing traditional energy sources such as coal is gradually becoming apparent. But this impact has limited impact on the thermal coal market in the short term.

Weather factors: The current temperature in various regions of the country is suitable, and there have been no extreme weather conditions. This helps to maintain the stable operation of the thermal coal market. However, the occurrence of extreme weather in the future may still have a certain impact on the thermal coal market, and it is necessary to closely monitor weather changes.

Market outlook

Short term outlook: It is expected that the thermal coal market will continue to operate steadily this week. Stable supply, stable demand, and policy orientation focused on stabilizing the market will all help maintain the stable operation of the market.

But it is also necessary to closely monitor the impact of changes in the international coal market, domestic policy adjustments, and weather changes on the market.

Long term outlook: In the long run, with the sustained and rapid growth of new energy generation squeezing the space for thermal power and the possible normalization of hydropower generation, China's coal demand may maintain year-on-year growth but the growth rate will decline.

At the same time, factors such as the slowdown in the approval pace of new coal production capacity and the uncertainty faced by some guaranteed coal mines will also have an impact on the long-term development of the thermal coal market.

In summary, the thermal coal market has maintained a relatively stable operating trend this week. The future market trend will be influenced by various factors.

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