SunSirs: Insufficient Demand, for China Thermal Coal Market is Sluggish

This week, the thermal coal market has indeed shown a quiet and low demand trend, mainly due to the following factors:

1. Weather factors

The daily consumption of coastal power plants has been affected by the easing weather and is lower than the same period last year. This indicates that with changes in temperature, electricity demand is also fluctuating. During periods of milder temperatures, electricity consumption decreases, leading to a decrease in demand for thermal coal.

1. Supply and demand pattern

Supply side: Most coal mines are operating normally, with a certain amount of inventory at the pit mouth, overall controllable, and stable coal mine quotations with slight fluctuations. This indicates that the supply of thermal coal is relatively stable and there has been no significant shortage or surplus.

On the demand side: Downstream users have sufficient coal inventory, but in order to meet their urgent needs, trading is concentrated in some cost-effective coal mines, and traders speculate that there is insufficient demand. This further proves the weakness of demand in the thermal coal market.

1. Market Trends and Prices

Price trend: As of November 11th, the "CCTD Bohai Rim Thermal Coal Spot Reference Price" of 5,500K, 5,000K, and 4,500K specifications closed at 851 RMB/ton, 753 RMB/ton, and 661 RMB/ton, respectively, with a weekly decrease of 4 RMB/ton, 2 RMB/ton, and 2 RMB/ton and a year-on-year decrease of 108 RMB/ton, 87 RMB/ton, and 62 RMB/ton. Price pressure continues to decline, testing the support level of 850 RMB/ton.

Price support factors: Although the current reality of suppression is relatively obvious, due to the generally high cost of hoarding coal in the circulation process, coupled with the approaching peak season, traders have a mentality of playing games with the future market, and their willingness to ship at low prices is not strong. It is expected that 5.500 kcal of thermal coal around the Bohai Sea will still have significant resistance at the 850 RMB/ton level.

Port inventory: The inventory of thermal coal in mainstream ports in the north, ports in the south, and 55 ports all show an upward trend on a weekly basis. Among the 55 port samples in China, the inventory of thermal coal was 68.731 million tons, an increase of 2.264 million tons on a weekly basis. But the year-on-year decrease. This indicates that the inventory level of thermal coal is relatively high, which puts certain pressure on market prices.

1. Imported coal situation

The landed price for importing 3.800 kcal from Indonesia to South China is 496 RMB/ton, which has a price advantage of 68 RMB/ton compared to domestic coal of the same variety; The landed price for importing 5.500 kcal from Australia to South China is 835 RMB/ton, which has a price advantage of 57 RMB/ton compared to domestic coal of the same variety; The landed price of 5.500 kcal international coal on the east coast of India is 826 RMB/ton (converted in US dollars), which is 66 RMB/ton lower than the domestic coal price level of the same variety; The landed price of 6.000 kcal international coal in Europe is 936 RMB/ton (converted in US dollars), which is 68 RMB/ton lower than the domestic coal price level of the same variety.

1. Industry prospects

New energy impact: With the rapid development of new energy, the demand growth for thermal coal in the power industry is slowing down. This has led to greater competitive pressure in the thermal coal market.

In summary, the reasons for the sluggish and low demand in the thermal coal market this week mainly include weather factors, supply and demand patterns, market trends and prices, as well as industry background and prospects. In the future, with the continuous development of new energy, policy adjustments, and changes in market supply and demand, the thermal coal market may present a more complex and volatile situation. Therefore, relevant enterprises and investors need to closely monitor market dynamics and policy changes in order to develop reasonable business and investment strategies.

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