SunSirs: Insufficient Demand, Accelerated Decline in China Thermal Coal Prices
December 12 2024 09:23:33 SunSirs (Selena)
Spot market price
In the spot market, the price of thermal coal varies depending on the place of origin, calorific value, and trading time. Here are some examples of spot prices for thermal coal from major production areas:
Inner Mongolia region:
The tax inclusive price of Q5500 power coal pit mouth in a mine in Ordos ranges from 600 to 610 RMB/ton (prices may fluctuate over time). The prices of thermal coal in other Inner Mongolia regions also vary due to factors such as calorific value and origin.
Shaanxi region:
The price including tax for Q6200 power coal pit in Yulin area is 850 RMB/ton. The price including tax for Q5500 power coal pit in Yulin area is 750 RMB/ton.
Other regions:
The prices of thermal coal in places such as Shanxi and Hebei also vary depending on the specific place of origin and calorific value.
Market dynamics
1. Poor demand in ports: Recently, the demand for port thermal coal has significantly decreased, which usually means that downstream industries (such as electricity, steel, chemical industry, etc.) have reduced their consumption of coal, or these industries have already met their demand through other channels (such as long-term contract coal, inventory, etc.).
2. Accelerated price decline: Due to insufficient demand, the price of port thermal coal has begun to accelerate its decline. This reflects changes in the market supply and demand relationship, where supply exceeds demand leading to price declines.
3. Strong willingness of traders to ship: Faced with the pressure of price decline and inventory backlog, traders' willingness to ship has significantly increased. They hope to reduce inventory and avoid greater losses through price reductions and promotions.
Market supply and demand situation
1. Port inventory has slightly decreased: Although the inventory of port thermal coal has slightly decreased, this is not due to an increase in market demand. On the contrary, this is mainly due to the transportation of long-term coal contracts and the realization of previous empty orders. Long term contract coal refers to coal supplied under long-term agreements, and its price and quantity are usually relatively stable. The early redemption of short orders refers to the closing of short contracts caused by bearish sentiment in the previous market.
2. Actual transaction volume in the market is very low: Although port inventory has decreased, the actual transaction volume in the market is very low. This further proves the current sluggish state of the market and the weak demand for coal in downstream industries.
Downstream industry situation
1. Downstream daily consumption falls short of expectations: The daily consumption (i.e. daily consumption) of downstream industries falls short of expectations, which usually means that production activities in these industries are slowing down or shutting down. This may be due to factors such as decreased market demand, environmental policy restrictions, or rising production costs.
2. Non electricity demand is average: Non electricity industries (such as steel, chemical industry, etc.) also have average demand for coal. This may be due to factors such as declining market demand, environmental policy restrictions, or rising production costs affecting these industries.
Price support situation:
Price temporarily shows no support: In the current market supply-demand imbalance and weak downstream demand, the price of port thermal coal is temporarily unsupported. This means that prices may continue to decline until there is a change in market supply and demand or policy intervention.
In summary, the current port thermal coal market is facing multiple pressures such as insufficient demand, price decline, and inventory backlog. Market participants need to closely monitor market dynamics and changes in downstream demand in order to develop reasonable procurement and sales strategies. Meanwhile, policy makers also need to consider taking measures to stabilize the market, promote consumption, and ensure energy supply.
If you have any enquiries or purchasing needs, please feel free to contact SunSirs with support@sunsirs.com.
