An overview of China thermal coal market since Apr

sxcoal.com Policy,  Viewpoint,  Thermal Coal 2018-06-01 11:55:00

After a two-month-long decline since the Lunar New Year holiday ended late February, China's thermal coal market started picking up in mid-April and maintained the upward strength until late May, when the authorities had to take measures to cool down the overheated market.

 

This round of growth was mainly driven by expectations for higher demand in the coming peak demand season, said analysts with industry consultant Fenwei Energy Information Services in its latest weekly report dated May 25.

 

Such expectations were reinforced by lower hydropower output, rapid growth of utility coal burns, and slow release of output and import restrictions.  

 

China re-imposed restrictions on import coal business at southern and eastern ports in late April. Ports in Xiamen, Quanzhou and Meizhou cities, Fujian province were no longer able to receive import coal. Other ports including Fangcheng in southern Guangxi and Zhoushan in eastern Zhejiang province were ordered to extend customs clearance for import cargoes.

 

This generally agreed consensus prompted earlier-than-expected restocking by traders and end users, driving up prices in a tightly balanced market, the analysts said.  

 

According to Fewnwei assessment, CCI spot index for the 5,500 Kcal/kg NAR thermal coal traded at Qinhuangdao port climbed to 665 yuan/t on May 21 from 569 yuan/t FOB on April 18, before edging down to 646 yuan/t on May 25.




More-than-expected demand China's thermal power generation increased 7.1% on the year to 1,595.1 TWh in the first four months. The growth accelerated in April, rising 7.3% year on year to 378.47 TWh, compared to 1.4% in March.

 

Higher power output means more coal was burned to fire boilers during this period. Data showed daily coal burns of the six major coastal power groups had already surpassed the-year-ago level in April, but in a slight way.

 

An obvious increase has been observed since May 12 when coal burns reached 664,000 tonnes, compared to only 42,000 tonnes than the same day last year. On May 23, 196,000 tonnes more coal was burned than a year earlier, the highest since February 27.

 



On the other hand, the six's coal stocks decreased at a faster pace. Their combined stocks fell consistently from a three-year high of 14.904 million tonnes on March 29 to 12.828 million tonnes on May 25, which was 318,000 tonnes lower than a year ago. The days of coverage accordingly reduced to 16 days from 20 days on average.

 



Lower hydropower Higher coal consumption was also related to a lack of hydroelectricity. Although there was a 1.3% growth of hydropower generation over January-April, the output in March and April totaled 70.18 TWh and 66.5 TWh, respectively, down 5.3% and 2.6% on the year.

 

Slowly growing output China's raw coal output totaled 1.097 billion tonnes in January-April, a 3.8% increase from a year ago. During the four months, however, effective thermal coal supply totaled 910.04 million tonnes, 44.18 million tonnes less than total consumption.

 

Due to safety and environmental inspections in major production areas of Shaanxi and Inner Mongolia, China's monthly output was unable to break the 300-million-tonne mark, far below the same period of 2015, when the de-capacity campaign hadn't started.

 

Daqin maintenance China's largest coal-dedicated Daqin railway started its spring maintenance on April 7 and lasted until May 1, together with the Fengtai-Shacheng-Datong, North Tongpu (Datong-Taiyuan) and Qian'an-Caofeidian rail lines.

 

The maintenance, 3-4 hours each morning during the period, led to a marked decrease in coal stocks at Qinhuangdao port, which dropped to 4.865 million tonnes on May 1 from 6.645 million tonnes on April 9.

 



While maintenance itself may not drive price substantially, the combined effect with other factors could not be neglected.

 

As offer prices for 5,500 Kcal/kg NAR thermal coal soared to 680 yuan/t in late May, China's top economic planner the National Development and Reform Commission (NDRC) on May 18 issued nine measures to prevent it from going wild.

 

These measures included enhancing production, releasing more high-quality capacity, raising rail capacity, ensuring long-term contracts, leaving more room to renewable electricity, buffer stock adjustment, reducing coal consumption, strengthening supervision and deepening joint operation between coal and power sectors.

 

In another conference three days later, the NDRC outlined seven follow-up measures, hoping to bring price back to the "rational range" of 500-570 yuan/t FOB with VAT for spot 5,500 Kcal/kg NAR coal.

 

These measures heavily hit market confidence, with the sentiment turning bearish immediately. Offer prices for 5,500 Kcal/kg NAR thermal coal at northern ports sharply decreased to around 660 yuan/t last week.

 

Volatile market 

However, domestic spot market has recovered again this week. The 5,500 Kcal/kg NAR thermal coal from Shanxi province rebounded above 660 yuan/t FOB, and is poised to go up further.

 

It's still hard to tell where the market will exactly go, due to the time lag for policy measures to show effect. The authorities may unveil more measures to boost supply and stabilize market, including easing of import restriction, as insiders pointed out.

 

Follow us for further updates on the Chinese thermal coal market. More details about the Fenwei Coal Weekly Update, please visit http://www.sxcoal.com/report/sdkw/1744/en, or contact us directly via inquiry@fwenergy.com.


(Writing by Alex Guo  Editing by Harry Huo)
For any questions, please contact us by inqury@fwenergy.com or +86-351-7219322.

Share this article
Connect with us

Editors Recommendations

1 Weekly global coal market news summary (Jan 14 – Jan 18) 2019-01-18

India's ECL output at 33 mln T during Apr-Dec FY2018-19 Eastern Coalfields Ltd (ECL), a subsidiary of Coal India, said on January 17 it produced 32.9 million tonnes of coal in the first thre

2 China on track to cut steel asset-liability ratio to below 60% 2019-01-18

China is on track to further reduce the asset-liability ratio in its steel industry, which stood at 65.74% as of end-November last year, according to an industry meeting held on January 14.

3 China Coal Daily Track (Jan 18) 2019-01-18

Thermal coal Domestic market Production area More mines in Yulin city of Shaanxi were ordered to halt production for safety checks, and most mines were mainly selling stocks. Miners frequ

4 Thoughts about Chinese Shenmu coal accident 2019-01-18

One deadly coal mine accident in northwestern China's Shaanxi province on January 12, which took away 21 lives, has shocked the entire market. Beyond sorrow and regret, there are many aspects we sh

5 Traders divided on China's pre-holiday thermal coal market 2019-01-18

Participants in Chinese spot thermal coal market were divided in the short-term outlook before the Spring Festival holiday, with some holding back on sales anticipating strong pickups while the others

6 Market hype helps push up Indonesian coal prices, traders 2019-01-18

Indonesian coal prices have risen visibly in recent days, and some Chinese traders deemed it unreasonable, in spite of multiple positive factors including heavy rain that has affected local production

7 China Dec power coal price index overview 2019-01-18

China's monthly-issued price index of power coal staged a year-on-year decline of 2.61% in the last month of 2018, which was still 0.41% higher compared with the November level, showed data from the s

8 China 2018 solar curtailment rate declines to 3%, NEA 2019-01-17

China's solar power electricity could be 97% utilized in 2018, and only 3% of the total generation was idled, showed data from the National Energy Administration, down 2.8 percentage points from a yea

9 China Coal Daily Track (Jan 17) 2019-01-17

Thermal coal Domestic market Production area Thermal coal prices continued rising at major production areas. A large numbers of coal mines in Shenmu and Fugu of Shaanxi halted produc

10 CHN Energy lowers spot coal prices by 1-11 yuan/t, sources 2019-01-17

China Energy Investment Corporation (CHN Energy), the nation's top coal miner, reduced its spot prices of thermal coal for the week ending January 21 by 1-11 yuan/t, a pullback from price hikes in the

Most Read Articles

1 China's spot thermal coal prices may head down as port demand drops 2019-01-09

China's spot thermal coal prices might head down in a short term as the downward spiral of port transaction and sagging demand from end users unleashed bearish sentiments among traders for future mark

2 Mongolia's coal exports hit all-time high in 2018 2019-01-07

Mongolia's coal exports hit an all-time high in 2018, the country's finance ministry said on January 4. The landlocked Asian country exported a total of 36.5 million tonnes of coal in 201

3 Chinese thermal coal lacks strength to keep rising, traders 2019-01-08

Chinese thermal coal prices may lack sustained momentum to go up further, traders said, although cargoes settled and offered at northern ports continued edging up on January 7. This was m

4 Newcastle coal price to decline 30% by 2020 2019-01-08

Asia-Pacific benchmark Newcastle coal prices could decline by around 30% by 2020, from 2018 average levels, as Chinese import demand cools, an Australian government report said. The Newca

5 China's import thermal coal market may cool down, traders 2019-01-10

China's import thermal coal market is likely to cool down after utilities finish their buyings, yet prices may not fluctuate sharply, trade sources said. Some Chinese utilities have issue

6 S. Africa Nov thermal coal exports hit one-yr high 2019-01-07

South Africa's thermal coal exports reached 7.92 million tonnes in November, hitting a new high since November last year, showed customs data. The November tonnage was basically unchanged

7 China spot thermal coal market ends 10-day price rebound 2019-01-10

There are some odds that recent price rebound of thermal coal starting late December may come to end at northern China's Bohai-rim ports, as traders scrambled to sell amid weakening demand before the

8 Wide price drops hit China's coking coal market 2019-01-07

China's coking coal market was hit by widespread price drops in the past week, as prices of raw coking coal declined with the decrease of washed products in main-producing bases, under the bleak outlo

9 China coastal thermal coal market struggles again after brief bounce 2019-01-11

China's coastal thermal coal market lost strength after over one-week rebound, and the rate of decline seemed speeding up along with dwindling demand. On January 10, the Fenwei CCI index

10 Chinese thermal coal extends weakness as traders rush to dump cargoes 2019-01-11

Chinese thermal coal prices continued losing ground at northern transfer ports, partly due to some traders' de-stocking activities aimed to shun costly storage fees and financial expenses.

Scan to download sxcoal.com mobile APP

X