China Energy Investment Group, the top coal mining company also known as CHN Energy or Shenhua, announced its monthly contract prices for August shipment on August 3, according to sources.
Its August contract prices only slightly fluctuated compared with July. The price for 5,500 Kcal/kg NAR thermal coal was 572 yuan/t, a scant rise of 2 yuan/t from a month earlier, while prices of 5,000 Kcal/kg and 4,500 Kcal/kg NAR grades fell 4 yuan/t each to 516 yuan/t and 455 yuan/t, respectively.
The price change almost showed no bias towards the spot market, but it may be good for spot prices to stay within the "green zone" – 500-570 yuan/t for the benchmark 5,500 Kcal/kg NAR thermal coal – set by the National Development and Reform Commission.
In fact, the spot market was falling intermittently after rising for the first week of July. In early July, with the back of rising prices at production areas, strict import restrictions and growing temperature in the south, coal prices started rising to a point close to the limit of "red zone" – 600 yuan/t.
Later then, Huaneng group limited spot purchases and CHN Energy resumed spot sales, signaling a reversal from a supply shortage to a glut. The market, therefore, turned to a downward trend.
Looking ahead, coal supply would be sufficient over the summer demand period. Under the requirements of the National Development and Reform Commission to ensure supply, production, transportation and port delivery among all links along the supply chain would keep high levels.
Although there are still no signs of easing restrictions on imported coal, the demand from southern power plants would be still mild this month, given high-level stocks in the downstream sector.
By end-July, coal inventory in the whole society totaled 373 million tonnes, an increase of 12.22 million tonnes from the previous month. It was also 11.8 million tonnes higher than the year-ago level.
By far, coal stocks at southern power plants were all above 23 days of use, according to several sources from the demand side.
(Writing by Alex Guo Editing by Tammy Yang)
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