In half a month, we will usher in the traditional Lunar New Year. What will be the trend of the domestic thermal coal market before and after the New Year? Looking at various factors, I believe that in the coming month, the domestic thermal coal prices, especially the thermal coal prices in the coastal regions, will continue to level off.

In the coming month, the bullish factors in the coal market will be intertwined with each other. The bullish factors are mainly reflected in the following aspects:

First, the thermal coal prices in the international market have continued to rise in the early stage, and the impact on the domestic coal market will gradually appear. Global coal platform data show that from November 26, 2010 to January 14, 2011, the Newcastle Port Australia thermal coal price index NEWC index has risen for seven consecutive weeks, from US$105.77/tonne to US$136.3/tonne, rising per ton. At US$30.5, the increase reached 28.9%. Correspondingly, since the end of November, the price of thermal coal in the domestic Qinhuangdao Port has continued to maintain a steady state after a short period of slight decline. The spread between Newcastle's Newcastle (FOB) and Qinhuangdao Port's thermal coal closing price (FOB) of 6,000 kcal gradually increased gradually from the former at the end of November to less than the latter at 155 yuan, and the former was higher than the latter at 65 yuan* **. Although NEWC index had a callback in the week from January 14 to January 21, its price was still higher than the RMB 6,000 kcal thermal coal closing price of Qinhuangdao Port near RMB 30/t. In other words, currently, the price of thermal coal in the international market represented by Australia has no price advantage, and the import volume of coal in January and February is bound to fall back, which will bring a bullish impact on the thermal coal price in the domestic market.

Second, since January, affected by two factors, some of the major producing areas have experienced a drop in coal production, which has led to a slight increase in thermal coal pit prices. The data show that from January 1 to January 23, Shanxi Province has completed a total of 1.969 million tons of commercial coal production per day. Compared with the average daily production in December 2010, it has dropped significantly. Affected by this, since the thermal coal prices in Qinhuangdao Port have remained stable since January, the price of thermal coal pits in northern Shanxi in the main production areas has generally risen by 5-10 yuan per ton. The rise in thermal coal pit prices may support the price of thermal coal in coastal areas to some extent.

Third, in the next few days, the temperature in most parts of the country is lower than the same period in previous years, and a large-scale rainfall and cooling process will still occur in the south. According to the national weather forecast for the next 10 days released by the Central Meteorological Observatory on the 24th, before the 29th, temperatures in most parts of the country were still 1-2°C lower than normal year-on-year, and parts of Guizhou, western Hunan, and other parts of the country had low temperatures 3-4. °C; After the 29th, the temperature in most parts of China is showing a rising trend. A large range of rain, snow, and cooling will occur in the southern region on 26-28, with heavy snow in parts of Jianghuai and northern Jiangnan, and heavy snowfall in some areas; temperatures will drop by 4-6°C, cooling in some areas 8 °C. There will be freezing rain in parts of Guizhou, Hunan and other places. Affected by this, for some time in the future, heating power consumption in most parts of the south will continue to operate at a high level, which will further bring about a beneficial effect on the coastal thermal coal market.

In the coming month, the negative factors in the coastal thermal coal market are mainly reflected in the following aspects:

First, with the advent of the Spring Festival, schools, factories, and enterprises have successive holidays, and the entire society will soon experience a seasonal fall in electricity consumption. From historical experience in previous years, if the Spring Festival in mid-February, the average daily thermal power generation in February will be about 15% lower than in January. We can draw such a conclusion. Take the Spring Festival as the center, to extend the Spring Festival day by 15 days and to extend it backwards by 15 days as a complete “month”. This “month” is the average daily thermal power and the previous month. "In comparison, it will drop by about 15%. On the 3rd of the Spring Festival in 2011, according to the foregoing conclusions, from the 30 days of January 19 to February 17 this year, compared with 30 days from December 20 last year to January 18 this year, thermal power generation The volume will drop by about 15%. Considering the fact that most of the southern part of the country has more rainy weather and the temperature is lower than the same period of previous years, the decline in thermal power generation capacity may be slightly narrowed. However, it is expected that the decline will still be about 13%. The decrease in the amount of thermal power generation means that the coal consumption for power generation will decrease at the same time, which will bring negative effects to the coal market.

Second, in the early period, raw coal production increased rapidly, and coal imports were operating at high levels. At present, transit coal stocks are relatively abundant, laying a good foundation for the stable operation of the coal market. According to relevant data, in December of last year, Shanxi Province achieved 71.39 million tons of raw coal production, which was the highest monthly record of historical production. Last year, Shanxi Province completed a total of 74.96 million tons of raw coal production, an increase of 20.37% compared with the previous year; The district completed raw coal output of 786.5 million tons, a year-on-year increase of 27.8%; last year, Shaanxi Province completed a total of 35.641 million tons of raw coal production, an increase of 22.69% year-on-year. Customs data show that in December last year, China's coal imports reached 17.34 million tons, a new record high, the total annual coal imports reached 16.512 million tons, compared with 2009, an increase of 31.7%. The rapid growth of raw coal production in Shanxi, Inner Mongolia, and Shaanxi in the previous period, and the continuous high coal import operation provided a good basis for ensuring a stable supply of coal.

At present, the coal stocks in circulation are mostly at a high level. According to statistics, as of January 24, Qinhuangdao Port coal inventories totaled 7.37 million tons, which was at a relatively high level; on January 24, SDIC Caofeidian Port and SDIC Jingtang Port coal inventories were 1.93 million tons and 1.51 million respectively. Tons, although somewhat low, were at normal levels; on January 21st, the coal inventory at Guangzhou Port was 2.73 million tons, which was at a high level. The high level of coal stocks in the port operation can stabilize market expectations to a large extent and promote coal prices to remain stable.

Third, the current degree of coastal coal trade activity is relatively low, and the coastal coal freight index is still falling, thus inhibiting the rebound of coastal thermal coal prices. According to data from China Shipping Network, since the beginning of December, except for a week's stabilization, the coastal coal comprehensive freight index has been adjusted for seven weeks, with a cumulative correction rate of 27.06%. The continuous correction of the coastal coal freight index indicates to a certain extent that since December, the activity of the seaborne coal trade has continued to decline. In the coming month, as coal for power generation will fall back seasonally, it will be difficult for coal purchases to strengthen, and coastal coal freight rates are expected to continue to operate weakly, thus curbing the recovery of coastal thermal coal prices.

Taken together, in the coming month, bearish and bullish factors affecting coal prices are intertwined. However, it is difficult for both parties to take absolute advantage. Therefore, it is expected that coastal thermal coal prices will remain stable in the coming month.

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