① Due to expectations of tightening supply in the Shanxi region and the impact of heavy snowfall on transportation, the price of coking coal futures rose sharply today, with the highest intraday increase of nearly 8% in the main contract ② Industry insiders said that the news of production cuts or the interpretation of relevant documents of the Shanxi Emergency Management Administration should be viewed as the impact of safety inspections on the coal production boundary, but it is currently uncertain how much it will affect production.
Finance Association, Feb. 21 (Reporter Zhang Liangde) Today, coking coal futures prices soared intraday. The main contract had the highest intraday increase of 7.99%, and the closing price increase was more than 6%. A Financial Services Association reporter learned from industry insiders that fluctuations in futures prices are mainly due to expectations of tightening supply in the Shanxi region. Furthermore, snowfall in the Shanxi region has also had an impact on transportation in many places.
News from the coal market in Shanxi is growing. There are market rumors that Lu'an Group will cut production by 17 million tons in 2024, from the original planned output reduction of 103 million tons/year to 86 million tons/year. In response, the securities department of Lu'an Huanneng (601699.SH) Company told the Financial Federation reporter: “It's unclear; no notice has been received.”
Mysteel sources said that the news should be true, but the market already knew about it, and today's changes in coking coal prices are not entirely attributable to this news.
Chen Liang, deputy general manager of Pocket Coke, told the Financial Federation reporter that the aforementioned production reduction news or interpretation of the Shanxi Emergency Management Bureau's “Notice on Launching the “Three Supermarkets” and Special Remediation of Concealed Work Surfaces in Coal Mines should be viewed as the impact of safety inspections on coal production boundaries. His personal tendency is to restrict each group's internal restrictions, but it is currently uncertain how much production it will affect.
According to the contents of the “Notice on Launching Special Remediation of the “Three Supermarkets” and Hidden Work Surfaces in Coal Mines” document, relevant departments in Shanxi will carry out special rectification of whether coal mines have exceeded their capacity to issue raw coal production plans and whether they have surpassed production capacity. By the end of February, coal mining enterprises across the province will fully carry out the “three super” and hidden work surface special inspection and self-reform work. Starting in March, provincial, municipal and county emergency management and energy bureaus will carry out full-coverage inspections on the “three super” and hidden work surface special remediation work areas in coal mines.
According to the requirements of this document, coal companies in Shanxi Province are all within the scope of inspection of this document, but when the Finance Association reporter consulted a number of metallurgical coal producers in the Shanxi region, they all indicated that they had not received the group's request to cut production.
The futures price rose suddenly, and there was no significant change in the spot price in the market.
Hou Ye, Research Institute of Fenwei Digital Information Technology Co., Ltd., told the Financial Federation reporter: “Futures prices are changing faster than spot goods. Currently, the Spring Festival has just passed, and some coal mines are still in the holiday phase. It will take until after January 15 for the changes in supply to actually show up.”
Chen Liang also said, “At present, the market has not resumed normal trading. Not many coal mines have resumed production in the middle and lower reaches. The auctions are still heavily sold, and the prices of some transactions still do not reflect normal market supply and demand.”
Furthermore, due to heavy snowfall in the past two days in regions such as Shanxi, Shandong, Henan, and Hebei, road traffic difficulties in some regions have also contributed to price fluctuations in the coking coal market. A coal trader in the Luliang region of Shanxi said that the local snowfall exceeded 10 centimeters, and some bridges and high-speed traffic were affected.
According to the Shanxi Emergency Management Bureau, rain and snow occurred throughout Taiyuan, Datong, Yangquan, Changzhi, Jincheng, Shuozhou, Jinzhong, Xinzhou, Linfen, and Luliang, and most of Yuncheng from February 19 to 20, with precipitation between 0.2 and 16.1 mm. Shanxi Province held a work safety work week dispatch meeting on the afternoon of the 20th to arrange traffic safety and other tasks that may be affected by the blizzard's cooling weather.
A coal trader in the Shanxi region said that due to the low temperature, snow on the road area has not yet melted, and it may still have an impact in the short term.