The Zhitong Finance App learned that Capital Securities released a research report saying that as the weather warms up and the heating season ends in most parts of the north, the obvious contraction of coal for heating will put a lot of pressure on short-term coal demand. Demand for coal in the off-season lacks stronger support, and short-term prices are expected to continue to be pressured. However, there is currently limited room for coal prices to fall. The core reason is that supply is affected by safety inspections, expectations of production capacity contraction in major production areas, declining coal prices and narrowing imports, etc., weakening the current decline in demand. Furthermore, medium- to long-term production capacity is lacking, and supply flexibility is still lacking due to the depletion of resources in some mines. Demand is expected to continue to reach new highs during the peak season, and it is unlikely that coal prices will drop sharply. Recommended attention: Shaanxi Coal (601225.SH), Yankuang Energy (600188.SH), Jinkong Coal (601001.SH), Shanxi Coking Coal (000983.SZ)

Key industry events: On March 15, the State Mine Safety Supervision Administration issued a notice on further strengthening the safety management of coal mine silos. The notice proposes to strengthen supervision and inspection of coal silos safety. Coal mine safety supervision and supervision departments should strictly enforce the law, urge coal mines to implement coal silo safety management responsibilities, comprehensively investigate and control hidden hazards, resolutely crack down on and rectify illegal operations in coal silos, and strictly prevent all kinds of coal silo accidents from occurring.

Demand is pressured, thermal coal prices continue to decline, and there is limited room for decline

On the supply side, coal mine supply in major production areas has completed the resumption of work and production after the holiday season. Currently, the main problem is still production safety. Safety inspections in places such as Shanxi and Shaanxi are still under high pressure, and marginal increase in production is slowing down.

On the demand side, the operating rate is rising steadily, and the daily consumption of power plants is gradually rising. Demand growth is limited. It is expected that daily consumption will continue to increase as the operating rate continues to rise. As the weather warms up and the heating season ends in most parts of the north, the obvious contraction of coal for heating will put a lot of pressure on short-term coal demand. Off-season coal demand lacks stronger support, and short-term prices are expected to continue to be pressured. Affected by the price correction, current port shipments continue to be inverted, and the Northern Port inventory continues to decline. As of March 15, the total inventory of the Northern Port was 20.79 million tons, a decrease of 130,000 tons from week to week, a decrease of 0.62%; the total inventory at the mouth of the Yangtze River was 5.19 million tons, a decrease of 270,000 tons from week to week, a decrease of 4.95%.

On the import side, due to the fall in domestic thermal coal prices, the inversion of overseas coal prices to CIF continues to rise, and imports of high-calorific value coal are expected to shrink. According to Pioneer Securities, there is currently limited room for coal prices to fall. The core reason is that supply is affected by safety inspections, expectations of production capacity contraction in major production areas, declining coal prices and narrowing imports, etc., weakening the current decline in demand. Furthermore, there is a lack of production capacity in the medium to long term and the depletion of some mine resources and supply flexibility is still lacking. Demand is expected to continue to reach new highs during the peak season, and coal prices of 5,500 kcal in the northern port are still expected to quickly rebound to more than 900 yuan/ton after the off-season ends.

The conductive pressure of weak demand for coking coal continues to be released, waiting for a marginal improvement in demand

On the supply side, due to recent coal mine safety accidents, the current safety inspection situation continues to become stricter. In particular, mines with complex geological conditions such as high gas will become the focus of inspections. Supply is expected to continue to weaken marginally.

On the demand side, downstream construction has not seen a sharp marginal improvement in data in the short term, and real estate sales data continued to decline year over year, continuing to be negative for demand. Currently, coking coal terminal steel prices continue to weaken, and steel mill profits will continue to be under pressure in the short term. Some steel companies have already lost money, and midstream coking companies have serious losses. It is expected that coking coal prices will remain under pressure in the short term. As of March 15, the market price of coking coal produced in Luliang, Shanxi was 1,930 yuan/ton, flat from week to week; Shanxi Gujiao produced 1,980 yuan/ton of fertilizer coal, down 7.04% from week to week; 2,255 yuan/ton of main coking coal from Handan, Hebei, remained flat from week to month.

On the import side, due to the continued decline in domestic coking coal prices, Mongolian coal prices fell simultaneously. As of March 15, the price of coking coal at Ganqimaodu Port in Mongolia was 1,630 yuan/ton, down 2.98% from week to month; 1/3 of the coking coal site price at Cek Port was 970 yuan/ton, which remained flat from week to week. As the weather warms up, construction starts are expected to improve, and demand for steel and other materials is expected to improve marginally, driving a steady rebound in coking coal prices.

Risk warning: coal safety incidents, coal supply policy adjustments, demand falling short of expectations, etc.