Financial Services Association, April 22 (Editor: Feng Yi) The Hong Kong stock market experienced a strong rebound today, but previously strong resource stocks have collectively weakened, and the coal sector experienced the highest decline.

As of press release, Mongolian coking coal (00975.HK) fell more than 7%, China Coal Energy (01898.HK) fell more than 5%, Yankuang Energy (01171.HK) and Shougang Resources (00639.HK) both fell by more than 4%, and many coal companies such as China Shenhua (01088.HK) followed suit.

According to the news, according to the National Bureau of Statistics, in March 2024, the country's regulated industrial raw coal production was 399 million tons, down 4.2% year on year, reducing market sentiment towards coal stocks.

Wang Yi, an analyst at Great Wall Securities, pointed out in a recent report that the recovery in non-electricity demand after the holiday season fell short of expectations as the main reason for the drop in coal prices. However, the temperature continued to rise after the holiday season, the daily consumption of power plants dropped markedly, stocks were sufficient, and the market did not accept high-priced coal very well.

What is more noteworthy is that domestic coal prices have shown a downward trend for 2 consecutive months since peaking in late February, and the suppression has affected market expectations.

According to the weekly industry report released by Dongwu Securities analyst Meng Xiangwen on April 21, for the week ending April 15 to 19, the spot price of thermal coal in the port was 826 yuan/ton, up 25 yuan/ton from the previous week, showing a slight recovery.

However, prior to that, the spot price of thermal coal in the port had dropped from a low of 940 yuan/ton in the week ending February 23 to 801 yuan/ton in the first week of April, falling nearly 140 yuan per ton, a range drop of about 15%.

The Ministry of Commerce's market operation monitoring system also shows that from April 8 to 14, coal prices across the country fell overall. Among them, coking coal, thermal coal, and No. 2 anthracite coal were 1,194 yuan, 802 yuan, and 1,207 yuan per ton, down 3.6%, 1.2%, and 0.7%, respectively.

Also, according to research released by Huatai Securities at the beginning of this month, considering the industry's traditional low demand season, this round of downward pressure on coal prices may continue until the second quarter. Among them, demand during the April-June off-season will test coal price support.

However, as a hot sector with impressive performance since the beginning of the year, institutions are still confident about the subsequent rebound in coal stocks.

Dongwu Securities believes that as May approaches, power companies need to start stocking up to “welcome the peak of summer,” and it is expected that electricity procurement will improve. At the same time, it is expected that the impact of production site safety supervision will continue to exceed expectations, and supply contraction may cause raw coal production to drop by 100 million tons throughout the year. Expectations for coal prices remain optimistic.

Changjiang Securities also said that the water storage level in the Three Gorges has fallen to the same period last year, there is still uncertainty about this year's hydropower output, and it is still optimistic about the room for coal prices to rebound this year.