It will be difficult to further ease the coal supply and demand relationship in 2024. With the arrival of the peak summer season, it is expected that the domestic coal prices will not fall much further.
Thermal coal: According to Wind, since mid-April, the thermal coal price has stabilized and rebounded. Since June, the high temperature in North China has continued, while the southern regions have experienced more rainy weather, suppressing the demand for electric coal. However, last week, the daily consumption of power plants began to increase, and it is expected that with the continued rise in temperature, the daily consumption will continue to increase. Supply and demand may tend to be slightly tight, and coal prices are expected to be stable or rise slightly.
Coking coal: Since June, the prices of major coking coal ports and production areas have fallen slightly. Although terminal demand will enter the seasonal offseason, supply constraints still exist. At the same time, the low inventory levels at various links of the coking coal support the coal prices, and with the implementation of various policies in the second half of the year, the coking coal prices have the elasticity to rise.
GF securities' research report indicates that the supply may remain at a low level, and with the arrival of the peak summer season, the supply and demand situation may tend to be slightly tight. The sector may benefit from the gradually stabilizing and rising coal prices. It is expected that with the improvement in seasonal demand and the positive macro expectations, both electrical and non-electrical demand will have room to increase.
In addition, the normal monitoring of production safety continues, and the coal price may continue to be stable or rise. Production of various companies in the second quarter is expected to recover steadily, especially in regions such as Shanxi and Henan where production is expected to increase significantly, and performance is expected to steadily improve.
Shanxi Securities stated that the May data basically met expectations and the demand side is expected to improve in the future. Production safety measures continue to be implemented in coal mining areas, and with increased inspection and maintenance activities and rising expectations for coal production resumption brought about by meetings in Shanxi, coal production may improve on a daily basis in the near future. In terms of demand, the overall high temperature weather has weakened and the power plant load has limited support. Non-electrical industries are still in the stage of replenishing inventories in May, but at the same time, new energy and southern hydropower are increasing their output, affecting the coal demand increment. The influx of coal into ports continues to be greater than the outflow, and inventories are increasing.
As a whole, the domestic port thermal coal price has slightly increased month on month due to various factors. As for coking coal and coke, production safety measures continue to be implemented, and demand is boosted by positive macro and real estate policies. The expected increase in steel demand increases the demand for coke. Steel prices continue to rise, and the start-up rate has increased, boosting the demand for metallurgical coke. Metallurgical coke prices showed a primarily upward trend in May.
Overall, it will be difficult to further ease the coal supply and demand relationship in 2024. With the arrival of the peak summer season, it is expected that the domestic coal prices will not fall much further, and the real estate and infrastructure policies in the later period still have a marginal expectation of improvement, with strong rigid demand for coal.
Coal-related companies: China Coal Energy (01898), Yankuang Energy (01171), Yancoal Australia (03668), China Shenhua Energy (01088), SouthGobi (01878), China Qinfa (00866), etc.
China Coal Energy (01898), Yanzhou Coal Energy (01171), Yancoal Aus (03668), China Shenhua Energy (01088), Southgobi (01878), China Qinfa (00866), etc.