Coal news and updates

After reaching fever pitch, China’s spot thermal coal-price frenzy has finally shown signs of cooling, with prices falling sharply recently from last week’s record high, due to slowing coal procurement from the country’s end-users, Mysteel Global noted.

As of January 26, Mysteel’s price assessment for the 5,500 kcal/kg Shanxi blend thermal coal had fallen sharply by Yuan 175/tonne ($27/t) on week to Yuan 870/t at Qinhuangdao port in North China’s Hebei and including the 13% VAT, the lowest for the past 20 days.

 

“Power plants have begun to wait-and-see regarding buying, after actively replenishing spot coal earlier which crazily pushed up coal prices,” said an industry source based in Hebei. Noting the cooler buying enthusiasm among the electricity suppliers, other end-users including cement manufacturers and coal chemical firms have also slowed procurement, he added.

 

“Coal suppliers are now reducing their offer prices almost on a daily basis, and some have even cut prices several times in a single day,” he said.

 

The slowdown of thermal coal procurement from domestic power plants is chiefly because of the return of warmer temperatures and cooling industrial activity, as workers have started to return to their hometowns for the Chinese New Year break in mid-February, explained a Shanghai-based analyst. Some staff have been encouraged by the authorities to remain at their places of work to contain the COVID-19 pandemic however, he noted. 

 

Coal miners were required by the country’s authorities to operate at maximum load – so long as mine safety is not jeopardized – while railway operators have prioritized thermal coal delivery. Imported thermal coal arrivals in China were smooth too, according to him.

 

Impacted by the weakening coal procurement, road freight charges for delivering thermal coal by truck have also declined. As of January 26, the coal delivery charge for the 770-km route from Shenmu city in Northwest China’s Shaanxi to Huanghua port in Hebei had dropped by Yuan 30/t on week to Yuan 280/t, according to Mysteel’s data.

 

China’s spot thermal coal price has lost its momentum and may continue to drop, the Shanghai analyst anticipated. As industrial electricity consumption gradually slides closer to the Chinese New Year break, thermal coal demand will decline too, and with the blanket of measures to secure coal supply, coal stocks at transhipment ports and held by end-users may start to increase, he explained, warning that this will weigh on domestic spot thermal coal prices.

 

 

Source : https://www.mysteel.net/article