With the onset of cold spells in various regions of the mainland, coupled with the tight supply of coal, coal prices in the mainland have surged recently. According to mainland media reports, as of January 5, coal prices broke through the 2900 integer barrier and closed at 2959.5, a record high.
In December 2020, there were power cuts and orderly use of electricity across the mainland, reflecting the phenomenon that the supply of coal in the mainland market exceeded demand, and coal prices rose sharply as a result . According to the data from the National Bureau of Statistics, coal prices on the mainland rose gradually in mid-December 2020, with increases ranging from 0.2% to 5.2%. At present, the mainland coal market has launched the 12th round of price increases, and some companies have increased coal prices up to 100 yuan per ton.
For coal prices continue to rise, some analysis said it is related to the slow growth of domestic coal production. The mainland media reported comprehensively that since October, Shanxi, Hebei and Henan have eliminated a total of more than 40 million tons of backward production capacity, but the new production capacity only reached 18 million tons, and the production rate is slow. On the other hand, the black building materials group of CITIC Futures said, in response to the major coal mine safety accident in Chongqing in December last year, the country has strengthened the safety inspection of coal, and all kinds of overproduction are strictly controlled, and the impact on domestic coal production is estimated to be maintained until the Spring Festival.
At the same time, the temperature in various regions of the mainland reduced, cold wave intensified, according to the Central Weather Station website, many areas of the mainland affected by cold air, the general decline of 6-8 degrees in the central and eastern regions of the Middle East, the drop of up to 10 degrees in western North China, eastern Jiangnan and other places. This has increased the demand for coal for residential heating and electricity, and it is estimated that the demand for coal and electricity will increase significantly.
In addition to the impact of domestic factors, high coal prices are also related to the restrictions on coal imports to the mainland. Comprehensive mainland media reports, affected by the epidemic and port clearance, the supply of imported coal from the mainland is limited.
Australia and China relations have not seen the light of day to rely on imported coal to suppress coal prices is hopeless
On the other hand, it is inferred that the continued tight supply of coal may originate from China’s stopping the purchase of coal from Australia. Australia is the most important source of coal imports to China. Beijing Iron and Steel Research Institute, a retired scholar Mr. Song has said to this station, Chinese companies rely heavily on Australian and Canadian coal, power generation coal demand is very big look, “the first five years, the first ten years, China’s power generation is a surplus”. But the reality is that Australia and China have not yet seen the light of day in improving relations, in the medium and short term can not expect to rely on imports to calm coal prices
In order to ensure the stability of coal prices, China Coal Energy Group, Jin Energy Holdings Group and other seven large coal groups on Friday (1) published a joint initiative “to ensure supply and stabilize prices” to speed up the signing of medium and long-term coal contracts in 2021 and contract aggregation work, in order to stabilize market expectations and prevent coal prices from fluctuating.
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