Once again fell steam coal prices instability
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On November 7th, the price was 643 yuan per ton, while on November 14th it dropped slightly to 641 yuan per ton. By November 21st, it remained steady at 641 yuan per ton, only to fall further to 640 yuan per ton on November 28th. Despite a brief stabilization in the Bohai Rim thermal coal market, prices have resumed their decline. Additionally, with weaker downstream demand, coal stockpiles at the four major ports around the Bohai Sea have begun to accumulate again.
As an important barometer for the domestic coal market, the rebound in coal inventories at the Bohai Rim ports and the ongoing fluctuations in prices suggest that the fundamental demand for coal remains unstable. Industry experts predict that coal demand won’t see a significant uptick until mid-2013. In the longer term, as the economy transitions and the adoption of clean energy accelerates, coal demand is expected to continue slowing, leading to growing oversupply issues and sustained pressure on industry profitability.
The Bohai Thermal Coal Price Index closed at 640 yuan per ton on November 28th, marking a 1 yuan per ton decrease from the previous period. Following two weeks of declines and flatlining, the index dropped again this week, entering a phase of volatile consolidation. Notably, the transaction price for thermal coal in the 5500 kcal market at Qinhuangdao Port fell by 5 yuan per ton compared to the previous week, reaching 635 yuan per ton. This figure is still 165 yuan per ton below the “electric coal†ceiling price.
Meanwhile, coastal coal shipping has also been volatile. According to shipping data from the Ocean Freight Index (OCFI), the overall coastal coal transportation market has continued to grow over the past week, though at a slower pace. For instance, the average freight rate for coal transported by ships of 40,000 to 50,000 tons from Qinhuangdao to Shanghai dropped by 0.1 yuan per ton to 26.6 yuan per ton compared to November 20th. Between Qinhuangdao and Guangzhou, the average freight rate for ships of 50,000 to 60,000 tons fell similarly by 0.1 yuan per ton to 36.3 yuan per ton. However, freight rates for smaller vessels—those of 20,000 to 30,000 tons traveling from Qinhuangdao to Zhangjiagang—rose slightly by 0.2 yuan per ton to 33.1 yuan per ton.
According to Li Xuegang, an industry expert, the coexistence of positive and negative factors has become the defining characteristic of the recent thermal coal market in the Bohai Rim region, contributing to the ongoing challenges faced by coal prices in the area. On one hand, improving economic conditions, the waning influence of hydroelectric power, and rising coal consumption for heating during winter have contributed to higher daily electric coal usage and a gradual depletion of coal inventories, alleviating some downward pressure on thermal coal prices. On the other hand, sluggish coal-fired power consumption and persistently high stock levels continue to dampen the purchasing enthusiasm of consumer companies.
In summary, the coal market remains a complex landscape, balancing various macroeconomic and industrial dynamics. While there are signs of recovery in certain segments, the overall outlook remains cautious as the industry navigates through uncertain times.