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    High stocks will limit coal price increases

    2019-02-11 04:24:34

    China Securities Journal Zhang Lijing

    On the eve of the Spring Festival, the coal sector futures varieties rose across the board. Analysts pointed out that short-term support for coal price, such as safety supervision and limited production, peak season demand, but over time, Lido digested, future high inventory and other negative factors may become a new focus of coal futures operation (Hong Kong stocks 00360), after the holiday Focus on the strength of support below the futures price.

    Thermal coal prices are expected to remain volatile

    In terms of thermal coal, as of the eve of the Spring Festival holiday, the number of days of power plant inventory available is 23 days, which is at a high level in the same period of history. It is difficult to increase the purchase intention of short-term power plants after the holiday. The imported coal is also sufficient, and the port coal price is stable.

    However, it is worth noting that on the eve of the Spring Festival holiday, the coal price of Hangkou is rising rapidly. The shipping cost is not high, and the port inventory is obviously reduced.

    Changjiang SecuritiesAnalyst Wang Hetao said that the main production area of ​​coal is stricter on coal mine safety production supervision. Shaanxi Province has carried out safety rectification of coal mines from January 22, 2019 to the end of June 2019. After the Spring Festival, the production environment is tight, and coal mines are expected. The progress of the resumption of production is slow. In the current background of seasonal demand decline and high inventory levels, the contraction of supply is difficult to be reflected in the terminal purchase volume and price. If the coal consumption demand brought by downstream construction is better after the holiday, the inventory of the transit link will continue to decline and may not be triggered. The trend of coal price trend, focusing on the scope and implementation of the main production stop.

    “Currently, the price of thermal coal is within the range of green coal prices. Conditions such as safety supervision and production limits and demand peak seasons may support short-term or support thermal coal prices, but factors such as high inventory in winter supply and superimposed terminals, and weak manufacturing demand, thermal coal prices may Maintain shocks."Founder SecuritiesHan Zhenguo, an analyst in the coal mining industry, said that in December 2018, PMI data fell below the stagnation line for the first time in recent years, and the demand for long-term thermal coal downstream demand is still pessimistic.

    Double focus price has limited upside

    In terms of coke, “from the perspective of supply, coke production remained relatively high on the eve of the Spring Festival. Due to safety supervision and the holiday of some coke mines, the tightening of raw materials or the marginal supply of coke is under pressure. From the perspective of demand and inventory, the coke of the Spring Festival Terminal stocks continue to rise, coking plants and port stocks are down; affected by downstream high prices and expected demand recovery, blast furnace capacity utilization remains high, coke demand may exist or support.” Han Zhenguo analysis.

    He said that coke prices are expected to fluctuate strongly due to higher downstream demand, impact of superimposed safety supervision or coke supply, and improved pessimistic expectations. However, due to the high terminal inventory and the gaming psychology of steel mills, there is limited room for the rise in coke prices.

    In terms of coking coal, Wang Hetao said that before the holiday, coal mines and coal washing plants were on holiday, and coking coal, especially the supply of clean coal, contracted. Under the background of the downstream start-up situation, there is still demand for procurement and stocking of raw materials, coal mine shipments are smooth, and mining stocks are declining. Overall, coking coal supply and demand is good, tracking the new construction and downstream coal production after the festival. Han Zhenguo analyzed that coking coal prices fluctuated strongly before the holiday due to the improvement of downstream demand and superimposed safety supervision and holiday factors. However, considering the continuous increase in terminal inventories, it may lead to limited upside price of coking coal in short-term prices.

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    Editor in charge: Fu Jianqing RF13564

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