China's Steam Coal Prices Is Expected To About RMB 650 /ton In July 27 May 2019
China's port Steam coal prices have been volatile for two months. Considering the weakening of short-term demand and the high inventory of power plants, the following peak season is expected to show a trend of first falling and then rising. With the sustained high growth of investment in real estate development in China, coke stocks have been largely digested, and spot prices of coke and coke still have room to rise in the short term. Catalyzed by the rise in spot prices, the plate is expected to re-emerge in the peak season driven by valuation repair. China's import of coal has increased significantly. Has the import policy been relaxed? In April, China's coal imports grew by 13.55% year-on-year, including Australia's coking coal imports, year-on-year and ring-on-year increased significantly. The main factors driving import growth are the large discount of imported coal and the shortage of domestic coking coal. At the policy level, there is no systematic relaxation. If the discount of imported coal continues, the follow-up import volume may still increase year on year. Will the squeeze of hydropower on thermal power be further aggravated? In the first April of this year, the contribution of thermal power to power generation growth dropped from an average of 70% last year to 45%. Since March, the rapid growth of hydroelectric power has restrained the growth of thermal power. However, as the output of hydropower reached the historic sub-high level in the peak season of June to September last year, the probability of hydropower expansion in the following months is small, the squeeze on thermal power is difficult to aggravate, and the growth rate of coal consumption in thermal power is expected to accelerate under normal weather conditions. Steam coal price "horizontal plate" after trend: first falling and then rising probability is high. In the past two months, the fluctuation range of port Steam coal price is only less than RMB 20 , and the "cross plate" time is longer. With the significant decrease of coal consumption demand and the gradual accumulation of absolute inventory, it is expected that the purchase rhythm of power plants will slow down. At the same time, with the reduction of transportation costs and value-added tax rate, the cost of coal arrival will also decrease, and the short-term price low is expected to be RMB 590-600 /ton. In the peak season of July, the demand for replenishment or the price of replenishment increased to about RMB 650 /ton, showing a pattern of first falling and then rising. Can the "double focus" price rise continue? At present, coke enterprises and blast furnace start-up rate remain high, but Coke and steel stocks are digested more than 30%, indicating that the overall demand of the industrial chain is good, which is mainly due to the high growth of real estate investment. It is expected that the growth rate of real estate investment will remain high in the next quarter, which is expected to support the demand of the industrial chain. It is expected that coke prices will still have room for a price increase of about 100 RMB , and coke prices will continue to rise by 50-80 RMB /ton.