This year's thermal coal market will be in a pattern of overall balance of supply and demand and a slightly looser off-season. The inventory strategy of the power plant still has a large impact on the rhythm of thermal coal price fluctuations, and the seasonal characteristics will continue to weaken. At the same time, the price of thermal coal will be further shifted downward this year. It is estimated that the price range of the 5,500 kcal thermal coal market in the Bohai Sea port will be 550-650 yuan/ton.
A, supply will be loose in 2019
With the improvement of coal industry profit, the sharp decline in fixed asset investment in coal mining and washing industry has improved. In 2016, the growth rate of industry investment was -24.21%, and in 2017 it was -12.82%. From January to October 2018, the cumulative investment growth rate of the industry was 5.2%. Once again, the coal industry entered a stable development period.
In order to solve the problem of serious supply surplus, China's coal industry began supply-side reform in 2016. It is planned to complete the 800 million tons of de-capacity task in five years, and increase the advanced production capacity by 500 million tons through reduction and replacement. In 2016, it plans to withdraw production capacity of 290 million tons, and actually withdraws 350 million tons, exceeding the plan. Due to strict control of over-production, coal supply has rapidly shifted from a severe surplus to a supply shortage. In 2017, it plans to have a capacity of 150 million tons and actually complete 120 million tons. In 2018, it plans to withdraw 150 million tons of production capacity. Assuming that it has been completed as planned, the cumulative capacity will be 620 million tons.
With the continuous production of advanced production capacity, coal production in 2018 has been greatly improved compared with 2016, and the serious imbalance between supply and demand has greatly improved. After the large-scale mines in the main producing areas are put into production, the output increase is large, and the controllability of the adjustment is significantly improved. In the face of the staged supply guarantee requirements, the implementation effect is better. From January to October 2018, the country's raw coal output was 289.889 million tons, an increase of 46 million tons, an increase of 5.4%. The growth rate was 0.6 percentage points higher than that of the same period in 2017.
The remaining 180 million tons of capacity in the next two years will not have much impact on the current supply. At the same time, with the further increase of industry concentration, the proportion of state-owned key mines increased, and the impact of unexpected events such as environmental protection and safety inspection on production will be weakened.
B, the import policy is more uncertain
The changes in China's imported coal-related policies since 2017 have repeatedly attracted market attention. In May 2017, strict import of low-quality coal was strictly controlled; in July, the second-class port was prohibited from operating coal import business; the import of coal at the end of the year was temporarily cancelled. In April and May of 2018, news of strict control of imported coal at some ports was reported again, causing many speculations in the market.
In November 2018, China's total coal import volume was 19.153 million tons, down 13% year-on-year and 17% quarter-on-quarter. For the fourth consecutive month, imports fell. From January to November 2018, the cumulative import volume reached 271.187 million tons, an increase of 9.3%. In 2017, China's coal and lignite imports totaled 271 million tons. The coal imports from January to November 2018 have remained basically the same, and there is almost no quota for customs declaration in December. At present, there is no “one size fits all” and “one ship and one discussion” takes into account the actual situation of the terminal, which also makes the final import quantity in December 2018 still have greater uncertainty. In 2016 and 2017, the import volume was 26.84 million tons and 22.74 million tons respectively. The market is more concerned about the decline in final imports under current policies.
Imported coal has certain rigid demand in some power plants in South China and East China, which has alleviated the problem of long transportation distance and high transportation cost of coal in China. The introduction of sudden policies is likely to bring greater uncertainty and practical difficulties to related companies. It is expected that the effect and accuracy of this year's import policy will be significantly improved. At present, the probability of a decline in the total amount of imports in 2019 is relatively large, and the decline is highly uncertain. It is estimated that the total annual import volume will be 240 million tons.
The picture shows the annual import volume of coal (10,000 tons)
C, consumption growth rate or further slowdown
2018 electricity demand is better than expected The growth rate of tertiary production and residential electricity consumption exceeded double digits. From January to October, the growth rate of electricity consumption in the whole society was 8.7%, slightly higher than the growth rate of 6.6% of thermal power. From January to October, the national total electricity consumption was 565.2 billion kWh, an increase of 8.7% year-on-year, and the growth rate was 2.0 percentage points higher than the same period of the previous year. In terms of industries, the electricity consumption of the primary industry was 61.5 billion kWh, up 9.8% year-on-year; the electricity consumption of the second industry was 387.5 billion kWh, up 7.2% year-on-year;800 million kWh, an increase of 13.1% year-on-year; urban and rural residents' electricity consumption was 828.5 billion kWh, an increase of 11.1%.
The global economic situation in the new year is not optimistic. Trade frictions and tightening monetary policies may curb global economic growth, and the external environment of China's economic growth has been tested. Downside pressure is mainly from the demand side. Whether the rebound in the infrastructure sector, which is highly anticipated, can offset the decline in exports and real estate investment growth will also require time verification. Under the background of several economic consensus, the decline in social power consumption is expected to be strong, and the growth of power demand is difficult to maintain high growth. The growth rate of coal consumption is expected to fall further, and the peak demand for coal has already appeared.
The data shows that from January to October 2018, the thermal power generation capacity of power plants above designated size was 406.86 billion kWh, a year-on-year increase of 6.6%, and the growth rate was 1.2 percentage points higher than the same period of the previous year; January-October, the whole country The hydropower generation capacity of power plants above designated size was 941.8 billion kWh, a year-on-year increase of 4.6%, and the growth rate was 2.4 percentage points higher than the same period of the previous year. From January to October, the country's crude steel output was 782.458 million tons, up 6.4% year-on-year. Among them, the output of crude steel in October was 82.52 million tons, up 9.1% year-on-year and 2.1% month-on-month. From January to October, the national cement output was 179,644,000 tons, up 2.6% year-on-year. Among them, the cement output in October was 22,043.2 million tons, up 13.1% year-on-year and 6.1% month-on-month.
The picture shows the annual electricity consumption of the whole society (100 million kWh)
D, the probability of terminal inventory is high
2018 inventory structure A notable feature is the limited stock of pits and the significant increase in inventory of ports and terminal power plants. Although the total stock of the whole society is not high, the coal storage structure has undergone a great change, moving from the upstream to the middle and lower reaches. At the end of October 2018, the stocks of key power plants, six major power plants in the coastal areas and the Yangtze River estuary were 18%, 40% and 93% higher than the same period of the previous year. First, because the power plant has changed its procurement strategy, it has carried out the off-season inventory in the off-season and used high inventory to cope with the rising price in the peak season. Second, with the increase of the handling capacity of the Yangtze River terminal and the increase in coal demand in the Yangtze River hinterland caused by trans-regional transmission. The status of the Yangtze River Terminal has gradually increased.
On the other hand, the railway capacity continues to grow, effectively mitigating the transportation bottleneck. The “Northern Coal South Transportation” and “Western Coal East Transportation”, which are unique to China's coal market, have extremely high requirements for transportation capacity, especially during the peak period of coal demand. The shortage of vehicle skin and insufficient transportation capacity will further push up the coal price of the port. In 2017, the environmental management of Beijing-Tianjin-Hebei region restricted the transportation of automobiles, which caused a part of the freight volume to be transferred to the railway, which further aggravated the railway transportation capacity.
In order to implement the central government's decision-making arrangements for adjusting the transportation structure and increasing the amount of railway transportation, China Railway Corporation will implement the "2018-2020 Freight Increase Action Plan" to further enhance transportation capacity and reduce logistics costs. Optimizing product supply, it is clearly stated that by 2020, the national railway freight volume will reach 4.79 billion tons, an increase of 30% compared with 2017, and the proportion of bulk cargo traffic to total railway freight traffic will remain stable at over 90%. Among them, the national railway coal transportation volume reached 2.81 billion tons, 650 million tons more than the 2017 increase, accounting for 75% of the national coal production, an increase of 15 percentage points compared with the 2017 production and transportation ratio.
With the increase in capacity, the coal in the northern port of 2018 did not feel the bottleneck from the transportation link. From January to October 2018, the national railway coal shipments totaled 1.97 billion tons, an increase of 180 million tons, an increase of 10%. In the same period, the accumulated coal transportation volume of Daqin Line was 374.17 million tons, a year-on-year increase of 4.06%.
In the future, the Daqin Railway is near saturation and there is little room for growth; the Mengyu Railway is expected to increase its capacity by 35 to 40 million tons with the completion of related supporting facilities and transportation stations; the Menghua Railway is planned to be 2019 It is put into operation at the end of the year and is expected to bring about 30 to 35 million tons of capacity growth at the beginning of the operation. In the future, the overall supply of railway capacity is abundant, and more is a structural problem. The railway transportation capacity in the Bohai Rim region has eased and has gradually become more relaxed. Before the Menghua Railway capacity was fully exerted, the coal supply in the inland provinces remained tight and the transportation capacity gap was large.
With the deepening of supply-side reform, capacity replacement and high-quality capacity production have been completed one after another. The total supply of coal in 2018 is relatively abundant. On this basis, supply will continue to increase this year. After the concentration of production capacity is increased, the regulation of production links, such as guarantees, will be more effective.The impact of factors such as inspections on production will be further weakened. The long-term ratio of the long-term alliance is further high, and the redemption rate is continuously emphasized. The amount of coal reserved for the market continues to decrease. The role of the long-term price ballast stone continues to play, and the market coal price fluctuation space narrows.
The supply is guaranteed to reserve operating space for the adjustment of the imported coal policy. This year's import policy has greater uncertainty, and the total decline is a high probability event. At the same time as the implementation of the total control target, it is expected to be decomposed into quarterly execution.
The economic situation at home and abroad this year is quite severe. Exports and domestic real estate are not enough to drive industrial products. Whether infrastructure can form demand support as expected also requires time verification. In this context, the growth rate of industrial electricity consumption will turn head, and the growth rate of coal consumption will also fall.