Analysts believe that it is now in a critical period of coal power annual contract negotiations, and both parties will compete on short-term price increases and next year's contract quantification.

This year is coming to an end. After the coal price has been falling for nearly a year, the coal power negotiation has entered a critical period, and the two parties have once again started the annual game.

Entering December, due to the continued impact of cold weather in the northern region, the closure of ports and the obstruction of automobile transportation have greatly exceeded market expectations. At the same time, coal companies deliberately control the rhythm of shipments before signing annual contracts, resulting in a rapid decline in inventories at northern ports.

As of December 17, the inventory of several major coal ports in the north (Qinhuangdao Port, Caofeidian Port, Jingtang Port, Tianjin Port and Huanghua Port) totaled only 11.385 million tons, a sharp drop of 40.6% from the periodical high on November 23. %. Among them, the inventory of Tianjin Port and Huanghua Port both fell to an absolute low level of over 1 million tons.

Deng Shun, an analyst at ICIS, revealed to the "Securities Daily" reporter that with the sharp drop in port inventories, some sources of goods were out of stock, the port prices began to rise, and Shenhua also tightened some preferential policies.

On December 16, downstream users received a notification from Shenhua, and Shenhua canceled the Shenyou series of discounts for market households from now on; while in December, long-term users will continue to implement the Shenyou series of discounts, but the shipment volume in December cannot exceed plan issued at the beginning of the month.

Afterwards, some power company users reported that Shenhua notified that Shenyou ships that arrived at the anchorage after 24:00 on December 23 would not accept loading.

Industry insiders believe that Shenhua has tightened the supply of "Shenyou" and let some downstream users reconnect with "Shenzhuan", which is tantamount to increasing prices in disguise.

According to Shenhua Group insiders, if the sales volume of Shenyou in some regional companies of the group exceeds the plan at the beginning of the month, customers will be notified that they can no longer receive the coal of the Shenyou series. In December, the number of long-term cooperation customers receiving Shenyou coal cannot exceed the plan set at the beginning of the month.

It should be mentioned that the sales of Shenhua and China Coal both improved in November.

Recently, the main production and sales data released by Shenhua in November showed that the sales volume of Shenhua's commercial coal in November fell by 6.7% year-on-year, the decline narrowed by 17.20 percentage points, and the absolute volume rebounded by 21.59% month-on-month. In November, the seasonal rise in daily consumption of power plants led to a recovery in demand. The throughput of Sigang and Huanghua ports rebounded by 11% and 7% MoM respectively, benefiting from the MoM increase in Shenhua's sales.

At the same time, the sales volume of China Coal in November narrowed by 13.8 percentage points year-on-year, and fell slightly by 3.52% month-on-month, of which the sales volume of self-produced coal decreased by 2.18% month-on-month.

Dong Chen, an analyst at Changjiang Securities, said that at present, the seasonal improvement of demand in winter has reflected most of it, but there is still some room for improvement before the end of the year. Considering that the current port inventory continues to deplete, coastal supply and demand will continue to pick up, and port coal prices are currently low. A rise of 5 yuan does not rule out the possibility of a slight rebound in the follow-up.

Winter is the peak season for coal demand, and the market has long been looking forward to a short-term rebound after coal prices continue to slump. Especially near the end of the year, it is a critical period for coal power negotiations.

The person in charge of a five major power group said that the recent rebound in thermal coal prices is relatively clear, the port inventory is low, and the port pressure is more serious, and the coastal transportation is not smooth. It is expected that this round of tight supply will not be until early January. will be relieved. The two sides of coal and electricity have begun to negotiate the long-term agreement for next year. It is normal for coal companies to control the supply at this time and build momentum for the negotiation.

Deng Shun believes that the current tight inventory in northern ports is conducive to coal companies raising prices. Shenhua's tightening of discounts is a follow-up, but because the industry is generally bearish on demand in 2016, and it is currently in a critical period of coal power annual contract negotiations, coal power The two sides will play a game on the short-term price increase and the quantitative contract for next year. Therefore, large coal companies are more cautious about price increases.

However, what is not optimistic is that the contradiction of coal overcapacity is serious, and the downward pressure on coal prices is still great. Therefore, from the perspective of the industry, despite entering a critical period of coal power negotiation, it may be difficult for coal companies to gain an advantage in this year's game.

Article source: Xinjiang Energy Network