Affected by the transformation of China's economic structure and the prevention and control of air pollution, the domestic thermal coal market was sluggish in 2015. Coal prices fell by nearly 30% year-on-year, the entire industry chain was oversupplied, coal industry profits fell sharply, and many coal companies cut wages and layoffs. and many more.

Deng Shun, an analyst in the coal industry, believes that from the perspective of the spirit of the Central Economic Work Conference and the recent severe haze weather in the north, the transformation of China's economic structure and the prevention and control of air pollution in 2016 will lead to a continued decline in thermal coal demand and the continued decline in thermal coal prices. The logic has not changed. There are two points to pay attention to during the operation of coal prices in 2016: First, the inventory situation of downstream users. In 2015, the coal price rebounded twice, such as in May and late November 2015, because the inventory of downstream power plants was too low ( The inventory of the six major power plants along the coast is less than 12 million tons), and it is caused by the centralized replenishment of inventory. In the case of sufficient inventory of downstream users, the price of water coal will continue to be under pressure. The second is the time node for the reduction of railway freight. With the upcoming opening of the entire Mengji Railway, the pattern of excess domestic coal transportation will be further exacerbated. According to the data of the Coal Transportation and Marketing Association, in November 2015, the national railway coal delivery volume was 156 million tons, a year-on-year decrease of 34.54 million tons, a decrease of 18.2%; from January to November, a total of 1.82 billion tons was completed, a year-on-year decrease of 280 million tons, a decrease of 13.5%. %. Although railway freight rates are largely determined by the state, it is only a matter of time before railway freight rates are reduced in the face of "no cargo to transport" and the continued impact of automobile transportation. The reduction in railway freight will exacerbate the decline in coal prices.

In 2016, market and policy factors suppressing imported coal volumes will continue to play a role. First, China's downstream demand for coal will continue to decline in 2016, and most imported coal prices will face upside down; second, the "Interim Measures for the Quality Management of Commercial Coal" is still a policy risk that cannot be ignored; This will have a big impact on imported coal. To sum up, it is expected that China's coal imports in 2016 will decrease by about 20% year-on-year.

At the moment when overcapacity in the coal industry is more serious, "supply-side reform" will become a hot word throughout 2016. In 2016, enterprises in the coal industry will go bankrupt, mergers and reorganizations will increase significantly, and some "zombie companies" that previously depended on "blood transfusion" from local governments and banks will close down. Industry concentration will further increase. The withdrawal of backward production capacity in the coal industry and the improvement of industry concentration will be conducive to the healthy development of the industry in the future.

Article source: China Coal Market Network