Friday, April 4, 2014

China Coal Weekly: Shenhua Secures Flat Contract Coal Prices

China Shenhua Energy, the nation's biggest coal producer, said its Q2 contract coal prices are basically unchanged from Q1 2014, with a slight increase of 0.2 to 5 yuan/ton.
The price of benchmark 5,500kcal/kg coal is 568.8 yuan/ton, unchanged from Q1.

Thermal coal inventory fell in Bohai port for the sixth consecutive week in the week through March 30, down 4.7% from the previous week to 17.9 million tons, according to Mysteel.com. Coking coal inventory dropped 1.5% week on week to 7.4 million tons.

The average price of the benchmark 5,500kcal/kg steam coal in Qinhuangdao held steady 525 yuan/ton in the week through March 23, slightly above 520 yuan/ton, the lowest spotted in 2013, according to Cqcoal.com. Further downside is expected for Qinhuangdao coal price as China enters the March-May low season for power demand. Coal inventory fell further, by 7.9%, to 6.49 million tons in Qinhuangdao as of March 23; coal inventories at key power plants were 70.25 million tons, or 18 days, as of March 10.

Mongolia plans to export a total of one billion tons of coal to China in the coming 20 years, said Tuvdenorj Naranth, director of the nation's coal industry association. China, Mongolia's biggest coal buyer, imported 18 million tons of coal from it last year, and expects to import 34 million tons in 2014.

China's coal market has begun the year poorly with Qinhuangdao coal prices having fallen 19% to 530 yuan/ton in the year to date, compared with the 2013 average price of 588 yuan/ton. JPMorgan expected production cuts to help rebalance the market into Q 2014. Individual power producers currently hold around 20 days of coal inventory versus a normal level 18 days.

The impact of overseas thermal coal in March and April will be significantly lower than that January and February as the price advantage of imported thermal coal against domestic thermal coal narrows, Guotai Junan Securities said, adding that coal demand of power plants would stay flat, coal inventory of ports would decrease and coastal thermal coal price would recover slightly in the following months.

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