Coal and Electricity have not agreed on coal prices

A clear feature of coal production, transportation, and demand convergence in 2013 is that the nationwide coking coal contract has been signed very smoothly. Judging from the situation reflected by local coal companies, almost all of the companies’ coking coal contracts were successfully signed. There was no major dispute between the parties on the price and the contract volume. Basically, they were compared with the coking coal market price in December last year, and 2013 was signed faster. Supply and demand contract for the year. Compared with coking coal, the signing of coal contracts is much more difficult and the focus of the debate between the two sides is on prices. The power companies have always believed that the price of electric coal coal mines in 2013 was too high.

In fact, before the announcement of the "Guiding Opinions of the General Office of the State Council on Deepening the Market-oriented Reform of Power Coal," many coal companies have already started their convergence work. The earliest is the Long Coal Group. The group began to connect with customers at the end of 2012. In mid-December, coal companies such as Shanxi Yangquan Coal Group, Jincheng Coal Group, and Chun'an Group have gradually started to converge. At the end of December, coal-fired power companies across the country basically achieved docking, but the signing of coal-fired coal association contracts in 2013 has not progressed.

Judging from the signing of the contract, Shanxi's coal-to-coal coal province, Shanxi, has signed a contract for direct railway coal. The convergence of the state-owned coal enterprises in eastern Inner Mongolia is also basically completed. The coal supply in western Inner Mongolia is large and needs to wait for the railway transportation capacity to be finalized. Determine the contract. In terms of prices, the price of electricity from direct railroads to inland areas has risen slightly from the 2012 contract price, but it is lower than the current market coal price. The price of sewer coal basically refers to the pricing model of Shenhua Group, and 70% of the annual connection volume. The fixed-length co-price, 30% of the spot price, including the long agreement price with reference to the current Bohai Sea thermal coal price index, down 10 yuan per ton, the spot price in accordance with the Bohai Sea price index to determine.

As of 17:00 on January 17, there were still some coal-fired power companies that did not sign an electricity supply and demand contract. The sewer coal supply companies represented by Shenhua Group and China Coal Energy Group are still negotiating with the five major power generation groups. The five major power generation groups still disagree with Shenhua's pricing model; coal prices in key coal and market areas in Shaanxi, Henan and other regions are upside down, and the connection work starts. Late, coal-fired power companies have not reached an agreement on the price of coal.

In fact, both coal companies and power companies admit that cancelling key contracts and realizing price merging are the general trend. Prior to this, the industry generally believed that the current is the most favorable opportunity for coal prices to merge, but there are still problems such as the difficulty of signing contracts in the negotiations. There are two main reasons.

First, the current coal market is relatively loose. The first is that the power plant has sufficient inventory. As the saying goes, "There is excess food in the hand, and there is no panic in the heart." High stocks play a role in the power plant. The power plant is not in a hurry to sign a contract. By the end of 2012, the national key power generation enterprises had stored 81.13 million tons of coal, and the number of available days remained at 19 days or more. Followed by a large increase in imported coal. Starting from October 2012, coal imports began to recover month by month. In December, imports reached 34.6 million tons. Accumulative imports totaled 290 million tons, an increase of 29.8% year-on-year.

Second, institutional issues require deeper reforms. The first is that power companies have become accustomed to the low price of key coal for many years. The merging of coal prices means that the policy dividends enjoyed for many years have disappeared, and power companies must find all sorts of pretexts to thwart them. Secondly, power companies are worried that coal resources will be tight and coal prices will rise sharply in the future. Under the current situation where power system reform is relatively slow, it is difficult to digest rising coal prices.

Although some companies still did not sign a coal supply and demand contract, in January this year, the coal and electricity companies still purchased and sold according to the contract in December last year. Whether coal or electricity companies, they dared not rashly stop coal shipments or accept coal. This includes the awareness of the overall situation of state-owned enterprises, reflecting from the side that there is no absolute advantage for either party in supply or demand under the current market conditions.

Time is changing, and the bargaining chips of the coal and electricity sides are also changing. At present, the temperature is low, the daily consumption of the power plant increases, and the inventory consumption is faster. Affected by factors such as safety accidents in Shanxi and other places and the approaching of the Spring Festival, the suspension of production cuts will lead to a decrease in coal supply. At the same time, coal imports have maintained a rapid growth trend. Changes in these factors will have a huge impact on the coal market. In the future, the balance between supply and demand of coal will eventually be biased toward which side? Who will have greater power in the market? We will wait and see.