How to interpret the rapid return of thermal coal prices to the backward market?

After the original main force 2101 contract of thermal coal hit a new high of 777.

Policy-level guidance

On January 16, the National Development and Reform Commission organized a video conference to make arrangements for the 2021 Spring Festival and the "Two Sessions" period to ensure the supply and price stability of living materials and the guarantee of energy supply.

On January 19, the China Coal Transportation and Marketing Association organized the heads of 14 large coal enterprise groups including National Energy, China Coal, Jinneng Holdings, Shaanxi Coal, and Yitai to participate in a video conference.

On December 12, 2020, the National Development and Reform Commission held a symposium, stating that power plants can freely purchase imported coal and requesting the customs to expedite port coal (excluding Australian coal) customs clearance, resulting in a surge in imports that month, and imports exceeding expectations throughout the year.

Promotion at the coal enterprise level

First of all, the large coal company's initiative.

Secondly, coal enterprises actively fulfill the mission and responsibility of increasing production, ensuring supply and stabilizing prices.

Finally, large coal companies have achieved results in increasing production and ensuring supply.

　　There is a callback requirement

　　First, the annual long-term association prices continued to increase.
The annual long-term association price of Q5500 kcal thermal coal was raised by 23 yuan/ton and 33 yuan/ton in January and February, respectively, and was already at 614 yuan/ton in February.
The long-term agreement price mechanism has played a "ballast stone" role in ensuring supply, price stability and people's livelihood.

　　Second, the long-term association signed a historical record.
The annual long-term agreement signed at the end of December 2020 reached 1.
375 billion tons, while the recent data released by relevant agencies was 2.
1 billion tons.
In addition to coal and electricity joint ventures and UHV, 85% to 90% of coal consumption in the market is in long-term agreements.
Executed under the price mechanism.

　　Third, the market performance is active and effective.
First, the current price of futures fell in response.
The spot price of thermal coal has fallen from RMB 1,150/ton in mid-January to RMB 755/ton at present, and there are signs of continued decline.
The main futures contract of 2105 has dropped from RMB 738/ton to RMB 610.
/Ton; Second, 85%—90% of the coal consumption end is implemented at the long-term agreement price, and the market share of the trade end less than 15% is mainly caused by traders and hot money.
This is also the specific process of the formation of the coal price market mechanism.
Performance; The third is the serious deviation of the current period.
The basis on January 20 was 369.
5 yuan/ton.
Under the measures of increasing production, expanding imports, ensuring supply, and stabilizing prices, it quickly returned to 98.
1 yuan/ton on February 5.

　　Combining the above analysis, it is expected that the spot price of thermal coal still has a large downside, and the futures price will oscillate after entering the blue price range of 570-600 yuan/ton, waiting for the return of the spot price.

　　At present, the spot side is mainly clearing inventory, and the futures side is mainly shorting.
Coal producers and traders can use thermal coal futures and options tools to hedge short positions.
When the thermal coal futures price enters the blue range, as the economy picks up and demand further increases, the futures price may fluctuate widely, but the serious deviation of the futures price will completely improve.
Pay attention to grasping investment opportunities.
(Author's unit: Yingda Futures)

Transfer from: Futures Daily

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