The coal industry will welcome the worst year next year

This year, the coal industry continued its downward trend in the previous two years. The market demand is still weak. Due to huge sales pressure and near net profit, coal giants Shenhua and China Coal have started to publicly cut prices. Industry analysts believe that although this meets the needs of market competition, it is a disaster for the overall coal market. For the upcoming 2016, experts predict that the entire coal market will usher in the worst year.

In October, Shenhua WeChat issued rare sales policies for the implementation of large-scale preferential treatments for various types of coal from Shenhua in October: In October, downstream users received more than 40,000 tons (including 40,000 tons) of goods for a total of 5,500 kcal coal. 15 yuan / ton price concessions, other coal can enjoy 10 yuan / ton price concessions. In September, another large coal producer, China Coal, also issued a price reduction policy in October. Compared with September prices, China Coal 5500 kcal coal (Ping 2 and Ping 8) listing price of 405 yuan, S more than 1.5%, the settlement price discount 5 yuan / ton; S more than 1.8%, the settlement price discount 10 yuan /Ton. It is worth noting that this is not the first price cut by the two coal giants. Since June, Shenhua has carried out seven price cuts, and China Coal has repeatedly lowered the price of various types of coal. However, the facts show that price reduction has little effect on the promotion of coal sales. The operating data released by Shenhua and China Coal in October showed that the coal sales of the two companies experienced double-digit declines in the same period last year: Shenhua coal sales volume was 26.4 million tons, a year-on-year decrease of 23.9%; China Coal’s coal sales volume was 10.79 million tons. The year-on-year decrease was 31.5%.

Due to the impact of price cuts by the two major coal companies, the price of the entire coal market has continued to fall. Taking the Bohai Bohai Thermal Power Coal as an example, from January to December 16th, the price index of the Bohai-Range thermal coal issued by the Qinhuangdao Seaborne Coal Trading Market fell from 519 yuan/ton to 371 yuan/ton, a decrease of 148 yuan/ton. Regarding the trend of the coal market in 2016, Lin Boqiang, director of the Xiamen University's Energy Economics Collaborative Innovation Center, predicts that the space for coal prices is currently falling is very small, and even if it declines next year, the rate will not be large, but the coal market will be worse than this year. Because the problem of oversupply still exists, at the same time, because of the cost involved, the impact of imported coal on domestic coal companies will continue. "If coal companies want to save themselves, besides their own downgrade, the key method is to reduce production," Lin Boqiang said.