Thermal coal futures prices fell by more than 700 yuan / ton: institutional funds retreated, traders hoarded goods to fall into the "darkest moment"

21st Century Business Herald reporter Chen Zhi reported from Shanghai

"Good days are always so short." A private equity fund commodity futures CTA strategic trading director sighed to reporters.

On October 26, his private equity fund decided to withdraw all funds from the CTA strategy of black futures such as thermal coal and coking coal, but in September, the above strategy helped them push the annualized yield by 5.3 percentage points to 13.6%.

He admitted that the reason why they "endured the pain" of the above-mentioned commodity futures CTA strategy was mainly due to the policy environment.

On October 25, the National Development and Reform Commission issued four articles in succession, including "The National Development and Reform Commission Strengthens the Credit Supervision of Coal Medium- and Long-term Contract Performance in Accordance with the Law", "The National Development and Reform Commission Initiates Assessment and Compliance Review of Coal and Other Energy Price Index Behaviors in Accordance with Regulations", "Coal Supply in Power Plants Continues to Be Greater than Coal Consumption And The Level of Coal Storage Increases Rapidly", "The National Development and Reform Commission Goes to Central Enterprises to Investigate and Promote Coal Production and Supply" and other four articles, continuing to implement the effect of coal supply and price stability.

On the same day, Zheng Shang also raised the trading margin and transaction fee standards for some contracts of thermal coal futures.

On October 26, the National Development and Reform Commission said that it is studying the inclusion of coal in the scope of commodities to stop huge profits, and has organized a cost-effectiveness survey of the coal industry to measure and determine the average price, average price difference rate, average profit margin and reasonable range of the coal market under normal circumstances, so as to guide coal prices to stabilize in a reasonable range for a long time.

Affected by this, as of the close of trading on October 26, the prices of thermal coal futures and coking coal futures hovered at 1237 yuan / ton and 2950.5 yuan / ton respectively, down nearly 750 yuan / ton and 950 yuan / ton from the new highs set on October 19.

"In fact, many private equity firms dare not bet on the bottoming out of thermal coal and coking coal futures, because this CTA strategy is likely to fail due to the continuous increase in policy." The director of trading of the CTA strategy of the above-mentioned private equity fund commodity futures said bluntly. At present, many private equity institutions with similar views are rapidly reducing the strategic investment quota of thermal coal and coking coal futures CTA.

The reporter learned from many sources that as the relevant departments take a number of measures to guide the long-term stability of coal prices in a reasonable range, more and more short-term investment institutions have also left the market.

A futures company black futures analyst revealed to reporters that in the past week, many investment institutions are collectively reducing long positions in thermal coal and coking coal futures, and even their liquidation behavior has brought about a "stampede" market - some short-term investment institutions with slower exit movements and higher investment leverage have encountered the risk of blowing up.

It is worth noting that as coal prices continue to fall, more and more coal traders are no longer adhering to the speculative strategy of "hoarding goods to rise".

"Previously, many coal traders and mining enterprises hoarded coal spot on the one hand, and bought arbitrage in the futures market on the other hand, but with the high level of coal prices diving since late October, coupled with the national unified adjustment of power plant coal supply for 20 consecutive days higher than coal consumption, they also had a premonition that coal hoarding to rise is becoming difficult to maintain, and began to actively reduce the price of coal pit mouth 100-150 yuan / ton, seeking to quickly fall into the bag for safety." The head of a coal mining enterprise in northern Shaanxi told reporters bluntly.

<h4>CTA strategic funds are reluctant to encounter "performance Waterloo" again</h4>

In the view of the trading director of the CTA strategy of the above-mentioned private equity fund commodity futures, the prices of thermal coal and coking coal futures continued to rise rapidly in September, making the commodity futures CTA strategy "raise its eyebrows" again.

The data shows that the September commodity futures CTA strategy outperformed the other eight private equity investment strategies with an average yield of 3.4%, causing the annualized average yield of the commodity futures CTA strategy to rise to 12.6%.

The reporter learned that under the dual drive of the increase in the gap between coal supply and demand, the continuous rise in coal futures prices, and the profit-making effect of commodity futures CTA strategies once again highlighted, many private equity institutions have increased investment in commodity futures CTA strategies for coal and thermal coal futures, and even in the commodity futures CTA strategies of some private equity institutions, the proportion of buying thermal coal and coking coal futures is more than 50%.

However, this good life did not last long.

"As the state continues to take a number of measures to curb the excessive rise in coal prices, many CTA strategies betting on coal futures are encountering new performance Waterloo." A partner of a commodity investment private equity fund pointed out to reporters. Since October 19, thermal coal futures have fallen from a new high of 1982 yuan / ton in the year to 1237 yuan / ton, and coking coal futures have also fallen from a new high of 3878.5 yuan / ton in the year to 2950.5 yuan / ton, resulting in many private equity funds rapidly shrinking the scale of CTA strategic investment in commodity futures "hedging".

"Many private equity firms are starting to worry that the tragedy of the second quarter is repeating itself. At that time, the regulatory policy caused commodities such as steel to rush up and down, resulting in the retracement and volatility of the net value of the commodity futures CTA strategies of many private equity institutions hit a record high, and even many radical CTA strategies also turned from profit to loss. He pointed out. In view of the previous investment lessons, many private equity institutions have seen that the relevant departments have continued to increase the regulation and control of coal prices in recent days, and suddenly adopted the investment strategy of compressing CTA to avoid risk.

"In fact, many short-term, fundamental commodity futures CTAs are betting on rising coal futures prices to make a profit, and now coal prices are easy to fall and difficult to rise, making them realize that the risk of loss of the above strategies is much higher than the prospect of profits." The commodity investment private equity partner analyzed. Affected by the increase in coal supply (falling prices) and the recovery of electricity, many private equity institutions have also withdrawn from the soda ash, ferroalloys and ferrosilicon futures that are highly related to coal prices.

This has also forced more and more short-term investment institutions to follow up and leave the market.

The black futures analyst of the above-mentioned futures company told reporters bluntly that affected by the rapid rise in coal prices in September, many investment institutions quickly opened accounts to join the camp of buying coal futures. And their investment strategy is very simple, do not leave overnight positions, every morning and early to push up the price of coal short-term profits. But now, due to the withdrawal of commodity futures CTA strategic funds, they also feel "alone", and instead choose to leave the market and settle down.

<h4>Coal traders are in danger of "hoarding goods to rise"</h4>

Relevant departments have taken more measures to guide coal prices to stabilize in a reasonable range for a long time, which is completely disrupting the calculations of many coal traders to hoard coal and wait for it to rise.

"Previously, during the period of rapid rise in coal prices, many coal import traders used the excuse of insufficient port inventories, and traders in the domestic real estate coal area used the excuse that the epidemic had led to increased pressure on coal transportation, and they adopted a strategy of reluctance to sell." The person in charge of the above-mentioned coal mining enterprises in northern Shaanxi told reporters. Behind this, they have a strong mentality of hoarding goods to rise, and even some coal traders "hoard coal" on the one hand, while buying profits in the coal futures market, maximizing demand benefits.

Even if the relevant departments began to introduce measures to ensure the supply and price of coal, at first these coal traders were "unmoved", because India, Europe and other countries suffered from energy crises, so that they saw that coal prices have the conditions for continuous rise.

"However, they underestimate the influence of policy regulation." The head of a coal mining enterprise in northern Shaanxi said bluntly. First of all, the relevant state departments have taken measures such as strengthening the supervision of the performance of medium- and long-term contracts in coal supply, so that coal production has exceeded coal consumption for 20 consecutive days since October, as of October 24, the coal storage capacity of power plants has reached 95.69 million tons, an increase of about 17 million tons over the end of September, effectively alleviating the tension between coal supply and demand; secondly, the state's crackdown on coal speculation and speculation has also made more and more coal mining enterprises and traders in coal-producing areas increase coal supply, so that coal spot prices have rapidly soared and fallen.

The reporter learned from many sources that at present, some coal mining enterprises have reduced the price of coal pits by 100-200 yuan / ton, which has caused a lot of panic among many coal traders involved in hoarding goods.

"Everyone is worried that if the spot price of coal continues to fall, the spot profits they have accumulated will be swallowed up." A coal trader in East China revealed.

A number of black futures analysts at futures companies have bluntly said that since this week, coal traders have speculated and bought in the futures market while hoarding coal, which has been significantly reduced from mid-October. At present, more and more coal traders are particularly afraid that if their coal waiting to rise (and speculative buying in the futures market) is discovered by the relevant departments, it may incur heavy penalties.

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