Multi-sectoral heavy-handed regulation and control to promote the balance between supply and demand Coal prices "to dry and reduce fire"

Source: China Securities News

On November 3, the National Development and Reform Commission organized a video conference on the supervision of coal flows in the National Long-term Association. Zhao Chenxin, member of the party group and secretary general of the National Development and Reform Commission, stressed that it is necessary to strengthen supervision and ensure national energy security with solid and high-level medium- and long-term performance. In addition, at the meeting held by the China Coal Transportation and Marketing Association a few days ago, more than 10 major coal enterprises across the country expressed their follow-up and took the initiative to reduce the price of 5500 kcal thermal coal pits in the main production areas to less than 1000 yuan per ton.

Experts said that the recent intensive regulation of many departments such as the National Development and Reform Commission has gradually "extinguished" the high coal price. Judging from market information, since the end of October, the price of coal at the pit mouth and port across the country has dropped sharply. The NDRC expects that with the increase in coal production in the later period, the supply and demand situation in the coal market will further improve, and coal prices will accelerate their return to a reasonable level.

Strengthen the supervision of the flow of coal to the Long Term Association

From fully promoting the increase of coal production and supply, to strengthening the credit supervision of coal contract performance in medium and long-term contracts; from investigating and punishing capital malicious speculation, publishing coal-related rumors, and then studying and determining the reasonable range of coal prices, the NDRC has taken a multi-pronged approach to ensuring supply and stabilizing prices.

Zhao Chenxin said that Changxie Coal is not only the "ballast stone" to stabilize the market, but also the "main force" of coal use guarantee in key areas related to the national economy and people's livelihood, such as power generation and heating. Strengthening the supervision of coal flow in the Long-term Association and urging the signatories to actively perform the contract are of great significance for doing a good job in energy supply this winter and next spring and even in the future。

On November 3, the website of the National Development and Reform Commission announced the "National Coal-fired Power Unit Transformation and Upgrading Implementation Plan" recently issued by the National Development and Reform Commission and the Energy Bureau. The plan proposes that in addition to specific needs, new coal-fired power units built according to specific requirements should, in principle, adopt ultra-supercritical units with coal consumption of less than 270 grams of standard coal/kWh for power supply. Under design conditions, wet-cooled coal-fired power units with coal consumption higher than 285 g of standard coal/kWh and air-cooled coal-fired power units higher than 300 g of standard coal/kWh are not allowed to be built. By 2025, the average coal consumption of thermal power supply in china will drop below 300 grams of standard coal/kWh。

In terms of increasing market supply, the National Development and Reform Commission and relevant departments have taken many measures to promote the potential of coal mines to increase production, and the work of ensuring coal supply and price stability has achieved phased results. According to data released by the National Development and Reform Commission on November 3, the country's daily coal production reached 11.67 million tons on November 2, close to the highest peak of this year's output, the second highest output this year, an increase of about 1 million tons from the beginning of October. With the continuous implementation of various measures to increase production and supply, the daily output of coal in the country is expected to exceed 12 million tons. On the same day, the national coal storage of power plants exceeded 110 million tons, an increase of more than 31 million tons from the end of September. In particular, since October 19, the coal supply of power plants has reached a new high, and the maximum coal supply exceeding coal consumption has reached 2.3 million tons.

Industry insiders said that with the effectiveness of the package of coal supply and price stabilization policies, the supply and demand pattern of the coal market is developing in a balanced direction.

Central enterprises have launched a tough battle to ensure supply and stabilize prices

Under the vigorous promotion of the State-owned Assets Supervision and Administration Commission, the central enterprises acted quickly to ensure energy supply and price stability in an all-round way.

"In the fourth quarter, in addition to ensuring the long-term cooperation of enterprises, China Coal Group also added 16.2 million tons of supply guarantee tasks, corresponding to the coal supply guarantee in key areas such as the three northeastern provinces and The Beijing-Tianjin-Hebei region." The relevant person in charge of China Coal Group said that from October 1 to 27, the output of commercial coal was 16.27 million tons, with an average daily output of 602,500 tons, the highest in the same period of history.

The relevant person in charge of the National Energy Group said that the group will speed up the processing of coal mine licenses and verification procedures, and obtain the guarantee and supply of mines that have obtained the approval of the license procedures, and achieve stable production as soon as possible under the premise of ensuring safety and environmental protection; coal-fired power units must not be overhauled without planning, and must not reduce output without reason, and should be started and issued to ensure that the number of combustible days is not less than 7 days; at the same time, the maximum release of transportation capacity.

The State Power Investment Corporation has formulated the guidance for fuel supply assurance of the group company this winter and next spring, and the next step will be to urge each unit to formulate and improve the supply guarantee plan of the unit; track and supervise the signing of medium- and long-term contracts, and coordinate the implementation of shipment.

In order to give better play to the role of state-owned enterprises as the "national team" and "main force" in energy and electricity supply assurance, the State-owned Assets Supervision and Administration Commission has introduced measures for rewards and punishments for energy supply guarantee assessment this winter and next spring, taking supply assurance as the main indicator of this year's enterprise assessment and implementing a "one-vote veto". Recently, the SASAC has also studied and drafted an emergency notice urging and guiding local state-owned enterprises to go all out to do a good job in ensuring energy and electricity supply this winter and next spring, and supervising the local SASAC to consolidate the main responsibilities of local state-owned enterprises. The battle to ensure energy supply of central enterprises this winter and next spring has been fully launched.

Accelerate the return to a reasonable range

With the acceleration of a series of measures to ensure supply and stabilize prices, the effect is gradually emerging.

Recently, at the meeting held by the China Coal Transportation and Marketing Association, more than 10 major coal enterprises across the country have expressed their follow-up and taken the initiative to reduce the price of 5500 kcal thermal coal pits in the main production areas to less than 1,000 yuan per ton. According to the National Development and Reform Commission, from the perspective of market monitoring, since the end of October, the national pit mouth and port coal prices have dropped sharply, with the increase in coal production in the later period, the coal market supply and demand situation will further improve, and it is expected that coal prices will accelerate the return to a reasonable level.

Chen Li, chief economist of Chuancai Securities, believes that the recent policy driving force of the coal power market is strong. On the one hand, for the rising coal prices in the early stage, the policy makes reasonable intervention to ensure supply; on the other hand, the pricing model of the electricity market is injected with market vitality, the price float of thermal power becomes higher, and the volatility elasticity is enhanced.

"The current price preservation and supply guarantee in the coal market show the strength, effect and determination of the policy, and coal prices are returning to a reasonable range." Chen Li said.

He Zhuoqiao, a researcher at Jianxin Futures, said that the regulatory authorities have forcefully curbed the speculation atmosphere in the futures spot market, and the release of hidden inventories can partially reduce the imbalance between supply and demand of coal. A modest increase in coal supply and a decrease in demand after rising coal prices can keep coal prices within an acceptable range.