With the high temperature warning signals hanging in large areas of Northwest and North China, this summer will definitely come earlier and more violently than before. Accompanied by it, the electricity load of the North China Power Grid and the Northwest Power Grid has hit new highs.

Thermal power generation is still the main force of power generation in my country, which means that coal has also entered the peak consumption season. However, recently, some people in the coal trading circle have been calling for price cuts. What is going on here?

The daily electricity consumption of coal is lower than last year

Since mid-June, high temperature weather has occurred in many places in my country, coupled with multiple factors such as the continuous recovery of economic operations, the electricity load data in summer has continued to rise.

The latest statistics from State Grid Corporation of China (hereinafter referred to as “State Grid”) show that since June, the largest electricity load in the State Grid’s operating area has exceeded 844 million kilowatts, and the electricity load in Northwest, North China and other regions has grown rapidly. Compared with the highest electricity load in the same period last year, the growth rates were 8.81% and 3.21% respectively.

On June 17, the largest electricity load of the Northwest Power Grid hit a record high, reaching 112.18 million kilowatts. On that day, the electricity consumption of the whole network in Northwest China was 2.542 billion kWh. On June 19, the maximum load of the North China Power Grid reached 249.01 million kilowatts, a new high since the beginning of summer.

The electricity load hit a record high but did not lead to a sharp rise in coal consumption data. According to the daily consumption data of inland power plants from the CCTD China Coal Market Network, since June 9, it has shown a trend of continuous growth. On June 17, the daily consumption data of inland power plants was 3.238 million tons, down 7.5% from the same period last year. . In addition, the daily consumption of power plants in the eight coastal provinces (regions) has been maintained at a level of about 1.25 million tons recently, down about 10% from last year.

In an interview with a reporter from the Shanghai Securities News, researchers in the coal power industry said that recently, the continuous high temperature in Northwest China and North China has driven a wave of coal demand. However, on the whole, affected by the epidemic prevention and control situation, economic activities in some areas are still recovering. The rainy weather in the southern region also restrained coal consumption to a certain extent. At present, the coal consumption level of mainstream power plants is lower than the same period last year.

The hype of high downstream inventory was hit

Not only is consumption weak, but the level of thermal coal inventory is also high.

The executive meeting of the State Council held in May this year clearly stated that there should be no power cuts. Governments and energy supply companies at all levels attach great importance to increasing production and ensuring supply. Recently, the inventory of power plants has been at a relatively high level. At present, the inventory of thermal coal in inland power plants exceeds 76 million tons, an increase of more than 40% year-on-year. Power plants in the eight coastal provinces (autonomous regions) currently have more than 25 million tons of thermal coal inventory, an increase of 24.5% year-on-year.

Since the average available days of coal in power plants is 20 days or more, power plants are currently not enthusiastic about purchasing coal, and even for long-term coal, the price has been pushed down to the government’s ceiling price. According to market sources, the transaction price of some coal was actually higher than the ceiling price set by the government.

On June 21, the reporter saw in a coal trade group that a number of sales staff lowered their coal prices by 30-50 yuan/ton. They said that due to the continuous increase of thermal coal inventories in power plants and ports, the price reduction of large mines, the industry benchmark, and the government’s maximum price limit for thermal coal bidding for a large-scale power plant in the south, they had to lower their expectations for the peak coal season and quickly cut prices and sell goods.

More importantly, the National Development and Reform Commission has deployed various localities to carry out pull-net-type investigations to investigate and punish behaviors where coal prices exceed a reasonable range, and its execution has exceeded the expectations of people in the coal circulation industry. According to internal exchanges in the industry, some companies have been interviewed by relevant departments and refunded the money that exceeds the maximum price limit for thermal coal.

According to the “Administrative Punishment Regulations for Price Violations”, if an operator engages in price gouging, the relevant department may order it to make corrections, confiscate the illegal income, and impose a fine of less than 5 times the illegal income. If it is verified by the relevant departments that there is behavior that exceeds the price, assuming that a ton of coal is charged more than 100 yuan, the final top fine may be the income of a shipment of coal. As a result, traders have become more cautious in their quotations.

Looking ahead to the market outlook, analysts believe that the recent social inventory has continued to increase, and the daily consumption of terminals has risen slightly, but the rise is not large. The supply side remains high, and the overall supply elasticity is low. However, the overall supply and demand situation has changed, and it is difficult for consumption to exceed expectations. It is expected that coal prices will continue to decline.