What are the reasons for the big rise in coal prices this year?

Coal prices may rise in the summer, driving up coke production costs

By Qinhuangdao coal price trend can be obtained, 2007 to the present, every year in March-April when the demand for coal off-season, the domestic coal prices have retraced, and after entering the summer, coal prices have maintained a rising trend. But this year, the spring retracement of coal prices is not obvious, as of April 18, Shanxi Premium Blend Coal and Datong Premium Blend Coal prices were RMB 790/ton and RMB 840/ton respectively, up 14.5% and 14.3% year-on-year. Meanwhile, the National Development and Reform Commission issued the "Emergency Circular on Effectively Guaranteeing Electric Coal Supply and Stabilizing Electric Coal Prices" at the beginning of April, requesting that all regions take strong measures to guarantee electric coal supply and stabilize electric coal prices, which also reflects the tightening of domestic coal supply. In addition, in recent years, coal production continued to grow, transportation bottlenecks will gradually highlight the rising price of gasoline, etc., but also increased the cost of domestic coal transportation. In short, in the context of high domestic inflation, as well as the tightening of coal supply, the summer power coal will rise for the general trend, and the rise in power coal, will certainly promote the price of the more scarce coking coal, and thus promote the coke production costs rise.

Steady growth in demand for iron and steel, making the demand for coke to remain optimistic

The demand for coke in the steel industry accounts for more than 80% of the demand for coke, so the degree of prosperity of the iron and steel industry directly determines the demand for coke, in March of this year, the domestic production of crude steel output of 59.41 million tons, an increase of 8.98% year-on-year, and the production of coke of 34.88 million tons, an increase of 12.59% year-on-year. 12.59%. The year-on-year production of crude steel and coke is highly correlated, and the change in the growth rate of crude steel production is ahead of the change in the growth rate of coke production. Under the 4 trillion stimulus policy in 2009, the year-on-year growth of steel production was beyond expectation, which directly led to the supply seriously exceeded the demand in 2010, suppressing the production growth rate of the steel industry and coke industry in 2010. But into 2011, with the strong growth of the domestic economy, the sustained and steady growth in demand will make the growth rate of steel production gradually return to a steady state, as a result, the serious situation of oversupply will be eased in 2011, the rebound of profits in the steel industry will also lead to the improvement of the coke industry, and enhance the price of coke.

In addition, the listing of coke futures, so that the price of coke market-oriented, which will benefit the development of the coke industry, the transformation of the coke industry in the pricing power of the situation is completely passive, at the same time, in the "Twelfth Five-Year Plan" period, the consolidation of the coke industry in Shanxi will become the government's focus, eliminating backward production capacity, improve coke industry Concentration will also increase the pricing power of the coke industry. In this double positive situation, if the coke industry profit margin increased by 3 percentage points, means that the current price of coke will increase by about 70 yuan. At the same time, coke summer driven by costs, the price itself is bullish, coupled with the storage costs of coke, etc., thus the current price of the J1109 contract is not on the high side.

The economics of coal price increase: the contradiction between supply and demand