The Zhitong Finance App learned that coal stocks rose in the afternoon. As of press release, China Coal Energy (01898) rose 4.37% to HK$9.07; Yancoal Australia (03668) rose 3.88% to HK$32.1; Yi Dazong (01733) rose 2.94% to HK$1.75; and China Shenhua (01088) rose 0.98% to HK$36.2.
Dongwu Securities pointed out that from the end of March to mid-April, due to the lower than expected growth rate of real estate and infrastructure investment, demand for coal in the non-power industry weakened, and the number of ships anchored at the Bohai Rim port once dropped to around 60. Although demand for coal in the power industry exceeded expectations, coal prices were more significantly affected by non-electricity demand, so coal prices fell more than expected.
The bank pointed out that in May, power companies need to start stocking up to “welcome the peak of summer,” and it is expected that electricity procurement will improve. Furthermore, the impact of production site safety inspections continues to exceed expectations, compounded by the withdrawal of old mines, and raw coal production is expected to drop by 100 million tons throughout the year. However, supply contraction will amplify the supply-demand conflict during the peak demand season in the electricity industry, so it is expected that coal prices will rebound again. We revised our forecast for coal prices to rise to 1,200 yuan in May and revised them to rise to 1,200 yuan in June. We are still optimistic about coal price expectations.