China Coal_ Weekly Coal Update_ Elevated Inventory

Summary of Coal Industry Conference Call Industry Overview - The conference call focused on the China Coal industry, specifically discussing the current state of thermal and coking coal prices, inventory levels, and market dynamics in the Asia Pacific region [1][7][12]. Key Points and Arguments 1. Price Trends: - Thermal coal prices have weakened, with QHD 5500 down 0.1% week-over-week (WoW) to Rmb703/ton, and CCI 5500 down 1.7% WoW to Rmb748/ton as of February 14 [2][7]. - The NEWC price for seaborne coal decreased by 4.6% WoW to US$104/ton [2][7]. 2. Inventory Levels: - Inventory at QHD port increased by 5.8% WoW to 6.80 million tons (mt), while Bohai Rim ports saw a 6.4% increase WoW to 28.3mt [3][4]. - The inventory at Bohai Rim ports is at the highest seasonal level in the past five years, indicating delayed restocking and weak downstream demand [4][5]. 3. Market Dynamics: - The significant inventory build-up at ports is expected to suppress price recovery potential, suggesting a continued downside risk for coal prices due to supply-demand mismatches [4][7]. - Domestic coking coal prices showed slight declines, with Liulin No. 4 mine-mouth prices down 2.9% WoW to Rmb660/ton [3][7]. 4. Comparative Analysis: - The Bohai-Rim Steam-Coal Price Index (BSPI) remained flat WoW at Rmb698/ton, indicating a stable but weak pricing environment [2][7]. - Year-to-date (YTD) averages for thermal coal prices show a decline, with NEWC down 18.8% and QHD 5500 down 3.3% compared to the previous year [7]. Additional Important Insights - The call highlighted the potential for further price declines in the coal market, driven by high inventory levels and sluggish demand post-Chinese New Year [4][7]. - The data presented indicates a cautious outlook for the coal industry, with analysts recommending close monitoring of inventory trends and price movements to identify potential investment opportunities or risks [7][12]. This summary encapsulates the critical insights from the conference call regarding the current state and outlook of the coal industry in China, emphasizing price trends, inventory levels, and market dynamics.