Peak demand for thermal coal is expected to arrive in China as cold winter is approaching from late November and the falling temperature in the north will drive up power loads, according to market sources.
Data showed daily coal burn of power plants in China coastal provinces rebounded to 1.76 million tonnes, and their inventory slightly dropped, with sustainable days down to 18 days. The changes were more noticeable for Inland power plants, seeing their daily consumption surging 18% over early October and sustainable days down to 24 days from more than 28 days.
In terms of six major power plants, their daily consumption as of November 14 reached 731,600 tonnes, up 8,000 tonnes from the previous day and rising 12,300 tonnes from the recent low. Days of use for existing stocks shortened to 17.6 days from a recent high of 18.1 days.
Overall, coal stocks are enough to last for more than 15 days in most power plants, indicating the pressure of storage replenishment is not urgent.
Whereas, thermal coal demand will continue being supported by economy recovery in the fourth quarter and discouraging performance of hydropower.
China’s total power generation rose 1.3% year on year in October to 661.0 TWh, of which thermal power output climbed up more rapidly by 3.2% to 445.3 TWh, down from the growth in September (6.1%), according to data from the National Energy Administration.
Hydro power generation in October tumbled 17.7% from a year ago to 99.4 TWh.
As the measures to stabilize the economy bear fruit and the coronavirus prevention and control policies are optimized, power consumption in the secondary and tertiary industries is expected to improve. Power use in households will also rebound as the cold winter formally starts.
Coal demand in non-power sectors is likely to be boosted. As the real estate sector bottoms out under a host of favorable financial policies, building materials demand is expected to pick up. The confirmation of specific energy consumption control policy is conducive to the chemical industry.
However, the weather forecast shows that the temperature will be relatively higher in most parts of China before the end of November, including East and South China as main coal consumers, so daily consumption of power plants may not see any big growth in a short term.
Power plants are awaiting further price concessions amid market downside, inhibiting purchase zest and large-scale demand release. As a result, we expect a pick-up in thermal coal demand may be a little later than expected, according to Sxcoal.
Note: This article has been exchanged under the article exchange agreement between CoalMint and Sxcoal.
Leave a Reply