Fenwei Coal Weekly Update

th
Sunday 8 Mar, 2020

2020-08/96
Demand Recovery Is Slow, and Import Coal Restriction Escalates.

1. Weekly Overview Price changes Unit: yuan/t

Up/ Converted Futures Up/ Up/
1.1 Thermal Coal: Demand Recovery Is Slow, and Import Coal Restriction Spot Basis
down Futures close price down down
Intensifies.
Thermal coal
(1) Thermal coal price dropped down at both ports and producing areas QHD Q5500 562 -4
amid sluggish demand. CCI5500 567 -4 567 546 +4 21 -8
As spot coal procurement was limited amid continuing sluggish demand from CCI import 5500 483 -32
downstream consumers, thermal coal price at port dropped back. CCI5500 fell Coking coal
4 yuan/t w/w to 567 yuan/t on Mar 6 (Friday), and QHD Q5500 quoted 562 CCI Liulin low-sulfur 1460 0
yuan/t, - 4 yuan/t w/w. As rigid purchases declined due to slack downstream
CCI Liulin high-sulfur 1151 0 1388 1256 +14 132 +46
demand, coal sales reduced at mines, and coal shipment was tepid. While
Australian Primary* 172.5 -1.0
roadway freight fell and the heating season was going to end, coal prices at
producing areas went down amid pessimistic outlook on coal market. Shanxi’s Australian mid-volatile* 156.0 -2.0 1292
Datong Q5500 was assessed at 415 yuan/t, -5 yuan/t w/w. Inner Mongolia’s Mongolia 5# 930.0 +20.0 1490
Ordos Q5500 registered 370 yuan/t, -12 yuan/t w/w. Shaanxi’s Yulin Q5800 Coke
reported 436 yuan/t, -20 yuan/t w/w. Rizhao Quasi Grade I met. 1810 -40 1810 1801 +12 9 -52
Producing areas: As mine resumption accelerated, the capacity utilization of *The price (US$/t) is CFR China Port.
surveyed thermal coal mines in Shanxi and Shaanxi rose 7.3pps w/w to 86%,
and combined thermal coal output rebounded 0.45Mt or +18.7% to 2.84Mt. Macro and industry data Unit: Mt, TWh, %
Coal supply at producing areas increased remarkably, and transportation 1/20 2/20 YTD YoY YTD YoY
restriction loosened. After continuous stock replenishment in the previous Macro Economy Data
period, downstream consumers slowed down restocking, leading coal sales to FAI growth
decline and coal stocks at sample mines in Shanxi and Shaanxi to rebound Infrastructure investment
0.11Mt or +18.9% w/w to 0.69Mt. Ports: As downstream resumption was growth
slower than expected, coal consumption maintained low. With coal inflows Real estate investment
more than outflows, the combined stocks at the northern four ports growth
PPI -0.3% -0.4pps
accumulated 0.61Mt or +5.1% w/w to 12.70Mt as of Mar 6 (Friday), -16.6%
PMI 50.0% 35.7% -13.5pps
YoY. The inventory at Guangzhou Port reached 2.52Mt, down 0.17Mt or -6.3%
Steel sector PMI 47.1% 36.6% -14.0pps
w/w while +10.3% YoY. As power plants’ coal consumption was relatively low
due to the remaining impact from COVID-19, plus procurement previously Coal Industry Downstream Data
from the northern regions arrived, coal inventories at ports of the Yangtze Power generation 7503.43 4.7%
River estuary further piled up 0.16Mt or +2.4% w/w to 6.76Mt, +7.8% YoY. Of that: thermal 5220.15 2.4%
Seaborne transport: As daily coal consumption of power plants remained low Hydro 1304.44 5.9%
this week, while the inventory was relatively high, spot coal demand was very Cement output 2350.00 4.9%
low. Some transaction prices were approaching the monthly long-term price Crude steel output 1204.77 6.3%
of large coal groups. As traders had difficulty in sales, domestic ocean freight Pig iron output 809.37 5.3%
continued falling under pressure. Shipping rates of 50,000-60,000 DWT Coke output 471.26 5.2%
vessels on the route from Qinhuangdao-Guangzhou slid 0.8% w/w to 23.9 Raw coal output 3850.00 4.0%
yuan/t on Mar 6 (Friday). Consumption areas: As resumption accelerated in Coal Imports & Exports
various places, market demand improved slightly, and daily coal consumption Coal imports 68.06 33.1%
picked up to more than 500Kt. Yet, as inventory was sufficient at power plants, Coal exports
meanwhile the heating season was about to end, restocking demand Coal net imports
remained weak, mainly for long-term coal and imported coal. Coal inventory Thermal coal imports
was passively building up. Daily coal consumption of the six utilities on Mar 6
Thermal coal exports
(Friday) stood at 0.50Mt, +16.9% w/w, -25.0% YoY, and coal burns increased
Thermal coal net imports
0.28Mt or +9.4% w/w to 3.25Mt in the week. Inventories accumulated 0.01Mt Coking coal imports
or +0.1% w/w to 17.69Mt, +6.2% YoY, leading the available days down 5.9 Coking coal exports
days w/w to 35 days. Coking coal net imports
(2) Price gap of domestic and imported coals widened further, as imported

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Fenwei Coal Weekly Update︱8 Mar, 2020

coal prices continued lowering. Thermal coal prices: Unit: yuan/t, USD/t
As bidding invitations for imported coal in April laycan mostly ended at power RMB* W/W W/W YoY USD**
plants this week, coal procurement reduced. Also, imported coal clearance At producing areas
was restricted for non-local buyers. COVID-19 broke out worldwide, and Japan Datong 5500 415 -5 -1.2% -4.4% 53
and South Korea were hit severely. As demand was soft, imported coal prices
Shuozhou 5000 355 0 0.0% -1.4% 45
ticked down. As of Mar 6 (Friday), CCI import 5,500 was assessed at
Ordos 5500 370 -12 -3.1% -10.8% 47
US$61.5/t, -US$3.5/t w/w. CCI import 4,700 was assessed at US$53.8/t,
Ordos 5000 301 -14 -4.4% -6.5% 38
-US$2.2/t w/w and CCI import 3,800 was assessed at US$40.0/t, -US$1.1/t
w/w. Thermal coal price at NEWC kept bearish, falling US$0.55/t to Ordos 4500 234 -6 -2.5% -0.4% 30
US$65.99/t on Mar 5. As imported coal prices adjusted downward, the gap of Yulin 6200 446 -34 -7.1% -22.0% 57
Q5500 domestic and imported coals widened 25 yuan/t w/w to 108 yuan/t on Yulin 5800 436 -20 -4.4% -4.6% 56
Mar 6 (Friday) at South China Port. At ports
(3) Demand recovery is slow, and imported coal restriction has escalated. QHD 5800 mixed 590 -4 -0.7% -11.0% 75
As coal supply restores to normal, the inventory is steadily rising at coal QHD 5500 mixed 462 -104 -18.4% -27.6% 59
miners. Coal output of resumed mines has basically returned to normal, and QHD 5000 mixed 504 -3 -0.6% -10.2% 64
the capacity utilization has increased significantly, reaching above 86% at QHD 4500 mid-sulfur 458 -3 -0.7% -8.4% 58
sample thermal coal mines. So, thermal coal supply is sufficient. Affected by Shenmu premium 6000 mixed 685 0 0.0% -10.5% 87
the epidemic, downstream purchases slow down, leading coal sales to soften 635 0 0.0% -11.2% 81
Shenhun 1# 5500
and coal inventories to pile up at producing areas and transfer ports.
GZ Shanxi 5500 620 0 0.0% -11.4% 79
Coal consumption for heating purpose is expected to reduce, and recovery 545 0 0.0% -12.8% 70
GZ Shanxi 5000
of industrial demand is slow. As the heating season is coming to an end, coal
Price indexes
consumption for civil use will reduce. Coal sources at port are mainly
CCI5500 567 -4 -0.7% -11.5% 72
long-term coal. As delivering costs are higher than sales prices at port, traders
are inactive to buy amid bearish expectation. While it still takes time for end CCI5000 510 -3 -0.6% -9.9% 65
users to fully resume operation, spot coal demand is weak, and usable days of CCI 5500 import 483 -31.9 -6.2% -9.3% 62
coal inventory at coastal power plants maintain a high level of 35 days. CCI 4700 import 423 -21.1 -4.8% -16.0% 54
Imported coal: China imported 68.06Mt of coal in January-February 2020, up CCI 3800 import 314 -11.5 -3.5% -15.2% 40
33.1% YoY, mainly because the government strictly restricted customs CCI 5500 import (FOB Australia) - -3.5 -6.2% -12.8% 53
clearance and adjusted statistical caliber in December 2019, in order to CCI 4700 import (FOB Indonesia) - -2.2 -4.4% -18.4% 47
achieve the target that coal import volume in 2019 would not exceed 300Mt. CCI 3800 import (FOB Indonesia) - -1.1 -3.2% -18.3% 34
According to GAC, China's coal imports stood at only 2.77Mt in December CECI 5500 composite 560 +2 +0.4% - 72
2019, plunging 72.9% YoY and -86.7% M/M. In 2019, China’s coal imports
CECI 5500 trading price 572 -3 -0.5% - 73
added up to 299.67Mt, up 6.3% YoY. The high imports in January-February
CECI 5000 trading price 509 -6 -1.2% - 65
2020 should contain unloaded but uncleared coal in December 2019.
CECI 5500 FOB 560 +2 +0.4% - 72
In order to ensure that coal import restriction policy is executed effectively,
CECI 5000 FOB 501 +1 +0.2% - 64
and avoid sudden tightening at the end of the year, the government has taken
CCTD5500 570 -2 -0.3% - 73
measures in advance to control the import rhythm this year. Currently,
imported coal control is stringent. According to Fenwei Energy, various ports CCTD5000 513 -2 -0.4% - 66
began to restrict import declaration of non-local importers since January. It is CCTD4500 462 -2 -0.4% - 59
rumored in the market that Fuzhou Customs required coal import volume be BSPI 559 0 +0.0% -3.3% 71
halved YoY in 2020, and keep flat with 2017. It will become more difficult for NEWC(FOB) - -0.78 -1.2% -32.9% 65.99
non-local traders to declare customs. NEWC(CFR-China) - -0.78 -1.0% -29.6% 74.49
Comprehensively, thermal coal supply has basically returned to normal, while RB($/t) - -5.16 -6.8% -12.3% 71.05
recovery of downstream demand is slow, leading spot coal trading to be DES ARA($/t)- +1.77 +3.9% -31.7% 47.65
limited. Restriction on imported coal has tightened, easing the current *China domestic coal price is RMB price with VAT included; w/w and YoY
pessimism to some extent, but coal prices will still be restrained by weak refer to RMB price changes;
demand in the short term. Demand remains the dominant factor for thermal **China domestic coal price converted to USD price with VAT excluded.
coal prices. Based on published CFR RMB prices with VAT included, CCI Import
1.2 Coke: The Second Round of Price Fall Is Executed, and Coke Prices Have Indexes are netback FOB USD prices with VAT excluded at exporting
countries. International seaborne coal price is USD price with VAT
Further Downward Pressure in a Short Term.
excluded; w/w and YoY refer to USD price changes.
(1) Coke prices slid this week.
As demand remained weak, and downstream consumers requested to cut

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Fenwei Coal Weekly Update︱8 Mar, 2020

prices, the second round of markdown was basically executed, with the
Thermal coal stocks Unit: Kt
cumulative reduction reaching 100 yuan/t. As of Mar 6 (Friday), Hebei
Quantity W/W W/W YoY
Tangshan Quasi Grade I coke recorded 1,840 yuan/t, Shandong Rizhao Grade
II coke reported 1,800 yuan/t, and the price of Shanxi Lvliang Quasi Grade I At ports
coke registered 1,610 yuan/t, all -50 yuan/t w/w respectively. As coke prices Qinhuangdao 6040 +350 +6.2% +8.1%
continued falling at producing areas, traders were active to sell. Yet, the SDIC Jingtang (east port) 1000 -90 -8.3% -42.9%
purchases were sluggish and offer prices lowered. Quasi grade I coke at Jingtang Port (old port) 1600 +100 +6.7% -26.9%
Tianjin Port quoted 1,810 yuan/t, -40 yuan/t w/w. Caofeidian 2296 +171 +8.0% -47.4%
Domestic steel market continued weak, while steel prices ticked up slightly Huanghua 1760 +80 +4.8% +31.3%
this week. Shanghai rebar price rallied 20 yuan/t w/w to 3,440 yuan/t on Mar Guangzhou 2524 -169 -6.3% +10.3%
6 (Friday). China exported 7.81Mt of steel products in January-February, Subtotal 12696 +611 +5.1% -16.6%
2020, down 27.0% YoY. As COVID-19 has spread globally, both domestic and
Stocks of five ports along Yangtze
international demands contract, greatly pushing down steel exports. 6760 +160 +2.4% +7.8%
River
However, as end users’ procurement resumes gradually, the rate of steel
Rugao Port 1300 +50 +4.0% -10.3%
stock building is slowing down, but high stocks still continue weighing on the
Changhong International 1010 -10 -1.0% 0.0%
prices. As of Mar 6, stocks of main steel types reached 25.30Mt, up 1.54Mt or
Jiangyin Port - - - -
+6.5% w/w, +36.6% YoY.
Yangtze Harbor 1530 -70 -4.4% +24.4%
Steel stock growth slowing down slightly. Unit: Kt
Taihe Port 770 -40 -4.9% -18.9%
At six major power plants 17685 +11 +0.1% +6.2%
4000 Zhejiang Power 4450 +300 +7.2% +19.3%
3000 Shanghai Power 278 +30 +12.0% +19.0%
Guangdong Yudean 3720 +10 +0.3% -2.6%
2000
Guodian 2175 0 0.0% +14.3%
1000 Datang 1479 -131 -8.1% +4.7%

0 Huaneng 5583 -198 -3.4% +0.6%

504 +73 +16.9% -25.0%
2017-01-01
2017-04-01
2017-07-01
2017-10-01
2018-01-01
2018-04-01
2018-07-01
2018-10-01
2019-01-01
2019-04-01
2019-07-01
2019-10-01
2020-01-01

Daily consumption
-1000 78 +28 +56.0% -36.6%
Zhejiang Power
-2000 Shanghai Power 16 0 0.0% -38.9%
Guangdong Yudean 52 +4 +8.3% -42.9%
Sources: Fenwei Energy
Guodian 128 0 0.0% -9.2%
Owing to active production, the operating rates of blast furnaces ticked up
Datang 64 +27 +73.0% -14.7%
0.69pp w/w to 63.54% as of Mar 6. As coke production was active owing to
Huaneng 166 +14 +9.2% -23.1%
good margins, the operating rates of coke ovens rose 2.45pps w/w to 73.06%.
As coke output continued rising, while coke sales did not improve markedly, Available days 35 -5.9 -14.4% +41.6%
coke stocks at sample coke plants increased 70Kt or +8.7% w/w to 0.92Mt. As Zhejiang Power 57 -25.9 -31.3% +88.1%
coke delivery to steel mills increased, while daily coke consumption Shanghai Power 17 +1.8 +12.0% +94.6%
maintained low, coke stocks at sample steel mills piled up 0.14Mt or +3.1% Guangdong Yudean 72 -5.8 -7.4% +70.4%
w/w to 4.78Mt, with 16 available days for coke use. As coke operation Guodian 17 0.0 0.0% +25.8%
basically resumed at port, and vessel loading increased, coke stocks at ports 23 -20.4 -46.9% +22.7%
Datang
fell 0.15Mt or -5.4% w/w to 2.61Mt. As the second round of coke price
Huaneng 34 -4.4 -11.6% +30.8%
markdown was executed, coking margins averaged at 114 yuan/t at sample
Australia Newcastle Port 1694 -56 -3.2% +9.1%
coke plants this week, -16 yuan/t or -12.1% w/w. As iron ore prices went up,
steel mills’ profit margins approached the money-losing point. Rebar sales Carrington dock 298 +148 +98.6% +5.2%
suffered a loss of 12 yuan/t this week, -38 yuan/t w/w. Kooragang dock 1396 -204 -12.8% +9.9%
(2) The second round of price reduction has basically executed, and
downward pressure still exists in the short term.
As coke plants are active in production, inventory pressure builds up
slightly. Coke production is stable at main producing areas, and most coke
plants maintain normal production, except for some regions such as Lvliang,
Shanxi and Wuhai, Inner Mongolia, where some coke plants cut production
by 30%-50% due to coking coal structural shortage. Overall, coke supply has
increased noticeably. As the growth of the operating rates of coke ovens is

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faster than blast furnaces, coke sales do not improve synchronously, Coking coal prices: Unit: yuan/t, USD/t
increasing sales pressure for coke plants.
RMB* W/W W/W YoY USD**
Steel mills push strongly to cut coke price amid demand-based restocking. Price at producing areas
Steel stocks continue high, while profit margins of steel mills are still low.
Liulin 4# JM 1490 0 0.0% -15.3% 190
Coke inventory and available days are sufficient. Steel mills purchase coke
Liulin 9# JM 1218 0 0.0% -3.9% 156
based on demand, and ask to reduce prices. As for port market, as the
second round of coke price cut is executed and roadway freight rates fall, Kailuan washed JM 1585 0 0.0% -2.5% 202
quotations at port continue sliding. Traders’ shipments are active amid Baotou washed JM 1023 0 0.0% -6.3% 131
cautious attitude on the later market. CCI coking coal price index
In short, as supply recovery is faster than demand recovery, steel mills CCI Liulin low-sulfur 1460 0 0.0% -15.6% 186
purchase coke based on demand, and are strongly requesting to lower the CCI Liulin high-sulfur 1151 0 0.0% -2.8% 147
prices. As coke supply looseness is difficult to change in the short term, coke CCI Lingshi fat coal 1050 -40 -3.7% -7.1% 134
prices have further downward pressure in the short term. CCI Jining gas coal 855 0 0.0% -20.1% 109
1.3 Coking Coal: As Supply Recovers and Stocks Rebound, Coking Coal CCI Changzhi PCI coal 750 0 0.0% -19.8% 96
Miners Surrender Profit Margins. CCI Fenwei estimation
(1) Coking coal price maintained stable or fell this week. Gujiao 2# JM 1520 +100 +7.0% -13.1% 194
As coking coal supply continued increasing, while incremental downstream Linfen Anze JM 1550 -70 -4.3% -8.8% 198
demand was limited, coking coal prices kept stable or ticked down this week. Linfen Puxian 1/3 JM 1260 0 0.0% -7.4% 161
As of Mar 6 (Friday), CCI Shanxi high-sulfur index posted 1,151 yuan/t, flat Liulin low-sulfur (raw coal) 910 0 0.0% -3.2% 116
w/w. Shanxi 1/3 coking coal price reported 1,370 yuan/t, Kailuan’s washed Changzhi meager lean coal 890 0 0.0% -18.0% 114
primary coking coal registered 1,585 yuan/t, and CCI Liulin low-sulfur index 716 0 0.0% -18.2% 91
Jincheng PCI coal
posted 1,460 yuan/t, all steady w/w. Shanxi Anze primary coking coal
Yangquan PCI coal 750 0 0.0% -19.8% 96
amounted to 1,550 yuan/t, -70 yuan/t w/w.
Coking coal price at Jingtang Port
Supply: As mine resumption expanded, capacity utilization and output at
Shanxi JM 1610 0 0.0% -14.4% 206
producing areas continued rising. The capacity utilization of sample coking
coal mines lifted 4.4pps w/w to 108%, and combined output amounted to
Shanxi 1/3 JM 1370 0 0.0% -6.8% 175

6.34Mt, up 0.25Mt or +4.1% w/w. Stocks: As downstream consumers slowed Hebei JM 1560 0 0.0% -6.0% 199
down coking coal procurement, coking coal stocks at sample coking coal Inner Mongolia fat coal 1080 0 0.0% -5.3% 138
mines built up 0.18Mt or +10.0% w/w to 1.96Mt. Steel mills and coke plants Inner Mongolia 1/3 JM 1020 0 0.0% -5.6% 130
increased coking coal procurement owing to rising operating rates, which International coking coal price (China CFR)
increased 0.23Mt or +3.5% w/w to 6.75Mt at merchant coke plants, and piled Australian premium($/t) 1350.81 -1.00 -0.6% -20.1% 172.50
up 0.31Mt or +4.0% w/w to 8.02Mt at steel mills. These stocks were able to Low-volatile primary($/t) 1342.98 -1.00 -0.6% -20.2% 171.50
sustain 16 and 14 days of use respectively. Coking coal stocks in the three
Medium-volatile HCC($/t) 1221.60 -2.00 -1.3% -19.7% 156.00
ports accumulated 0.39Mt or +8.4% w/w to 5.03Mt.
Low-volatile PCI coal($/t) 869.22 -2.00 -1.8% -18.7% 111.00
Imported coals: As the reopening of Mongolian coal borders was
Medium-volatile PCI($/t) 845.72 -2.00 -1.8% -19.7% 108.00
approaching and the epidemic spread globally, meanwhile customs clearance
SSCC($/t) 730.22 -2.00 -2.1% -27.0% 93.25
for imported coal tightened, Australian coal offer prices reduced, and
Ganqimaodu Mongolia 5# 930 +20 +2.2% -11.4% 115
international seaborne coking coal prices fell this week. Australian PLV hard
coking coal FOB price dropped US$3.25/t w/w to US$160.50/t by Mar 5, Ceke 1/3 CC 650
+50 +8.3% -11.0% 81
meanwhile China CFR price slid US$1.0/t w/w to US$172.50/t. In terms of *China domestic coal price is RMB price with VAT included; w/w and YoY
Mongolian coal, main clearance borders are still closed, but Mongolian refer to RMB price changes;
Government has decided that if measures for epidemic prevention and **China domestic coal price converted to USD price with VAT excluded.
Based on published CFR RMB prices with VAT included, CCI Import
control are in place, coal exports to China can resume before March 15. On
Indexes are netback FOB USD prices with VAT excluded at exporting
March 4, Mongolia first resumed coal exports to China at countries. International seaborne coal price is USD price with VAT
Zamyn-Uud/Erenhot Border. Increasing downstream demand boosted excluded; w/w and YoY refer to USD price changes.
Mongolian coal prices. Mongolia 5# coking coal reported 930 yuan/t at
Ganqimaodu Border, +20 yuan/t w/w. 1/3 coking coal at Ceke Border quoted
650 yuan/t, +50 yuan/t w/w.
(2) Facing demand pressure, coking coal miners gradually surrender profit
margins.
Domestic supply continues increasing, and tight imported coal supply is
easing. As mine resumption accelerates, and most mines have resumed
production, coking coal output has gradually restored to normal. Coal output
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Fenwei Coal Weekly Update︱8 Mar, 2020

of Lvliang and Linfen, Shanxi Province has also recovered. As for Mongolian Coking coal stocks: Unit: Kt
coal, as customs clearance resumes, outbound coal transfer will gradually
Quantity W/W W/W YoY
recover, and coal sources start delivering from borders to China mainland Merchant coking plants
successively. Mongolian coal supply is expected to continue increasing thanks
Coking coal stocks 6751 +231 +3.5% -17.0%
to highway free-toll policy. In terms of seaborne imported coal, as customs
Available days 14 +0 +0.1% -8.9%
clearance policy tightens, and coal arrivals will reduce in the later period,
traders’ offer prices keep firm, while purchase interest of end users is not Steel mills
strong and offer prices tick down. Coking coal stocks 8022 +309 +4.0% -4.6%
Available days 16 +0.6 +4.0% -4.5%
As coke plants become more cautious in purchasing, the pace of stock
replenishment slows down. As coking coal supply continues increasing, At ports
purchasing difficulty has decreased for coke plants. As coke prices Jingtang Port 3950 +600 +17.9% 23.4%
continuously reduce, profit margins of coke making have narrowed. In order Qingdao Port 500 -60 -10.7% -28.6%
to control costs, coke plants become more cautious in purchasing coking Rizhao Port 580 -150 -20.5% -35.6%
coal, especially for high-priced coal types. Subtotal 5030 +390 +8.4% +4.8%
In short, as demand is difficult to release, steel mills and coke plants are
mostly purchasing coking coal based on demand. As downstream product Coke prices: Unit: yuan/t
prices have increasing downward pressure, coking coal gradually surrenders Coke W/W W/W YoY
profit margins, especially for low-sulfur primary coking coal, which saw a
Coke price at producing areas
large price growth in the early stage.
Changzhi grade I met coke 1752 -54 -3.0% -15.4%
2. Key News & Events in Coal and Downstream Industries 1550 -50 -3.1% -13.9%
Jinzhong grade II
2.1 Domestic News Lvliang quasi grade I 1610 -50 -3.0% -17.4%
(1) Shenhua Group released long-term contract prices for March 2020. Rizhao grade II 1800 -50 -2.7% -14.3%
Tangshan quasi grade I 1840 -50 -2.6% -14.8%
Coal type Price (yuan/t) M/M
Tangshan grade II 1780 -50 -2.7% -11.4%
Outsourced-5500 562 -
Wuhai grade II 1500 -50 -3.2% -8.0%
Outsourced-5000 502 -
Coke price at ports
Outsourced-4500 452 -
Rizhao quasi grade I (domestic
Shenhun-5500 546 3 1810 -40 -2.2% -14.6%
trade)
Shenhun-5000 496 2 Tianjin Port quasi grade I
1810 -40 -2.2% -14.6%
Shenhun 4-4500 447 3 (domestic trade)
Tianjin Port quasi grade I
(2) Production capacity of coal mines in operation reached 3.431 billion 242 -5 -2.0% -24.4%
(export)($/t)
tons/year as of March 3.
As of March 3, all coal-producing provinces and regions had resumed
Coke stocks: Unit: Kt
production except for Hubei Province. Coal mines in production had a total
Quantity W/W W/W YoY
capacity of 3.431 billion tons/year, with capacity resumption rate of 83.4%
Merchant coking plants
and daily coal output of 9Mt on March 3, having basically recovered to the
level of a year ago. Coke stocks 917 +74 +8.7% +77.7%

(3) Yunnan: The number of coal mines will be controlled within 200 mines Steel mills
and total production capacity within 150Mtpa. Coke stocks 4781 +143 +3.1% +5.4%
Yunnan issued the “Notice on Accelerating the Classification and Disposal of Available days 16 +0.5 +2.8% +7.5%
Coal Mines”, proposing that Yunnan Province will strictly implement the At ports
“Three-year Action Plan for High-quality Development of Coal Industry Tianjin 270 -20 -6.9% -51.8%
(2019-2021)”. That is, the number of coal mines in the province shall be Lianyungang 50 +10 +25.0% -28.6%
controlled within 200 by the end of 2021, and the total capacity of all coal Rizhao 760 -30 -3.8% -47.9%
mines owned by a single coal miner shall not be less than 3Mtpa. The 1530 -110 -6.7% -7.3%
Qingdao
number of coal miners shall be controlled between 20-30, and the size of a
Subtotal 2610 -150 -5.4% -30.2%
single mine must not be lower than 0.3Mtpa. By 2021, coal capacity shall be
controlled within 115Mt in Yunnan Province.

Fenwei Energy Information Services Co., Ltd 5 / 12

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(4) The first UHV DC transmission and transformation project kicked off
construction in the world’s largest coal field.
On February 28, commencement ceremony of±800 kV UHV DC project
from northern Shaanxi to Hubei was held at North Shaanxi Converter
Station in Puyu Industrial Park, Fugu County, Yulin City, Shaanxi, marking
“electricity transmission highway” from north to south will be established
in China.
(5) Handan plans to close six coal mines in 2020.
In 2020, Handan plans to shut down six coal mines and withdraw the
capacity of 4.07Mtpa, of which 2.75Mt of coal capacity will be phased out,
and 1.32Mt will be downward verified. In particular, five mines are
operating mines and one mine is under-construction mine owned by
Fengfeng Group and Handan Mining Group respectively.
(6) Rizhao Steel’s 17Mtpa steel project will start construction soon.
Rizhao Steel Holdings Group Co., Ltd. has signed a "Bank-Enterprise
Strategic Cooperation Agreement" with CITIC Bank, and signed a "CITIC
Australia Magnetite Concentrate Supply Agreement in 2020" with Pacific
Resources Trading Pte. Ltd. (PRT). Rizhao Steel’s steel project with a total
investment of 33 billion yuan and a capacity of 17Mtpa is going to start
construction.
2.2 International News
(1) Indonesia: Thermal coal reference price for March ticked up 0.3%
M/M.
The Ministry of Energy and Mineral Resources of Indonesia announced
that thermal coal reference price (HBA) for March 2020 was US$67.08/t,
edging up 0.28% M/M, rising for the second consecutive month, yet falling
25.9% YoY.
(2) Mongolia has first resumed coal exports through Erenhot Railway
Border.
Fenwei Energy Information Services Co., Ltd
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th
Fenwei Coal Weekly Update︱8 Mar, 2020
Mongolian National Special Committee has decided that if relevant
preparations for epidemic prevention and control can be completed in
advance, there is no need to wait until March 15 to resume exporting
coal and oil to China. To this end, coal exports to China have restored at
Zamyn-Uud/Erenhot Border on Sino-Mongolian border.
(3) Coal exports to China via Newcastle Port fell for the second
consecutive month in February.
In February, 1# and 2# coal terminals (Kooragang Terminal and
Carrington Terminal) operated by Port Waratah Coal Services exported
1.17Mt of coal to China, -14.3% YoY and -2.5% M/M, accounting for
14% of total exports from the two terminals. In February, Newcastle
Port 1# and 2# coal terminals exported a total of 8.34Mt of coal, -6.0%
YoY and -11.2% M/M, falling for the second consecutive month.
(4) Thailand Banpu Public Company plans to increase coal production
in Australia.
Thailand's largest coal trader, Banpu Public Company Limited, plans to
increase its coal production in Australia to 14.7Mt (equity basis). In
2019, Banpu's coal production in Australia stayed at 9.4Mt. So, it will
increase by 5.3Mt or 56.4% from a year earlier.
(5) Russia: Coal exports fell 11.8% YoY in January-February, 2020.
Russia's coal exports were 12.68Mt in February, down 9.5% YoY while
up 1.1% M/M. January-February, Russia's coal exports totaled 25.22Mt,
-11.8% YoY.
(6) Russian Railways will provide a 25% discount on thermal coal
export freight.
Russian Railways have notified to significantly cut thermal coal export
freight in Russia's main coal mining areas from March 1, 2020 to
December 31, 2020. In the direction of transfer stations at
Russian-Kazakhstan border and then to crossings Dostyk-Alashankou
and Altenkley-Khorgos bordering on China, the discount is 25% for
transportation distance shorter than 3,000km and 12.8% for
transportation distance over 3,000km.
6 / 12
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Fenwei Coal Weekly Update︱8 Mar, 2020

Thermal Coal Stocks

Figure 1: Thermal coal stocks at ports Unit: kt Figure 2: Stocks at Yangtze River mouth Unit: kt
Qinhuangdao Port
SDIC Jingtang Port (east port)
Jingtang Port (old port)
Total coal stocks at Yangtze River mouth
9500
8000 Caofeidian Port
Huanghua Port 8500
Guangzhou Port 7500
6000 6500
5500
4000 4500
3500
2000 2500
1500

2018/11/23
2018/12/23
2019/01/23
2019/02/23
2019/03/23
2019/04/23
2019/05/23
2019/06/23
2019/07/23
2019/08/23
2019/09/23
2019/10/23
2019/11/23
2019/12/23
2020/01/23
2020/02/23
0
2019/01/26
2019/02/26
2019/03/26
2019/04/26
2019/05/26
2019/06/26
2019/07/26
2019/08/26
2019/09/26
2019/10/26
2019/11/26
2019/12/26
2020/01/26
2020/02/26
Source: Fenwei Source: Fenwei

Figure 3: Stocks of coastal six power plants Unit: kt Figure 4: Daily consumption of six power plants Unit: kt
2017
2018 2017 2018 2019 2020
21000 2019 80000 1000
2020
Stocks of key power plants-R
800
16000 75000
600

400
11000 70000
200

6000 65000 0

10-15
10-31
11-16

12-18
1-1

2-8

4-5

6-1

7-9

9-4

1-17

2-18

3-21

4-22

5-24

6-25
7-11
7-27
8-12
8-28
9-13
9-29

12-2
1-1

2-2

3-5

4-6

5-8

6-9
1-20

2-27
3-17

4-24
5-13

6-20

7-28
8-16

9-23

12-8
10-12
10-31
11-19

12-27

Source: Fenwei Source: Fenwei

Figure 5: Available days of coastal six power plants Unit: days Figure 6: Water flow of the Three Gorges Dam Unit: m3/s

2017 2018 2019 2020 2017 2018 2019 2020

45000
50 40000
35000
40
30000
30 25000
20000
20 15000
10000
10
5000
0 0
10-15
10-31
11-16

12-18
1-17

2-18

3-21

4-22

5-24

6-25
7-11
7-27
8-12
8-28
9-13
9-29

12-2
1-1

2-2

3-5

4-6

5-8

6-9
10-15
10-31
11-16

12-18
1-17

2-18

3-21

4-22

5-24

6-25
7-11
7-27
8-12
8-28
9-13
9-29

12-2
1-1

2-2

3-5

4-6

5-8

6-9

Source: Fenwei Source: Fenwei

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Fenwei Coal Weekly Update︱8 Mar, 2020

Thermal Coal Price

Figure 7: Thermal coal price at producing areas Unit: yuan/t Figure 8: Thermal coal price at Qinhuangdao Port Unit: yuan/t
Datong Nanjiao weak 5500 pithead price
Shuozhou 5000 4500 medium sulfur 5000 mixed
Inner Mongoli a Ordos 5500
Inner Mongoli a Ordos 5000 1000 5500 mixed 5800 mixed
700 Inner Mongoli a Ordos 4500
600 Shaanxi Yulin 6200 800
Shaanxi Yulin 5800
500
600
400
300
400
200
100 200
0
2015/9/7
2016/1/7
2016/5/7
2016/9/7
2017/1/7
2017/5/7
2017/9/7
2018/1/7
2018/5/7
2018/9/7
2019/1/7
2019/5/7
2019/9/7
2020/1/7
0

2015/1/3
2015/5/3
2015/9/3
2016/1/3
2016/5/3
2016/9/3
2017/1/3
2017/5/3
2017/9/3
2018/1/3
2018/5/3
2018/9/3
2019/1/3
2019/5/3
2019/9/3
2020/1/3
Source: Fenwei Source: Fenwei

Figure 9: CCI thermal coal indexes Unit: yuan/t Figure 10: Thermal coal price at Guangzhou Port Unit: yuan/t
Shenmu premium mixed 6000
CCI5500 CCI5000 Shenmu mixed 1# 5500
CCI Import 5500 CCI Import 4700 1200
800 Shanxi premium mixed 5500
CCI Import 3800 1000 Shanxi large mixed 5000
600 800
600
400
400

200 200
0
2015/1/3
2015/5/3
2015/9/3
2016/1/3
2016/5/3
2016/9/3
2017/1/3
2017/5/3
2017/9/3
2018/1/3
2018/5/3
2018/9/3
2019/1/3
2019/5/3
2019/9/3
2020/1/3
0
2018-08-29

2018-10-29

2018-12-29

2019-02-28

2019-04-30

2019-06-30

2019-08-31

2019-10-31

2019-12-31

2020-02-29

Source: Fenwei Source: Fenwei

Figure 11: International thermal coal price Unit: US$/t Figure 12: Domestic and international coal price Unit: yuan/t
Price gap
Europe ARA Port thermal coal spo Qinhuangdao thermal coal FOB
Richard RB thermal coal spot 800 Domestic 5500 Guangzhou CFR 200.00
Imported 5500 Guangzhou CFR taxes paid
Newcastle NEWC thermal coal spot
140 600 150.00
120
100 400 100.00
80
60 200 50.00
40
20 0 0.00
2018/07/04

2018/09/04

2018/11/04

2019/01/04

2019/03/04

2019/05/04

2019/07/04

2019/09/04

2019/11/04

2020/01/04

2020/03/04
2017/01/01
2017/04/01

2017/07/01

2017/10/01

2018/01/01
2018/04/01

2018/07/01

2018/10/01

2019/01/01
2019/04/01

2019/07/01

2019/10/01

2020/01/01

Source: Fenwei Source: Fenwei

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Fenwei Coal Weekly Update︱8 Mar, 2020

Coking Coal Price

Figure 13: Coking coal price at producing areas Unit: yuan/t Figure 14: CCI coking coal price index Unit: yuan/t

Liulin 4# JM Liulin 9# JM CCI Liulin low-sulfur JM

CCI Shanxi high-sulfur JM
2000 Kailuan washed JM Baotou washed JM 2000 CCI Lingshi high-sulfur fat coal
CCIJining gas coal
1500 1500

1000 1000

500 500

0 0
2015/1/4
2015/5/4
2015/9/4
2016/1/4
2016/5/4
2016/9/4
2017/1/4
2017/5/4
2017/9/4
2018/1/4
2018/5/4
2018/9/4
2019/1/4
2019/5/4
2019/9/4
2020/1/4

2017-07-04
2017-09-04
2017-11-04
2018-01-04
2018-03-04
2018-05-04
2018-07-04
2018-09-04
2018-11-04
2019-01-04
2019-03-04
2019-05-04
2019-07-04
2019-09-04
2019-11-04
2020-01-04
2020-03-04
Source: Fenwei Source: Fenwei

Figure 15: Coking coal price at Jingtang Port Unit: yuan/t Figure 16: Imported coking coal price Unit: US$/t
Shanxi JM
Shanxi 1/3 JM Australian medium-volatile HCC
2500 Hebei JM 350 Canada primary coking coal
Inner Mongolia fat coal Australian premium primary CC
Inner Mongolia 1/3 JM 300
2000
Jingtang Port 1st-tier JM 250
Jingtang Port 2nd-tier JM
1500 200
150
1000 100
50
500
0
2016/1/20
2016/4/20
2016/7/20

2017/1/20
2017/4/20
2017/7/20

2018/1/20
2018/4/20
2018/7/20
2015/10/20

2016/10/20

2017/10/20

2018/10/20
0
2015/1/4
2015/5/4
2015/9/4
2016/1/4
2016/5/4
2016/9/4
2017/1/4
2017/5/4
2017/9/4
2018/1/4
2018/5/4
2018/9/4
2019/1/4
2019/5/4
2019/9/4
2020/1/4

Source: Fenwei Source: Fenwei

Figure 18: Trucks cleared at GMD; Mongolia 5# price at GMD and Port
Figure 17: Price gap of primary coking coal at Jingtang Port (premium)Unit: yuan/t Unit: trucks, yuan/t
Price gap (Liulin low-S vs Australia premium HCC)-R Mongolia 5# price at GMD-L
Australian premium primary CFR Mongolia 5# price at Tangshan Port-L
2500 Liulin low-sulfur CFR 2000
1800 Trucked cleared at GMD-R 1600
Mongolia 5# coking coal CFR
2000 1500 1400
1000 1400 1200
1500 1000
500 800
1000 1000
0 600
400
500 -500 600 200
0 -1000 0
200 -200
2018-01-15
2018-03-15
2018-05-15
2018-07-15
2018-09-15
2018-11-15
2019-01-15
2019-03-15
2019-05-15
2019-07-15
2019-09-15
2019-11-15
2020-01-15

2017/8/30

2018/2/28
2018/4/30
2018/6/30
2018/8/31

2019/2/28
2019/4/30
2019/6/30
2019/8/31

2020/2/29
2017/10/30
2017/12/30

2018/10/31
2018/12/31

2019/10/31
2019/12/31

Source: Fenwei Source: Fenwei

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Fenwei Coal Weekly Update︱8 Mar, 2020

Coking Coal and Coke

Figure 19: Coke prices at producing provinces Unit: yuan/t Figure 20: Coke prices at ports Unit: yuan/t, US$/t
Tianjin Port Quasi Grade I (yuan/t)
Changzhi grade I met coke Jinzhong grade II
Lvliang quasi grade I Rizhao grade II 3000 Tianjin Port Quasi Grade I export met.(US$/t) 400
Tangshan grade II Wuhai grade II 350
2500
3000 300
2000 250
2000 1500 200
1000 150
1000 100
500 50
0
0 0
2016/3/20
2016/7/20

2017/3/20
2017/7/20

2018/3/20
2018/7/20

2019/3/20
2019/7/20
2015/11/20

2016/11/20

2017/11/20

2018/11/20

2019/11/20

2015/9/14
2016/1/14
2016/5/14
2016/9/14
2017/1/14
2017/5/14
2017/9/14
2018/1/14
2018/5/14
2018/9/14
2019/1/14
2019/5/14
2019/9/14
2020/1/14
Source：Fenwei Source：Fenwei

Figure 21: Coking coal stocks at steel mills and merchant Figure 22: Coking coal available days at steel mills and merchant
coking plants Unit: kt coking plants Unit: days

Merchant coking plants Steel mills

Steel mills Merchant coking plants
10000 20
9500 19
9000 18
8500 17
8000 16
7500 15
7000 14
6500 13
6000 12
5500 11
5000 10
2019/03/01

2019/04/01
2019/05/01

2019/06/01
2019/07/01

2019/08/01

2019/09/01
2019/10/01

2019/11/01
2019/12/01

2020/01/01

2020/02/01
2020/03/01

2019/03/01
2019/04/01
2019/05/01
2019/06/01
2019/07/01
2019/08/01
2019/09/01
2019/10/01
2019/11/01
2019/12/01
2020/01/01
2020/02/01
2020/03/01
Sources: Wind, Fenwei Sources: Wind, Fenwei

Figure 23: Coke stocks at steel mills and merchant coking plants Figure 24: Average available days for steel mills
Unit: kt Unit: days

Steel mills(R)
5500 1200 Coke usable days at steel mills
Merchant coking plants(L)
17
5000 1000
16
800 15
4500
600 14
4000
400 13
3500 200 12

3000 0 11
2019/03/01
2019/04/01
2019/05/01
2019/06/01
2019/07/01
2019/08/01
2019/09/01
2019/10/01
2019/11/01
2019/12/01
2020/01/01
2020/02/01
2020/03/01

10
2019/03/01

2019/04/01

2019/05/01

2019/06/01

2019/07/01

2019/08/01

2019/09/01

2019/10/01

2019/11/01

2019/12/01

2020/01/01

2020/02/01
2020/03/01

Sources: Wind, Fenwei Sources: Wind, Fenwei

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Fenwei Coal Weekly Update︱8 Mar, 2020

Coke Price & Stocks

Figure 25: Coking coal stocks at ports Unit: kt Figure 26: Coke stocks at ports Unit: kt

Jingtang Rizhao Tianjin Lianyungang

Lianyungang Qingdao 3000 Rizhao Qingdao
800
Six ports total Three ports total 2500
700
600 2000
500
1500
400
1000
300
200 500
100 0

2017/01/04
2017/04/04
2017/07/04
2017/10/04
2018/01/04
2018/04/04
2018/07/04
2018/10/04
2019/01/04
2019/04/04
2019/07/04
2019/10/04
2020/01/04
0
2017-01-04
2017-04-04
2017-07-04
2017-10-04
2018-01-04
2018-04-04
2018-07-04
2018-10-04
2019-01-04
2019-04-04
2019-07-04
2019-10-04
2020-01-04
Source: Fenwei Source: Fenwei

Figure 27: Operating rates of coke ovens and blast furnaces Unit: % Figure 28: Estimated daily average output of crude steel Unit: kt

Operating rates of coke oven

2017 2018 2019 2020
Operating rates of blast furnaces
85
2900
80
2700
75

70
2500

65 2300

60 2100

55 1900
2019/02/22
2019/03/22

2019/04/22
2019/05/22

2019/06/22
2019/07/22

2019/08/22

2019/09/22
2019/10/22

2019/11/22
2019/12/22

2020/01/22

2020/02/22

1700
1-10
1-31
2-20
2-29
3-20
4-10
4-30
5-20
6-10
6-30
7-20
8-10
8-31
9-20
10-10
10-31
11-20
12-10
12-31
Sources: Wind, Fenwei Source: China Iron and Steel Industry Association (CISA)

Figure 29: Total social steel stocks Unit: kt Figure 30: QHD seaborne freight rate Unit: yuan/t, US$/t

QHD-GZ (50k-60k DWT)-L

2017 2018 2019 2020
Kalimantan-China: Panamax-R
3000 100 27.00
RBCT/Saldanha-China: Panamax-R
2500 Newcastle-Qingdao: Panamax-R
22.00
2000 50
17.00
1500
12.00
1000
0
7.00
500
-50 2.00
0
2018-01-17
2018-03-17
2018-05-17
2018-07-17
2018-09-17
2018-11-17
2019-01-17
2019-03-17
2019-05-17
2019-07-17
2019-09-17
2019-11-17
2020-01-17
10-16

11-17

12-19
1-17

2-18

3-22

4-23

5-25
6-10
6-26
7-12
7-28
8-13
8-29
9-14
9-30

11-1

12-3
1-1

2-2

3-6

4-7

5-9

Sources: Wind, Fenwei Source: Fenwei

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Fenwei Coal Weekly Update︱8 Mar, 2020

Figure 31: Unit coking profits Unit: yuan/t Figure 32: Unit rebar profits Unit: yuan/t

2000
600
1600

400
1200

200 800

400
0
2019/3/27

2019/4/26

2019/5/26

2019/6/25

2019/7/25

2019/8/24

2019/9/23

2020/1/21

2020/2/20
2019/10/23

2019/11/22

2019/12/22 0

2017-01-01
2017-04-01
2017-07-01
2017-10-01
2018-01-01
2018-04-01
2018-07-01
2018-10-01
2019-01-01
2019-04-01
2019-07-01
2019-10-01
2020-01-01
-400

Source: Fenwei Source: Fenwei

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