Recently, the power coal futures 1909 contract continued to repeat in the range of 570-600 yuan/ton, and the market divergence intensified. The author believes that the driving force of power coal rise is weakened, and the rebound space above is limited.

_Continuous increase in supply

Since 2016, coal prices have been rising steadily, driven by a significant decline in output after the structural reform of coal supply side in 2016. With the publication of "Opinions on Overcapacity Resolution in Coal Industry to Realize the Development of Removing Difficulties", "Guiding Opinions on Energy Work in 2016" and "13th Five-Year Plan for Coal Industry Development", the work of capacity removal in coal industry has been launched, and the rapid reduction of coal output has led to the sustained rise of coal prices. According to the requirements of the Thirteenth Five-Year Plan for the Development of Coal Industry, we should eliminate the excess and backward production capacity of about 800 million tons per year, increase advanced production capacity by about 500 million tons per year through reduction replacement and optimum layout, and increase coal production by 3.9 billion tons by 2020.

From the output point of view, the output of raw coal in 2016 and December is 3.363 billion tons, which is 9.4% lower than that in 2015 and 320 million tons lower than that in 2015. However, with the adjustment of policy from capacity-free to stable supply and price, the output of coal has rebounded year by year. In 2017, the output of raw coal was 3.44 billion tons, in 2018, it was 3.54 billion tons, and in January and June 2019, the cumulative output of raw coal continued to rise by 2.6% year on year. Domestic raw coal output has increased steadily, putting pressure on coal prices. With the relaxation of coal production restriction policies in Yulin and other places, domestic output will continue to rise. In addition, from the point of view of import, the import willingness of foreign power coal continues to rise. According to the data, the import of raw coal in January and June 2019 was 154.5 million tons, a cumulative increase of 5.67% over the same period last year.

_Reduction of coal consumption in thermal power plants

As a commodity closely related to the economic cycle, power coal is greatly influenced by macro-economy. From this year's macro situation, the overall domestic economic growth rate has fallen. Real estate data show that the cumulative growth rate of real estate sales in January and June was 1.8% lower than that of the same period in 2018, which was 3.3%. The automobile situation shows that the cumulative decrease of automobile production in January and June is 14.2% year-on-year, and the cumulative growth rate is negative year-on-year for eight consecutive months.

In addition, the weak macro-demand has resulted in a more obvious decline in electricity consumption in the whole society. According to statistics, the cumulative growth rate of electricity consumption in January and June was 5% year-on-year, and 9.43% in the same period in 2018. The growth rate of industrial electricity consumption was 2.9% and 7.53% in the same period in 2018. While the growth of total electricity consumption is declining, the thermal power generation is further weakened due to the power generation of hydropower. The cumulative growth rate of hydropower generation in January and June was 11.8% and 2.9% in the same period of 2018. Correspondingly, the cumulative growth rate of thermal power generation in January and June was only 0.2% and 8% in the same period of 2018. The growth rate of thermal power declined sharply, resulting in a significant decline in coal consumption in power plants.

_Power plant has a high inventory

At present, the high inventory of power plants makes the enthusiasm of power plants for coal procurement in ports decrease. The latest six major coastal power generation groups have 17.65 million tons of coal stock, compared with 15.4 million tons in the same period in 2018, which is 2.24 million tons higher than the same period last year. From the port situation, the latest phase of coal inventory in the Yangtze Estuary is 8.54 million tons, compared with 6.83 million tons in the same period in 2018, and the downstream inventory continues to accumulate.

_With the increasingly hot weather in East China, the daily consumption of power plants has recovered in recent years, but the current recovery of daily consumption has not exceeded seasonality. The monthly daily consumption data show that the average daily coal consumption of the six major coastal power generation groups in July 2018 is 774,100 tons, compared with 666,900 tons in July 2019, which is still significantly lower than the level in 2018. In the case of ineffective consumption of power plant inventory and limited recovery of daily consumption, the revival of enthusiasm for coal procurement in power plants remains to be seen.

Based on the above analysis, the author concludes that the power coal supply continues to rebound, thermal power consumption is lower than the same period in 2018, coal stocks in power plants are at a high level, and the rebound space of power coal futures price is limited.