As one of the special events of the 2019 National Coal Trade Fair, 2019 Market Seminar on Thermal Coal Futures, which was co-endorsed by China Coal Transportation and Distribution Association and Zhengzhou Commodity Exchange, was held in Qinhuangdao City on the morning of December 6, 2018. Dr.Feng Yu, Vice Chairman of China Coal Transportation and Distribution Association and President of China Coal Market attended the Seminar and delivered a speech.
Dr.Feng Yu Vice Chairman of China Coal Transportation and Distribution Association
President of China Coal Market
Kou Ning, Director of Macro Strategy Research Center of Yide Futures , Li Xuegang, Vice President of China Coal Market, Ye Chun, Deputy Director of Industry Development and Environmental Resources Department of China Electricity Council, Li Hua, Researcher of China Railway Economic and Planning Research Institute, and Yuan Cheng, the representative of Guangzhou ZhujiangElectric Power Fuelling CO., LTD, were invited to give wonderful speeches on “Economic Summary of 2018 and Economic Forecast for 2019”,“Analysis and Prospect of Thermal Coal Market in Seaborne Areas”, “Analysis and Prospect of Power Market Situation”, “Analysis and Prospect of Railway Coal Transportation Status” and “Exploring the Experience of Hedging in Electric Power Enterprises and New Ideas of Inventory Rotation Management ”respectively.
Dr. Feng Yu said at the Seminar that 2018 was an important year for China’s structural reform on coal de-capacity. After more than two years of joint efforts, China has already withdrawn more than 560 million tons of coal per year and the 70% of the coal de-capacity task in the "13th Five-Year Plan" was completed. The coal market’s supply and demand achieved a basic balance, and coal prices returned rational. Especially since this year, the medium and long-term contract price of Qinhuangdao 5500 Kcal/kg thermal coal was on a reasonable range of 559 yuan/mt.However, it is worth noting that the fluctuation and frequency of coal prices have slowed down significantly since the fourth quarter of 2018. The spot trading price of CCTD Qinhuangdao 5000 Kcal/kg thermal coal has dropped from 670 yuan/ mt at the beginning of October to 629 yuan/mt on December 3. In the past two months, it has dropped by more than 40 yuan/ mt.
Since its listing on the Zhengzhou Commodity Exchange in 2013, thermal coal futures have effectively played a decisive role in resources allocation as one of the market forces, restoring commodity attributes of energy and coal, and built an competitive market structure and market system effectively. At the same time, with the gradual deepening of the coal supply-side structural reform, the trading mechanism of the futures market has become increasingly mature, and it has received great attention from coal and electricity spot enterprises and investors. After years of operation, with the continuous improvement of the breadth and depth of participation of upstream and downstream enterprises in the industrial chain, the role of thermal coal futures as a price discovery tool and risk management platform for the coal and electricity industries has gradually emerged. More and more coal enterprises began to use futures tools for hedging, and a large number of institutions rooted in the industry and can use futures flexibly for investment continued to grow.
Kou Ning Director of MacroStrategyResearch Center of Yide Futures
Yuan Cheng Guangzhou ZhujiangElectric Power Fuelling CO., LTD
The speakers deeply analyzed the current operation of the thermal coal market in terms of macro policies and the supply and demand of upstream and downstream’s industrial chains, analyzing the principle of futures hedging, the significance of futures hedging for enterprises' production and operation, and how to use them in actual operation and other contents, winning applause from the audience. Participants said that the exchange at the Seminar not only enhanced the understanding of the macro fundamentals and the future market forecast of thermal coal, but also further improved the understanding of futures financial derivatives, which is of great help for enterprises and individuals to master the use of futures tools to achieve hedging and resist risks.
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