Coal stocks in Hong Kong experienced a broad decline.
At the time of writing, shares of Yankuang Energy (01171.HK) were down 5.88% at HKD 10.72, while Yancoal Australia Ltd (03668.HK) fell 5.18% to HKD 28.20.
China Coal Energy Co Ltd (01898.HK) dropped 3.12% to HKD 9.95, and China Shenhua Energy Co Ltd (01088.HK) declined 1.56% to HKD 40.38.
The downward movement is attributed to recent weather patterns and energy market dynamics.
According to the China Meteorological Administration, frequent rainfall is expected to continue in southern China during the first ten days of July.
Zhongtai Securities notes that recent heavy rain has slowed the rise in daily coal consumption at power plants.
This, combined with a sharp drop in crude oil prices weakening expectations for coal substitution demand, has led to a softening and decline in coal prices.
However, the peak summer season for high temperatures has not yet arrived, suggesting underlying fundamental support remains, and the upward trend for coal prices is not over.
Cinda Securities points out that continuous rainfall in early July is suppressing coastal daily consumption, while inventories at midstream and downstream levels have accumulated to multi-year highs, leading to weak purchasing enthusiasm from end-users and creating temporary market pressure.
It is crucial to emphasize that, based on historical patterns, peak seasonal demand in July is still highly likely to materialize.
Excessive concern over short-term weather disruptions is unnecessary, and the coal sector's seasonal rally remains promising.
From a medium to long-term perspective, the logic of a tight supply-demand balance in the coal market is robust, and the annual average price for coal is expected to show a significant year-on-year increase.
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