Hard rock pick - The domestic coal industry is ushering in four major mode transformations

　　The steady expansion of the thermal coal futures market, while further improving the construction of the coal market system, will also gradually change and enrich the ways and models of coal trade. The coal industry is undergoing four major transformations: business model, profit model, competition model, and development model.
　　Data recently released by the General Administration of Customs shows that China imported a total of 327 million tons of coal in 2013, setting a historical high. At the same time, according to statistics from the Futures Daily reporter, from the listing of Zhengzhou Commodity Exchange's thermal coal futures on September 26, 2013 to the end of 2013, there were a total of 64 trading days, with a total trading volume of 8.75 million lots, equivalent to 1.7 billion tons of thermal coal; the average daily trading volume was 136,000 lots, equivalent to 27 million tons of thermal coal. After the listing of thermal coal futures, it brought positive effects to China's coal industry.
　　"The large import of coal has a significant impact on the domestic coal market, and domestic coal enterprises should consider new countermeasures under the new situation." Industry insiders interviewed believe that domestic coal demand will maintain low-speed growth in the coming period, but supply capacity will continue to increase, and the domestic coal market will show a loose supply situation, and coal enterprises will face greater risks.
　　"In the near future, a new trading model supported by a multi-level and diversified trading market system and based on strategic cooperation will become an effective means for the development of the coal market." Qu Jianwu of Taiyuan Coal Trading Center told Futures Daily reporter. In the opinion of the above-mentioned industry insiders, the establishment of a diversified coal trading system cannot only involve spot trading, and the impact of the futures market on the coal industry should not be underestimated. The spot market and the futures market will complement each other and progress together.
　　With the steady increase in the trading volume and open interest of thermal coal futures, the guiding role of futures on the operation of spot enterprises is becoming increasingly apparent, and some large state-owned enterprises are actively promoting the related work of thermal coal hedging. Wei Zhenxiang, assistant general manager of Zhengzhou Commodity Exchange, said that with the gradual emergence of the price discovery function of thermal coal futures, relevant industrial enterprises such as coal-fired power generation will gradually shift from negotiated pricing to futures pricing in thermal coal trade, and the "price setting" method commonly used in international bulk commodity transactions will gradually become popular, transaction costs will be effectively reduced, and market efficiency will be further improved.
　　The steady expansion of the thermal coal futures market, while further improving the construction of the coal market system, will also gradually change and enrich the ways and models of coal trade. Wei Zhenxiang said, "Since the listing of thermal coal futures, the coal industry has been undergoing four major transformations: business model, profit model, competition model, and development model".

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　　The production cost of coal enterprises mainly depends on objective factors such as resource endowment and mining conditions, and the space for independent adjustment is relatively limited. The coal selling Price is mainly determined by the market supply and demand relationship, and currently, the vast majority of enterprises are passive recipients of Price. After the listing of thermal coal futures, the traditional profit model of coal enterprises focusing on sales volume will become more abundant, and enterprises can achieve a dual-core profit model of spot sales and futures operation through basis trading. "Coal enterprises can no longer make profits when the coal Price falls and lose money when the coal Price rises," Wei Zhenxiang said.
　　In terms of the competition model, in the past, the competition among coal enterprises mainly relied on the scale of production. After the listing of thermal coal futures, coal enterprises can stabilize or even increase the profitability per unit of sales through hedging, and guide the mining progress through forward Price, and market competition will gradually shift to winning with operating efficiency. It is also possible to achieve "achieving great things with small resources" and "achieving victory with fewer resources". Wei Zhenxiang believes that after the listing of thermal coal futures, it will help coal enterprises to walk on two legs of spot and futures. The development model will be extended and expanded from the traditional focus on production, sales, safety, and environmental protection to a further focus on finance, futures, talent, and mechanisms.
　　At the same time, he also stated that with the gradual development of the thermal coal futures market, China's voice in the international coal trade system will be enhanced, and the coal enterprises' ability to participate in international competition will be further improved, which is more conducive to making good use of both domestic and international markets.