HUADIAN POWER's stock plummeted 6.98% during intraday trading on Monday, reflecting broader weakness in the power sector.
The sharp decline comes as thermal coal prices have surged to a new annual high, directly threatening the profitability of thermal power companies. Coal represents the primary variable cost for these firms, and significant price increases squeeze their profit margins. Additionally, power plant inventories have been drawn down substantially as daily consumption rises while procurement remains limited to essential needs.
While market expectations for reductions in local long-term electricity contract prices are already reflected, the recent coal price recovery could support monthly and spot electricity prices. The power sector continues to navigate reforms including expanded spot trading, capacity pricing implementation, and improved integration of renewable energy sources.