Imported coal market price weakness of some varieties down
2019-02-01 22:05:16
Recently, the decline in coal prices at home and abroad is relatively obvious. How do we view this change in the coal market and what will the future trend of coal prices look like?
Some people in the country believe that coal prices will continue to rise after a brief downturn. I do not agree with this kind of judgment. Coal prices have entered a period of decline from a large context for a long period of time. It will decline at a faster rate in the near future and will decline at a slower rate in the future. The middle may be repeated due to individual factors, but the big trends and directions will not change.
Coal demand is in mourning
Why do you say that? From the demand side, in the short term, the economic situation at home and abroad is not good, which determines that the demand side of coal is unlikely to change in the near future. In the long term, with the emphasis on climate change, carbon emission reduction, and environmental protection both internally and externally, even if the domestic and foreign economies recover to the normal track, most of the newly added energy demand does not flow to coal but to some low-carbon energy sources. Therefore, in the time that can be expected, there is no good news that favors the increase in coal demand.
The only exception to this is probably Japan. Japan's power energy structure is roughly one-third of thermal power, hydropower, and nuclear power. Because of the Fukushima nuclear accident caused by the great earthquake last year, the power supply capability of nuclear power was greatly hurt. Although there is news that Japan will resume the operation of some nuclear power units, it is an indisputable fact that the power supply capability of Japan’s nuclear power sector is seriously damaged. Because hydropower has no room to increase supply capacity, the gap caused by nuclear power is supplemented by thermal power. However, because thermal power has coal-fired thermal power, fuel-fired thermal power, and gas-fired thermal power, the proportion of coal-fired thermal power in the entire thermal power structure is about half, so the coal consumption of new coal-fired thermal power will be extremely limited. As we all know, the area with the largest increase in coal demand in the Soma area was last month with two new 10.4 million kilowatts of coal-fired generating units. The annual increase in coal consumption is 5-6 million tons.
The coal demand of other countries outside of Japan is mostly not an incremental slowdown, or a stagnant or even reduced demand growth. On the whole, global coal demand does not increase very well.
Ample supply space
Under the background that the increase in coal demand is extremely limited or does not increase, coal's supply capacity is showing a stronger and stronger trend.
The first is that domestic supply capacity continues to increase. China's coal consumption was about 3.7 billion tons last year, and coal production was at a level of more than 3.5 billion tons. However, with the enhancement of railway transportation capacity and the development of power grids and the development of coal-based industry chains in various coal producing areas, the supply capacity can exceed at least 4.2 billion tons, compared with the slowdown in domestic economic growth and the country’s “energy savingâ€. With the increase in emission reduction efforts, coal consumption will not increase too much, and it may be around 5%.
For China, which has faced intense energy supply in recent years, the increase in domestic coal supply capacity is already good news. However, under the background of the increase in the international coal supply capacity, such conclusions are untenable.
Why do you say that?
From an international point of view, this year's coal will have more affluence. By the end of the decade, as long as there is investment in the coal prime-year coal, it will have a profitable impact. South Africa, North America, Australia, Indonesia, Russia, Congo and other countries and regions have increased the investment in the coal industry and formed a lot of new production capacity. In Congo, a coal mine with a capacity of 20 million tons has recently been put into operation. It is worth mentioning that in the United States, the United States has a coal production of 1.1 billion tons and its volume is very large. We are familiar with Australia, Indonesia, but coal production is only two to three million tons. Frankly speaking, the impact of these countries on China and the world's coal market is still limited, because their coal export structure is relatively fixed, Japan, South Korea and China's Taiwan region's import demand is met, will consider mainland China. The United States is different. Its coal production capacity is cut in half, the coal-consuming industry is eliminated by half, and hundreds of millions of tons of coal can be exported. Gradually reducing the coal-consuming industry and reducing the dependence of domestic economic development on coal energy are precisely the established principles of the United States. The question then arises. How can the future of the US's coal production capacity and potential be eliminated? Export. Due to the poor coal quality in the United States, it is not favored by Japan and South Korea. Therefore, the main target countries are basically emerging economies such as China and India.
That being the case, the influx of US coal into China will have a huge impact on China's coal market. Even after the economic recovery has resumed, our demand for coal will continue to increase at a relatively high rate. It is still difficult for China’s coal to repeat the increase in production, demand, and prices over the past decade or so. The reason is simple. The price does not rise. Coal in the United States wants to enter. When prices rise, US coal will come in.
Now, the relevant signs have been shown. Recently, the FOB price for a ton of South African coal is US$85, and the CIF price for China is only US$82. This is something that has not happened before. Many U.S. coal carriers that have not yet signed a contract are waiting to travel to China in the waters near Singapore. It is not surprising that coal in South Africa is not affected.
Of course, not only foreign coal destined for China but also China's own coal is affected by the US coal exports. Coal companies will have to reduce their own profit expectations and gradually reduce coal prices. Coal will first change from a high-profit industry to a normal profit industry, and then become a meager profit industry. This process will be accompanied by the decline, closure and bankruptcy of a group of coal companies.
Energy ** Compresses future coal demand
Why do I dare to make such a positive conclusion?
Still related to the United States. It is well-known that unconventional natural gas technologies such as shale gas and coalbed methane in the United States have greatly improved the energy consumption structure of the United States. Because the natural gas is cleaner and the combustion efficiency is higher, once the conditions for the industrialization of unconventional natural gas development technologies that have been studied in the United States for 15 years have matured, they will quickly be promoted. This development path for unconventional natural gas will be replicated in China in a shorter time; moreover, it takes 15 years for Americans to study unconventional natural gas technology, and China certainly cannot spend such a long time. The reason is also obvious. When the United States developed this technology, it was actually completely directionless exploration. In China, clear objectives are a favorable condition, and the United States is another favorable condition for reference. It is estimated that 5 to 8 years, the large-scale development of unconventional natural gas can be realized, that is, large-scale substitution of unconventional natural gas for coal can be realized. . This also means that the importance of coal in China's energy consumption structure will become less important.
I say this is not alarmist. Unconventional reserves of natural gas, China and the United States, no less. Take CBM, the United States has more than 24 trillion cubic meters of reserves, China has more than 36 trillion. Some people likened the development of unconventional natural gas to a **, saying that the United States would become an energy exporter, and that traditional energy big countries such as Russia and the Middle East oil-producing countries would fall into poverty because they lost their jobs. If this is true, who can guarantee that China will not become an energy exporter? In any case, I am convinced that in a few years, we will see a China with a profound change in energy structure: coal demand will continue to decrease, and coal production capacity will remain high.
Prepare for a proactive response
The downward adjustment of coal prices is a good news for coal-consuming industries in the long term. In the short term, it may not be. Because many coal-fired enterprises to prevent the adverse impact of coal prices continue to rise, high prices to buy a lot of coal for hoarding for emergency use, these high-priced coal will take some time to digest. In addition, coal prices have led to lower production costs, which may cause some high coal-consuming industry companies to revive or gain development incentives. This is worthy of vigilance by the relevant national authorities, because the increase in coal consumption is incompatible with environmental protection and carbon reduction. The state should think of ways to guide the healthy development of the coal industry and coal-consuming industries.
Of course, the involvement of the government does not mean that macro-control replaces the role of market mechanisms, mainly to allow coal companies to fully play their role as market players and the mutual replacement effects of different cost and energy sources. On the one hand, we must realize that if it is not mandatory coal mergers and acquisitions in previous years that led to the strengthening of the ability of large coal companies to control prices, today we are faced with a drop in coal prices that may occur earlier rather than the previous price Only raise the non-normal state.
On the other hand, we must also realize that the substitution of high-quality energy for low-efficiency energy is an irresistible trend. With similar costs and similar energy efficiency, cleaner energy will surely be used more. Therefore, we must, in the context of developing clean energy technologies as soon as possible, gradually reduce the social dependence on coal consumption through market mechanisms, and further increase the efficiency of coal use and eliminate the adverse effects of coal on the environment and economic development.
Some people in the country believe that coal prices will continue to rise after a brief downturn. I do not agree with this kind of judgment. Coal prices have entered a period of decline from a large context for a long period of time. It will decline at a faster rate in the near future and will decline at a slower rate in the future. The middle may be repeated due to individual factors, but the big trends and directions will not change.
Coal demand is in mourning
Why do you say that? From the demand side, in the short term, the economic situation at home and abroad is not good, which determines that the demand side of coal is unlikely to change in the near future. In the long term, with the emphasis on climate change, carbon emission reduction, and environmental protection both internally and externally, even if the domestic and foreign economies recover to the normal track, most of the newly added energy demand does not flow to coal but to some low-carbon energy sources. Therefore, in the time that can be expected, there is no good news that favors the increase in coal demand.
The only exception to this is probably Japan. Japan's power energy structure is roughly one-third of thermal power, hydropower, and nuclear power. Because of the Fukushima nuclear accident caused by the great earthquake last year, the power supply capability of nuclear power was greatly hurt. Although there is news that Japan will resume the operation of some nuclear power units, it is an indisputable fact that the power supply capability of Japan’s nuclear power sector is seriously damaged. Because hydropower has no room to increase supply capacity, the gap caused by nuclear power is supplemented by thermal power. However, because thermal power has coal-fired thermal power, fuel-fired thermal power, and gas-fired thermal power, the proportion of coal-fired thermal power in the entire thermal power structure is about half, so the coal consumption of new coal-fired thermal power will be extremely limited. As we all know, the area with the largest increase in coal demand in the Soma area was last month with two new 10.4 million kilowatts of coal-fired generating units. The annual increase in coal consumption is 5-6 million tons.
The coal demand of other countries outside of Japan is mostly not an incremental slowdown, or a stagnant or even reduced demand growth. On the whole, global coal demand does not increase very well.
Ample supply space
Under the background that the increase in coal demand is extremely limited or does not increase, coal's supply capacity is showing a stronger and stronger trend.
The first is that domestic supply capacity continues to increase. China's coal consumption was about 3.7 billion tons last year, and coal production was at a level of more than 3.5 billion tons. However, with the enhancement of railway transportation capacity and the development of power grids and the development of coal-based industry chains in various coal producing areas, the supply capacity can exceed at least 4.2 billion tons, compared with the slowdown in domestic economic growth and the country’s “energy savingâ€. With the increase in emission reduction efforts, coal consumption will not increase too much, and it may be around 5%.
For China, which has faced intense energy supply in recent years, the increase in domestic coal supply capacity is already good news. However, under the background of the increase in the international coal supply capacity, such conclusions are untenable.
Why do you say that?
From an international point of view, this year's coal will have more affluence. By the end of the decade, as long as there is investment in the coal prime-year coal, it will have a profitable impact. South Africa, North America, Australia, Indonesia, Russia, Congo and other countries and regions have increased the investment in the coal industry and formed a lot of new production capacity. In Congo, a coal mine with a capacity of 20 million tons has recently been put into operation. It is worth mentioning that in the United States, the United States has a coal production of 1.1 billion tons and its volume is very large. We are familiar with Australia, Indonesia, but coal production is only two to three million tons. Frankly speaking, the impact of these countries on China and the world's coal market is still limited, because their coal export structure is relatively fixed, Japan, South Korea and China's Taiwan region's import demand is met, will consider mainland China. The United States is different. Its coal production capacity is cut in half, the coal-consuming industry is eliminated by half, and hundreds of millions of tons of coal can be exported. Gradually reducing the coal-consuming industry and reducing the dependence of domestic economic development on coal energy are precisely the established principles of the United States. The question then arises. How can the future of the US's coal production capacity and potential be eliminated? Export. Due to the poor coal quality in the United States, it is not favored by Japan and South Korea. Therefore, the main target countries are basically emerging economies such as China and India.
That being the case, the influx of US coal into China will have a huge impact on China's coal market. Even after the economic recovery has resumed, our demand for coal will continue to increase at a relatively high rate. It is still difficult for China’s coal to repeat the increase in production, demand, and prices over the past decade or so. The reason is simple. The price does not rise. Coal in the United States wants to enter. When prices rise, US coal will come in.
Now, the relevant signs have been shown. Recently, the FOB price for a ton of South African coal is US$85, and the CIF price for China is only US$82. This is something that has not happened before. Many U.S. coal carriers that have not yet signed a contract are waiting to travel to China in the waters near Singapore. It is not surprising that coal in South Africa is not affected.
Of course, not only foreign coal destined for China but also China's own coal is affected by the US coal exports. Coal companies will have to reduce their own profit expectations and gradually reduce coal prices. Coal will first change from a high-profit industry to a normal profit industry, and then become a meager profit industry. This process will be accompanied by the decline, closure and bankruptcy of a group of coal companies.
Energy ** Compresses future coal demand
Why do I dare to make such a positive conclusion?
Still related to the United States. It is well-known that unconventional natural gas technologies such as shale gas and coalbed methane in the United States have greatly improved the energy consumption structure of the United States. Because the natural gas is cleaner and the combustion efficiency is higher, once the conditions for the industrialization of unconventional natural gas development technologies that have been studied in the United States for 15 years have matured, they will quickly be promoted. This development path for unconventional natural gas will be replicated in China in a shorter time; moreover, it takes 15 years for Americans to study unconventional natural gas technology, and China certainly cannot spend such a long time. The reason is also obvious. When the United States developed this technology, it was actually completely directionless exploration. In China, clear objectives are a favorable condition, and the United States is another favorable condition for reference. It is estimated that 5 to 8 years, the large-scale development of unconventional natural gas can be realized, that is, large-scale substitution of unconventional natural gas for coal can be realized. . This also means that the importance of coal in China's energy consumption structure will become less important.
I say this is not alarmist. Unconventional reserves of natural gas, China and the United States, no less. Take CBM, the United States has more than 24 trillion cubic meters of reserves, China has more than 36 trillion. Some people likened the development of unconventional natural gas to a **, saying that the United States would become an energy exporter, and that traditional energy big countries such as Russia and the Middle East oil-producing countries would fall into poverty because they lost their jobs. If this is true, who can guarantee that China will not become an energy exporter? In any case, I am convinced that in a few years, we will see a China with a profound change in energy structure: coal demand will continue to decrease, and coal production capacity will remain high.
Prepare for a proactive response
The downward adjustment of coal prices is a good news for coal-consuming industries in the long term. In the short term, it may not be. Because many coal-fired enterprises to prevent the adverse impact of coal prices continue to rise, high prices to buy a lot of coal for hoarding for emergency use, these high-priced coal will take some time to digest. In addition, coal prices have led to lower production costs, which may cause some high coal-consuming industry companies to revive or gain development incentives. This is worthy of vigilance by the relevant national authorities, because the increase in coal consumption is incompatible with environmental protection and carbon reduction. The state should think of ways to guide the healthy development of the coal industry and coal-consuming industries.
Of course, the involvement of the government does not mean that macro-control replaces the role of market mechanisms, mainly to allow coal companies to fully play their role as market players and the mutual replacement effects of different cost and energy sources. On the one hand, we must realize that if it is not mandatory coal mergers and acquisitions in previous years that led to the strengthening of the ability of large coal companies to control prices, today we are faced with a drop in coal prices that may occur earlier rather than the previous price Only raise the non-normal state.
On the other hand, we must also realize that the substitution of high-quality energy for low-efficiency energy is an irresistible trend. With similar costs and similar energy efficiency, cleaner energy will surely be used more. Therefore, we must, in the context of developing clean energy technologies as soon as possible, gradually reduce the social dependence on coal consumption through market mechanisms, and further increase the efficiency of coal use and eliminate the adverse effects of coal on the environment and economic development.
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