2020 is the year with the biggest fluctuation of thermal coal disk price in the past five years. At the beginning of the year, because of the epidemic, thermal coal prices, like other industrial products, fell to the bottom, and soon rose rapidly with the resumption of work and production, forming a V-shaped trend. In the following three months, that is, from the end of May to the end of August, although it was in the peak season of coal consumption in summer, the price of thermal coal fluctuated, which was the biggest reason for the over-level play of hydropower. Starting from September 2020, thermal coal prices opened up the accelerator, when the driver returned to the supply-side tightening and consumer-side exuberant. It can be said that tight supply is the theme throughout 2020, and it will continue until 2021.
Attention should be paid to the situation of import customs clearance.
According to customs statistics, China imported 303.991 million tons of coal in 2020, the highest level since 2014 (including 2014) and a cumulative increase of 1.5% over the same period last year. On the whole, the control of domestic imported coal shows a loose pattern before and after a tight pattern. After years of discussion in the market, import leveling has finally been fully implemented in 2020. Coal imports peaked from January to April 2020, and then plummeted. With the consumption of import quotas at various gates in the second and third quarters, the amount of imported coal began to decline, and November's data hit the lowest level in nearly six years. In this process, the control of Australian coal is more stringent. Judging from the current situation, even if the upstream supply is tight and the import policy of coal is liberalized again in the peak season at the end of the year, it is very difficult for Australian coal to pass through customs normally. It is almost impossible to fully liberalize the import policy in 2021, and as a means of regulating the coal market, it may be liberalized moderately if necessary.
Tight supply is a medium-and long-term problem
According to the data, in December 2020, domestic production of raw coal was 350 million tons, an increase of 3.2 percent over the same period last year, and the growth rate was 1.7 percent faster than that of the previous month, but accounted for Nissan, it was 11.35 million tons, down 230000 tons from November. In addition, for the whole of 2020, China produced a total of 3.84 billion tons of raw coal, an increase of only 0.9 per cent over 2019. In terms of sales, the coal enterprises that the Coal Association focuses on monitoring have increased their coal sales compared with the previous month. From January 1 to 18, 2021, the average daily sales was 7.21 million tons, an increase of 170000 tons or 2.4% over December 2020, of which the day's sales reached 8.31 million tons on the 18th, the highest level in history.
In 2020, due to the impact of the epidemic and the continued squeeze of hydropower, coal sales experienced a process of recovery from the bottom. Production is more affected by Inner Mongolia "inverted investigation for 20 years" and coal mine safety supervision stations in Shanxi and Shaanxi, and the output release has always been limited. Especially in the context of macroeconomic recovery and huge demand, although the absolute value of the supply side has maintained a slight year-on-year growth, and there has been a significant increase in monthly growth after the second quarter of 2020, the market is still facing the medium-and long-term problem of tight supply.
In 2021, when coal mine safety supervision and anti-crime actions are not relaxed, the tightening of the coal supply side will become the norm. The transformation of backward production capacity and the improvement of the degree of automation of coal mining will be the source driving force for the increase in production. From the perspective of the whole year of 2021, the slight increase in coal production compared with the same period last year is a high probability event.
The proportion of railway transport is increasing year by year.
In December 2020, the national railway sent an average of 5.6 million tons of coal per day and loaded 80,000 vehicles, an increase of 10% and 9.5% respectively over the same period last year, of which 51000 vehicles were loaded with thermal coal per day, an increase of 9.9% over the same period last year. It is reported that in November 2020, the National Railway Group began a 60-day special campaign to guarantee and supply winter coal, sending a total of 330 million tons of coal, an increase of 20 million tons over the same period in 2019.
In fact, the monthly transport volume of railway coal has shown a month-on-month increase since the fourth quarter of 2020. Due to the demand for guaranteed supply in winter, the amount of coal transported out of the producing area continues to increase, and the railway transport volume increases accordingly. Coal rail traffic is expected to remain at a high level in January 2021 before falling seasonally. From the perspective of the whole year of 2021, with the further improvement of the capacity of Haoji railway, under the background of "public railway", the railway coal transport volume will maintain positive growth.
Rapid recovery of national electricity consumption
According to the National Bureau of Statistics, the growth rate of national power production continued to accelerate in December 2020, generating 727.7 billion kilowatt hours in the same month, an increase of 9.1 percent over the same period last year, an increase of 2.3 percent over the previous month; the average daily power generation was 23.47 billion kilowatt hours, an increase of 2.07 billion kilowatt hours compared with the previous month. In addition, for the whole of 2020, China generated a total of 7.417 trillion kilowatt-hours of electricity, an increase of 2.7 percent over 2019. Of this total, thermal power increased by 9.2 percent, an increase of 2.6 percentage points over the previous year.
Demand for thermal power will be squeezed again in 2020. From the second quarter of 2020, hydropower generation and thermal power share have decreased compared with 2019. 2020 is the end of the 13th five-year Plan. In the 13th five-year Plan for Energy Development, the focus of the adjustment of China's energy consumption structure is the substitution of non-fossil energy, of which the requirement for the proportion of coal consumption in 2020 is reduced to 58%. Judging from the current situation, the task has been basically completed.
2021 is the first year of the 14th five-year Plan, and the issue of energy development will continue the main spirit of the 13th five-year Plan. Therefore, the general trend of gradual reduction of thermal power share will not change. Under the influence of the global epidemic, the local transfer of the manufacturing industry also makes China's energy demand face new challenges. Generally speaking, the growth rate of power consumption in 2021 will be higher than that in 2020, and thermal power consumption is expected to show flat or slight growth.
Industrial coal is expected to grow steadily.
The electrolytic aluminum industry accounts for 7% of the country's electricity generation and 8% of the country's electricity generation. According to the data, in December 2020, the domestic output of electrolytic aluminum was 3.279 million tons, an increase of 8.00 percent over the same period last year, and the average daily output was 105800 tons, an increase of 300 tons over the previous month. In addition, for the whole of 2020, the cumulative output of domestic electrolytic aluminum reached a record high of 37.124 million tons, an increase of 4.80% over 2019. According to Baichuan data, 1.965 million tons of new production capacity will be added in 2020, and it will take some time for these capacity to be fully released. Therefore, in 2021, the power consumption of electrolytic aluminum industry will also increase steadily.
The cement industry will shine in 2020. Even if it is dragged down by the epidemic at the beginning of the year, after the resumption of work and production, the output and demand of the cement industry are growing rapidly. Monthly output began in April 2020, almost all exceeding the highest level in 2019. This has the impact of backward demand, but more policy support for infrastructure and real estate. In 2021, the cement industry is expected to maintain a relatively bright performance, which in turn will boost the demand for cement coal.
Hydroelectric power was brilliant last year.
By the end of 2020, the scale of domestic conventional hydropower is 340 million kilowatts, of which the new construction scale during the 13th five-year Plan period exceeded 60 million kilowatts. In December 2020, the country's absolute hydropower generation was 76.4 billion kilowatt-hours, an increase of 11.3 percent over the same period last year, and the same as the previous month. For the whole of 2020, the country's hydropower generation totaled 1.21 trillion kilowatt-hours, an increase of 5.30 percent over the same period last year. From January to November, the average utilization of hydropower equipment was 3627 hours, an increase of 128 hours over the same period in 2019.
The performance of hydropower in 2019 is very eye-catching, which can be said to be the year of hydropower. In addition, since the second quarter of 2020, the increase in precipitation has led to a sharp rise in the month-on-month ratio of hydropower. The amount of water and the length of time since 2020 are rare in recent years, which can also be verified by the data of the three Gorges in and out of the reservoir. After several times of early flood discharge and full generation of hydropower, the national hydropower generation, including the three Gorges, has maintained a high level and lasted until the fourth quarter of 2020. Looking forward to 2021, there will be great uncertainty in hydropower. La Nina will sweep the northern hemisphere in 2020, and precipitation will decline significantly if it is converted to El Ni ñ o in 2021. This means that hydropower will be reduced compared with the same period last year.
UHV enters a period of rapid development
With the development of China's economy and the continuous improvement of its comprehensive strength, China has become the largest energy consumer in the world. At the same time, the malpractice of uneven distribution of energy in our country also appears. Coal is the main energy consumption in China, and the distribution of coal is "more in the west, less in the east, less in the north and less in the south", and the main demand side of energy is in the economically developed south and east coast. This environment promotes the development of UHV transmission technology.
China has paid enough attention to the construction of UHV transmission. In the 13th five-year Plan of Electric Power Development, the National Energy Administration pointed out that considering that the transmission channel is mainly the rational distribution of energy-enriched areas, it is necessary to build the "west-to-east power transmission channel" of UHV transmission and conventional transmission technology. Data show that from January to November 2020, cross-district power transmission across the country completed 561.7 billion kilowatt-hours, an increase of 13.5% over the same period last year.
In 2020, the National Electroweb actively responded to the country's "new infrastructure" strategy, proposed that the annual investment scale of UHV construction projects exceed 100 billion yuan, and speed up the UHV approval and construction process. The peak performance of UHV market is generally half a year to one year ahead of the peak of investment, and the UHV investment shows a certain lag. According to the national Electroweb's UHV preliminary work arrangement, the approval of UHV projects in 2020 will be concentrated in the second half of the year, and the outbreak period of investment will be in 2021. The construction of 10-to-10 direct lines will be approved during the 14th five-year Plan period. during this period, the total investment in UHV is expected to be 300 billion yuan, with an average annual investment of 60 billion yuan, and the length of the line will be extended from 28352 km in 2019 to 40825 km. In this way, the local transformation of coal and the development of coal in the western region will enter a new stage.
The supply is difficult to reduce the quantity, and the demand is growing steadily.
2020 is a year when the supply of the coal market is less than the demand, and the "backward investigation of 20 years" in Inner Mongolia has led to strict restrictions on local production capacity. In addition, frequent mine accidents affect the market nerves, and coal mine safety supervisors in Shanxi and Shaanxi have become more and more stringent. For example, Shanxi has adopted the regulation that the chairman of the company at the next level of major safety responsibility accident resigns on the spot. In 2020, the contraction of domestic output will become the "new normal" and the import policy will continue to tighten on the other. In 2021, the general direction of the policy is still to control imports.
On the whole, the holiday factors at the beginning of the year led to a sharp correction in thermal coal prices. After the Spring Festival, various industries will resume work and production, and the demand for electricity will increase significantly. Subject to climatic conditions, it will be difficult for hydropower to be on the same scale as in 2020, and the demand for thermal power will be exuberant. In addition, industrial coal will also be popular, and the local conversion of coal at the mouth of the pit will divert part of the coal from the water. It can be said that in 2021, the supply of thermal coal market is difficult to release, the demand is growing steadily, the price will first restrain and then rise, and the operating range of the disk is expected to be 660 yuan / ton. (author unit: founder medium-term futures)
