Crude oil, coal, natural gas and other energy prices continued to rise
Crude oil. As of February 21, the closing price of IPE oil distribution was US $97.35/barrel, up 10.8% month on month and 23.4% year to date; WTI crude oil closed at US $91.66/barrel, up 5.9% month on month and 20.6% year to date. The intensification of geopolitical conflicts has promoted the continuous rise of international oil prices in the near future. In terms of natural gas, as of February 21, the price of IPE natural gas was 172.89 pence / Semm, down 7.0% month on month and 20.6% year to date. The price of NYMEX natural gas was US $4.45/mmbtu, up 2.7% month on month and 16.4% year to date. Geopolitical conflicts have led to increased fluctuations in natural gas prices.
In terms of coal, as of February 21, China Shipbuilding Industry Group Power Co.Ltd(600482) coal futures closed at 841.20 yuan / ton, up 9.6% month on month and 13.8% year to date; The market price of q5500 thermal coal in Qinhuangdao port was 1000.00 yuan / ton, unchanged month on month, up 26.6% year to date. The attack of cold winter and the rise of prices in main producing areas supported the stabilization and rebound of coal prices.
The growth rate of investment in the mining industry stabilized and rebounded, and the output of oil, gas and coal continued to grow
In terms of investment, in December 2021, the completed investment in fixed assets of China’s oil and gas exploration industry increased by 4.2%, and the growth rate changed from negative to positive. The investment in fixed assets in the coal mining and beneficiation industry increased by 11.1% in total, and the growth rate further rebounded. The completed investment in fixed assets in the mining industry increased by 10.9% and the growth rate continued to rise.
In terms of output, in December 2021, China’s natural crude oil output was 16.47 million tons, a year-on-year increase of 1.7%; The output of natural gas was 19.2 billion cubic meters, a year-on-year increase of 2.3%; The output of raw coal was 371 million tons, a year-on-year increase of 4.60%. From January to December 2021, China’s cumulative crude oil output was 199 million tons, a year-on-year increase of 2.4%; The cumulative output of natural gas was 205.300 billion cubic meters, a year-on-year increase of 8.2%; The cumulative output of raw coal was 4.071 billion tons, a year-on-year increase of 4.7%.
In terms of construction, the capacity utilization rate of China’s oil and gas exploration industry was 89.0% in the fourth quarter, maintaining a high level. The capacity utilization rate of the coal mining industry increased slightly to 76.4%, also at an all-time high.
Investment advice
With the continuous improvement of global vaccination rate, the impact of the epidemic is gradually weakened, which promotes the continuous recovery of the global economy and the continuous increase of energy demand. However, the relatively lagging recovery of supply leads to a sharp rise in energy prices. During the period of rising oil prices, the rise of capital expenditure of oil and gas companies generally lags behind oil prices by about 1.5-2 years. Therefore, as oil and gas prices remain high in the future, it is expected that the capital expenditure of oil and gas companies will also stabilize and recover, driving the increase in demand for relevant equipment. In terms of coal, with the support of high coal prices and the continuous growth of enterprise profits, it will promote the increase of capital expenditure. Driven by policies such as increasing production and ensuring supply and replacing advanced production capacity, the fixed asset investment of high-quality coal enterprises is still expected to maintain growth. Therefore, we maintain the “overweight” rating of the energy and heavy equipment industry.
Risk tips
The sharp drop in energy prices has reduced the willingness of enterprises to spend capital. The global economic recovery was less than expected.
