In 2021, although the repeated epidemic has disturbed commodities, the global economy has continued the recovery trend since the second half of 2020. Coupled with the unprecedented loose monetary environment, commodities have been rising all the way since the beginning of the year. When high raw material prices began to affect downstream production, the balance of supply and demand began to tilt gradually. At the same time, governments continued to strengthen their efforts to curb inflation, and the focus of commodities fell significantly.
Throughout the year, industrial products showed an “inverted V” trend with low at both ends and high in the middle. Among them, the high points of energy, chemical industry and nonferrous metals index all appeared in October, which is consistent with the high points of industrial products index, while the high points of steel, building materials and other plate indexes appeared in May.
The hot spots of energy and chemical commodities continued throughout the year, among which the “energy crisis” in Europe, the sharp rise in the price of thermal coal and the repeated disturbance of the epidemic all year round seriously affected the supply and demand pattern of bulk commodities.
The picture shows Wenhua industrial products index
European “energy crisis”
On December 21, the flow of Yamal Europe, the natural gas pipeline connecting Russia and Europe, decreased to zero, resulting in the price of natural gas and electricity in Europe both rising by more than 20%, reaching a record high. Among them, the price of natural gas is 10 times higher than that of a year ago.
The picture shows the trend of natural gas in Europe
However, after the sharp rise in natural gas prices in Europe, several American liquefied natural gas (LNG) ships bound for Asia turned around and sailed to Europe for greater revenue, which alleviated the supply gap in Europe to some extent. At the same time, the temperature in major European cities picked up and speculators’ profit reduction also increased the pressure of natural gas correction. Subsequently, the price fell rapidly, and on the 24th, it was close to “halving” in only three days.
However, it is still too early to judge the peak of natural gas prices in Europe. Similar sharp ups and downs also occurred in September this year.
As an important alternative energy for the transition from fossil fuels to green energy, taking into account energy consumption demand and carbon reduction, the demand for natural gas in Europe has increased significantly in recent years. This year’s “windless summer” in Europe significantly reduced wind power generation. In the second half of the year, several nuclear power plants in France unexpectedly stopped operation, making European power generation more dependent on natural gas. At present, about 90% of the EU’s natural gas depends on imports, most of which come from Russia. The Beixi second line project completed in September this year could double Russia’s natural gas supply to Germany, which could have greatly alleviated the European natural gas supply gap. However, under the criticism of the United States and its European allies, the Federal Network administration, the German energy regulator, suspended the approval process of the project in Germany in November, Said the project needs to comply with German law to obtain certification.
In response, Russian President Vladimir Putin said, “Russia’s supply of more natural gas to the European market will certainly help stabilize prices, but European countries choose not to do so. They can only blame their own improper policies.”
At present, the “beixi-2” project may not be certified and officially put into operation until the spring of 2022 at the earliest. Until then, once the cold wave strikes, European gas and electricity prices are still likely to soar again. Whether the NATO Russia Council meeting to be held on January 12, 2022 can have an effective dialogue on security will also affect the trend of European natural gas prices.
A study by Bruegel, the EU’s main think tank, shows that the EU’s energy supply and demand balance depends on the speed of phasing out fossil fuels and gradually introducing green energy, and the process will not be too calm. Europe is right to promote greener energy, but it can’t put the car in front of the horse. In the short and medium term, EU countries will continue to face an energy crisis more or less until large-scale batteries for storing renewable energy are developed.
crazy power coal
The chart shows the trend of thermal coal futures
No one expected that the “steady” power coal would rise so fiercely!
Since the beginning of this year, the main contracts of thermal coal futures have continuously set new record highs, with 800 yuan, 900 yuan and 1000 yuan… All historical highs have been broken. Finally, after hitting a record high of 1982 yuan / ton on October 19, it reversed in one day under a series of heavy blows from the regulatory authorities, and then opened a continuous slump mode. It returned to below 900 yuan / ton in just 11 trading days
In fact, the increase of spot was much higher than that of futures. There was even a quotation of 3000 yuan / ton at the power coal pit. Previously, the spot price only briefly stood at 1000 yuan in 2008. At that time, it was in the stage of global economic overheating before the outbreak of the international financial crisis.
The behavior of “Tun coal waiting to rise” caused by the rise of coal price further led to “coal shortage” and “power shortage”, the shutdown of some industries further led to the supply gap of relevant commodities, and also led to the sharp rise of downstream commodities of coal chemical industry, such as methanol, polyethylene, polypropylene, urea, soda ash and ethylene glycol, due to the rise of costs. In a few areas, there are even periodic power cuts, affecting the normal life of residents.
Late at night on October 19, the national development and Reform Commission said that the rise of coal prices was completely divorced from the fundamentals of supply and demand, and studied the implementation of intervention measures according to law. Power coal futures fell.
It is worth mentioning that some areas stop production due to power shortage, and some areas only take the initiative to “double control of energy consumption”. In the first half of this year, under the background that China’s energy consumption per unit of GDP decreased by 2% year-on-year, the dual control indicators of energy consumption in some provinces were not completed, and even there was an increase instead of a decrease in key indicators such as energy consumption intensity. According to the barometer of the completion of the dual control target of energy consumption in various regions in the first half of 2021 issued by the national development and Reform Commission, 9 provinces such as Jiangsu, Guangxi, Guangdong and Fujian are listed as the first level early warning. Relevant regions actively compressed the production of industries with high pollution and high energy consumption, which also boosted the sharp rise of PVC, ferrosilicon, silicon manganese, aluminum and other commodities to a certain extent.
Generally speaking, the reasons for the rise of coal price are various, such as the sharp reduction of on balance sheet and off balance sheet capacity caused by the reform of coal supply side and the rectification of over production; China’s industrial production rebounded sharply, hydropower generation decreased, and thermal power demand surged; Capital speculation… wait. Of course, it also includes some factors such as the haste of some regions and industries in realizing the “double carbon” goal.
In the long run, stable economic growth is inseparable from energy consumption, and achieving the goal of carbon peak and carbon neutralization requires energy conservation and carbon reduction, which is a dilemma.
In view of various problems encountered in the implementation of carbon emission reduction this year, the central economic work conference held in December pointed out that it is necessary to correctly understand and grasp carbon peak and carbon neutralization. Realizing carbon peak and carbon neutralization is the internal requirement of promoting high-quality development. We should unswervingly promote it, but it is impossible to accomplish its work in one battle. We should adhere to the principles of national overall planning, giving priority to economy, two-wheel drive, smooth internal and external flow and risk prevention. The gradual withdrawal of traditional energy should be based on the safe and reliable substitution of new energy. Based on the basic national conditions of coal, we should pay attention to the clean and efficient utilization of coal, increase the consumption capacity of new energy, and promote the optimal combination of coal and new energy. We should pay close attention to tackling key problems of green and low-carbon technology. It is necessary to conduct scientific assessment, exclude the new renewable energy and raw material energy from the total energy consumption control, create conditions to realize the transformation from “double control” of energy consumption to “double control” of total carbon emission and intensity as soon as possible, accelerate the formation of an incentive and restraint mechanism for reducing pollution and carbon, and prevent simple layer by layer decomposition. To ensure energy supply, large enterprises, especially state-owned enterprises, should take the lead in ensuring supply and stable prices. We should further promote the energy revolution and accelerate the construction of an energy power.
epidemic disturbance
Over the past two years, the epidemic has profoundly changed the operation mode of the world economy and disturbed the trend of bulk commodities.
——In 2020, the international oil price climbed out of the “pit” of negative oil price. With the gradual recovery of consumption, it climbed all the way. In the first week of 2021, the US crude oil rose above the $50 mark without hesitation. After that, the European epidemic intensified again in March, the Delta in July and the recent Omicron mutant strain all led to a sharp decline in oil prices. However, since European and American countries have not tightened prevention and control as in 19 years, and relying on the strong “steering” ability of OPEC +, US crude oil has been maintained above US $57.
The picture shows the trend of international crude oil source: Tianfeng futures
——As China was the first to control the epidemic, while the production lines in Vietnam, India and other countries did not get rid of the problem of the epidemic, a large number of orders from European and American developed countries returned to China, and the surge in demand drove the commodity prices of relevant industries, such as short fiber and filament of textile chain, which rose sharply in early 2021. As the epidemic situation in foreign countries such as India, Pakistan and Vietnam is under control and production is resumed one after another, the return of orders to China is reduced, and the signs of sluggish peak season since September are more obvious.
——Due to the repeated impact of the global epidemic, the logistics cost has increased. Due to the increased port epidemic prevention and intensified port congestion, international shipping prices have risen sharply, and it is difficult to find cargo ships, seafarers and containers, which has an adverse impact on China’s commodity exports. In previous years, there will be a wave of order peaks near the overseas “Christmas season” and China’s “double 11” and “double 12”. However, orders have decreased significantly this year, which has a negative impact on relevant chain commodities.
At present, Omicron is still spreading rapidly overseas. The latest data from Johns Hopkins University in the United States on the 28th showed that more than 500000 new cases were diagnosed in the United States in a single day, a record high. For some time to come, the epidemic will still be an important factor affecting bulk commodities and the operation of the global economy.
(Xinhua Finance)
