Crude oil, coal, natural gas and other energy prices continued to rise
Crude oil. As of March 29, the closing price of IPE oil distribution was US $111.42/barrel, up 10.2% month on month and 41.2% year to date; WTI crude oil closed at US $105.16/barrel, up 12.2% month on month and 36.2% year to date. Regional conflicts continued, pushing the recent rise in international oil prices. In terms of natural gas, as of March 29, the price of IPE natural gas was 256.50p/som, up 16.1% month on month, 17.7% year to date, and the price of NYMEX natural gas was US $5.45/mmbtu, up 18.6% month on month and 42.6% year to date. Insufficient supply superimposed geographical conflicts, pushing up the price of natural gas again.
In terms of coal, as of March 29, 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 150000 yuan / ton, up 59.6% month on month and 89.9% year to date. The reduction in imports led to another rise in coal prices.
The growth rate of investment in the mining industry continued to pick up, and the output of oil, gas and coal continued to grow
In terms of investment, in February 2022, the completed amount of fixed asset investment in China’s oil and gas exploration industry increased by 0.0%, and the growth rate decreased slightly. The completed amount of fixed asset investment in coal mining and beneficiation industry increased by 45.4%, and the growth rate rebounded sharply. The completed investment in fixed assets in the mining industry increased by 21.1%, and the growth rate continued to rise.
In terms of output, from January to February 2022, China’s cumulative output of crude oil was 33 million tons, a year-on-year increase of 4.6%; The cumulative output of natural gas was 37.240 billion cubic meters, a year-on-year increase of 6.7%; The cumulative output of raw coal was 687 million tons, a year-on-year increase of 10.3%.
In terms of commencement, the capacity utilization rate of China’s oil and gas exploration industry was 89.0% in the fourth quarter of 2021, 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. In addition, geopolitical conflicts may affect global energy supply in the medium and long term, further supporting oil and gas prices to remain high. 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.
