The energy sector rose 13% in the first quarter, far exceeding the performance of the market
In the first quarter of this year, the Shanghai Composite Index fell 10.06%, the Shenzhen Component Index fell 18.4% and the energy sector rose 13%. From the perspective of listed companies, the top five gainers in the energy sector in the first quarter of this year were Pingdingshan Tianan Coal Mining Co.Ltd(601666) (+ 104.5%), Shanxi Coal International Energy Group Co.Ltd(600546) (+ 68.1%), Jinneng Holding Shanxi Coal Industry Co.Ltd(601001) (+ 63.8%), Yankuang energy (+ 62.9%), Shanxi Coking Coal Energy Group Co.Ltd(000983) (+ 50.2%); The top five declines were Zhongxing Tianheng Energy Technology (Beijing)Co.Ltd(600856) (- 51.9%), Bomesc Offshore Engineering Company Limited(603727) (- 31.9%), Jiangsu Lopal Tech.Co.Ltd(603906) (- 28.8%), Renzhi shares (- 27.3%), Oriental Energy Co.Ltd(002221) (- 27.1%).
Geopolitical shocks combined with economic recovery boosted demand, and crude oil prices remained high
Since the first quarter, international crude oil prices have maintained an upward trend. Since the outbreak of the conflict between Russia and Ukraine at the end of February, crude oil prices have soared. Despite the recent decline from the high point, it still maintains high operation. Basically, because the world has entered the post epidemic era, the operating rate of factories and enterprises has increased significantly compared with the earlier epidemic control period. At the same time, OPEC has maintained a stable and prudent pace of oil production. The imbalance between supply and demand is the core factor of the rise of crude oil prices. The outbreak of geopolitical events is undoubtedly an important driver of the surge in short-term oil prices. Although the European and American sanctions against Russia are not directly related to energy related trade, the sanctions have substantially generated resistance to Russia’s energy exports, and European countries have tried to get rid of their energy dependence on Russia. We believe that military conflicts are difficult to resolve in a short time, political and economic sanctions need more time, and the impact of this geopolitical event on the global energy market will continue. Under the background that the international crude oil price is expected to remain high, the global capital expenditure for oil exploration and exploitation will increase significantly compared with last year.
Ensuring supply has become the focus, and the coal sector maintains a high outlook
From the market performance, among the energy sector, the coal sector performed well in the first quarter, far surpassing other listed companies. Thanks to the continuous rise of international crude oil prices, coal, as a substitute for energy and chemical raw materials, has gradually reflected its cost performance. The cost of some coal chemical products has been lower than that of crude oil. The rise in crude oil prices has directly stimulated the market’s attention to the coal sector.
As China’s uncontrollable energy source, coal bears the burden of ensuring supply. The key requirement for coal in the 14th five year plan for modern energy system is to stabilize and ensure the demand for energy. At the same time, in order to avoid short-term coal price fluctuations, the long-term association plays an increasingly important role in the coal trading system. The explosive profit growth obtained due to coal price fluctuations in the past may be difficult to reproduce, but the coal price operating stably in a higher position will bring the long-term profits of coal enterprises to a new level. At the same time, the energy transformation under the dual carbon goal will clear a number of small and medium-sized low-quality coal mines. The market will have a process of rapidly turning to leading coal enterprises, and the improvement of concentration will bring benefits to listed companies in the coal sector..
Risk tip: macroeconomic growth is lower than expected, the risk of changes in emission reduction policies and the risk of fluctuations in raw material prices.
