Crude oil, coal, natural gas and other energy prices remained high
Crude oil. As of April 22, the closing price of IPE oil distribution was USD 106.20/barrel, down 7.3% month on month and up 34.6% year to date; WTI crude oil closed at US $101.75/barrel, down 8.6% month on month and up 33.9% year to date. Regional conflicts continued, supporting international oil prices to remain at an all-time high.
In terms of natural gas, as of April 22, the price of IPE natural gas was 167.50p/som, down 29.0% month on month, down 23.1% year to date, and the price of NYMEX natural gas was US $6.47/mmbtu, up 25.7% month on month and 69.2% year to date. Warmer weather, delayed settlement risks and the agreement reached between the United States and Europe pushed down the price of natural gas in Europe, while the price of natural gas in the United States rose sharply.
In terms of coal, as of April 22, China Shipbuilding Industry Group Power Co.Ltd(600482) coal futures closed at 822.00 yuan / ton, down 3.9% month on month and up 15.2% year to date; The market price of Qinhuangdao q5500 thermal coal was 120000 yuan / ton, down 23.2% month on month and up 51.9% year to date. The low consumption season led to a slight drop in the price of power coal.
The growth rate of investment in the mining industry decreased slightly, and the output of oil, gas and coal maintained growth
In terms of investment, in March 2022, the completed amount of fixed asset investment in China’s oil and gas exploration industry increased by 11.3%, and the growth rate decreased slightly. The completed amount of fixed asset investment in coal mining and beneficiation industry increased by 50.80%, and the growth rate continued to rise. The completed investment in fixed assets in the mining industry increased by 19.1% and the growth rate decreased slightly.
In terms of output, from January to March 2022, China’s cumulative output of crude oil was 51 million tons, a year-on-year increase of 4.4%; The cumulative output of natural gas was 56.95 billion cubic meters, a year-on-year increase of 6.6%; The cumulative output of raw coal was 1.084 billion 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 in the first quarter of 2022 was 92.4%, a record high. The capacity utilization rate of the coal mining industry was 74.9%, down slightly.
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.
