The operating situation and future trend prediction of energy prices in Inner Mongolia in the first quarter

https://cheman.chemnet.com/ 2024-05-07 10:11:24 Inner Mongolia People's Government Website

In the first quarter, domestic energy production remained basically stable, energy imports steadily increased, and the supply of major energy products was generally sufficient. Influenced by factors such as climate, Spring Festival holidays, and international market prices, the prices of major energy products in Inner Mongolia generally declined. Compared with the first quarter of 2023, the prices of finished oil slightly increased, while the prices of other energy products decreased to varying degrees.

1、 Price monitoring of Inner Mongolia's energy market

（1） Price of thermal coal

In the first quarter of 2024, the price of thermal coal in Inner Mongolia first increased and then decreased. From January to February, due to the impact of multiple cold air winters on demand, as well as the impact of some coal production enterprises shutting down for holidays before and after the Spring Festival on supply, the short-term supply and demand of thermal coal market were slightly tight, with prices rising slightly, with monthly month on month increases of 0.82% and 1.04% respectively; Starting from March, domestic supply gradually increased, while imports remained at a high level. With the rise of temperature, demand has declined slightly, and port inventories have accumulated. Origin prices have rapidly declined as port prices have declined. By the end of March, the average price of thermal coal at the pit mouth in the entire region was 343.69 yuan/ton, a decrease of 10.44% from the beginning of the year.

In the first quarter of 2024, the average price of thermal coal in Inner Mongolia was 374.03 yuan/ton, a decrease of 6.31% compared to the same period last year. Among them, the average price of brown coal in the eastern region was 326.67 yuan/ton, a year-on-year decrease of 1.68%; The average price of thermal coal in the western city of Ordos is 517.92 yuan/ton, a year-on-year decrease of 12.89%.

（2） Coke price

In the first quarter of 2024, coke prices fell month by month. From January to March, coke prices decreased by 4.15%, 2.33%, and 7.07% month on month, respectively. By the end of March, the average coke price in the entire region had dropped to 1616.00 yuan/ton, a decrease of 17.13% compared to the beginning of the year. The reason for the continuous decline in coke prices is that, on the one hand, coking coal prices continue to decline, and cost support is no longer available. On the other hand, downstream demand is weak, crude steel production has decreased year-on-year, and market expectations are not optimistic. Steel mills have adopted a low inventory strategy for raw materials such as coke. Under the combined effect of insufficient cost support, weak demand, and sufficient supply capacity, coke in the first quarter experienced a significant year-on-year decline. The average price of coke in the entire region from January to March was 1802.67 yuan/ton, a year-on-year decrease of 23.10%.

（3） Natural gas prices

In the first quarter of 2024, the natural gas LNG market had sufficient supply, import prices continued to decline, and LNG prices in the entire region continued to decline. Before and after the Spring Festival, market prices began to decline due to factors such as periodic temperature increases and end enterprise holidays. Subsequently, with the warming of temperature and an increase in imports, market competition became fierce, and the price decline accelerated. By the end of March, the average ex factory price of domestically produced LNG, the average outbound price of imported LNG, and the retail price of LNG in the entire region were 4376.00 yuan/ton, 4200.00 yuan/ton, and 4555.71 yuan/ton, respectively, a decrease of 19.94%, 10.64%, and 22.73% compared to the beginning of the year.

In the first quarter, the retail price of CNG in Inner Mongolia remained stable at 3.97 yuan/cubic meter from January to February, and rose to 3.99 yuan/cubic meter in March.

From the overall price level, the average price of the Japan Korea Marker (Japan Korea Benchmark Natural Gas Price Index) in the Asia Pacific region from January to March was $9.4 per million British thermal units, a year-on-year decrease of 44%. Under the combined effect of abundant supply and reduced import costs, LNG prices have significantly declined year-on-year. In the first quarter, the average ex factory price of domestically produced LNG, the average outbound price of imported LNG, the retail price of LNG, and the retail price of CNG in the entire region were 4682.00 yuan/ton, 4533.33 yuan/ton, 5050.32 yuan/ton, and 3.98 yuan/cubic meter, respectively, with year-on-year prices decreasing by 27.51%, 37.83%, 20.79%, and 6.23%.

（4） Finished oil price

In the first quarter of 2024, the prices of refined oil were "three highs and two lows". By the end of March, the average wholesale prices of 92 octane gasoline, 95 octane gasoline, 0 octane diesel, and -35 octane diesel were 10123 yuan, 10696 yuan, 8510 yuan, and 9787 yuan per ton, respectively. The prices of gasoline and diesel increased by 2.96% and 3.28% compared to the beginning of the year, and the prices of gasoline and diesel increased by 1.81% and 1.98% year-on-year, respectively.

2、 Prediction of the later trend of energy prices in Inner Mongolia

In the first quarter, China's GDP grew by 5.3% year-on-year, an increase of 0.1 percentage points compared to the previous quarter, and the economic operation achieved a good start. In the second quarter, the accumulation of positive factors supporting the continued recovery of the economy has increased. Firstly, the world economy has rebounded. The World Trade Organization predicts that the growth of global trade in goods this year may reach 2.6%, which is conducive to supporting China's export demand; Secondly, based on leading indicators such as PMI (Purchasing Managers Index), the Chinese economy is expected to continue to recover in the second quarter, driven by a series of policies such as active fiscal policies and expanding demand. The improvement of the economy has continued to steadily increase the total energy consumption in the second quarter.

（1） Coal price prediction

In the first quarter, raw coal production decreased while imports continued to grow. From January to March, the production of industrial raw coal above designated size reached 1.11 billion tons, a year-on-year decrease of 4.1%; Imported coal reached 120 million tons, a year-on-year increase of 13.9%, while the total supply decreased by approximately 2.66% based on comprehensive calculations. According to the arrangement of coal supply guarantee in major coal producing areas such as Shanxi, it is expected that there is still some room for increase in coal production in the second quarter. From the perspective of the import increment in the first quarter, the restoration of coal import tariffs has a limited impact on the total import volume. However, with the rise of international thermal coal prices, the advantage of imported thermal coal is no longer significant, and it is expected that the import volume of thermal coal will decrease in the second quarter.

From the data of manufacturing and infrastructure investment and exports in the first quarter, it can be seen that the support for manufacturing and infrastructure investment is strong, and export growth exceeds expectations, both of which are conducive to supporting the growth of total coal demand. In the first quarter, the installed capacity of new energy remained at a relatively fast year-on-year growth rate. In the second quarter, the output of southern hydropower increased, and the installed capacity and output of new energy increased rapidly, which will continue to replace some coal demand. With the support of economic recovery and industrial demand, despite the increase in energy substitution, the demand for thermal coal is expected to maintain a growth trend in the second quarter.

From the inventory of various links, as of the end of March, coal enterprises in China had a coal inventory of 66 million tons, a year-on-year increase of 3.0%; China's thermal power plants have a coal storage capacity of about 180 million tons, a year-on-year increase of about 17 million tons, and can be used for about 26 days; At the end of March, China's major ports stored 57.81 million tons of coal, a year-on-year decrease of 7.8%; Among them, the main ports around Bohai have 23.66 million tons of coal stored, a year-on-year decrease of 13.2%. Despite a year-on-year decline in coal inventory at ports, it is still higher than the lowest level in nearly three years, and the high inventory in various links still plays a supportive role in stabilizing prices in the second quarter.

Overall, in the second quarter, China's supply of thermal coal will remain high, demand will continue to grow, and the overall supply-demand relationship of thermal coal will be basically balanced. The market price of thermal coal may remain stable with narrow fluctuations.

（2） Coke price prediction

For the coke industry with sufficient supply, demand, cost, and expectations are key factors affecting prices. From the perspective of demand, with the implementation of policies such as additional issuance of treasury bond and special treasury bond, it is expected that the investment in fixed assets, manufacturing industry and infrastructure will continue to grow rapidly in the second quarter, which will help stimulate the demand for steel at the downstream of coke; From a cost perspective, due to the significant decrease in coking coal production in Shanxi, the supply of coking coal has slightly decreased since the beginning of this year. In addition, the sustained low inventory in the industry has led to a smaller supply elasticity, making it easy for prices to rise rapidly in the short term with increasing demand; From an expected perspective, with downstream steel prices rebounding and steel mills steadily increasing their blast furnace operations, the coke market is expected to improve. Based on factors such as improved demand, rising raw material prices, and improved expectations, it is expected that coke prices will rebound in the second quarter.

（3） Natural gas price prediction

Since the beginning of this year, natural gas supply has continued to increase. From January to March, the national industrial natural gas production reached 63.2 billion cubic meters, a year-on-year increase of 5.2%; Imported natural gas reached 32.79 million tons, a year-on-year increase of 22.8%. From both domestic and international markets, on the one hand, according to the work arrangement of the National Energy Administration, natural gas will maintain a rapid production trend in 2024, and domestic supply will continue to increase; On the other hand, in 2023, global upstream oil and gas investment will increase by about 11% year-on-year, the highest level since 2015. It is expected that faster oil and gas investment will support the sustained growth of global natural gas supply in 2024. At the same time, China's pipeline gas import capacity continues to improve, LNG receiving capacity reaches a new historical high, and the newly signed LNG long-term agreement begins to fulfill its obligations. It is expected that the supply capacity of imported LNG will maintain rapid growth.

In the second quarter, with the end of northern heating, natural gas consumption entered the off-season market, and urban fuel demand significantly declined compared to the first quarter; According to preliminary calculations by the Bureau of Statistics, the proportion of natural gas consumption increased by 0.5 percentage points in the first quarter. With the gradual implementation of the country's strong support for non fossil energy development policies and the low price trend this year, it is expected that the consumption of industrial gas and alternative gasoline and diesel will continue to steadily increase. Considering multiple factors such as steady macroeconomic growth, declining international gas prices, and energy transformation, it is expected that the national natural gas consumption in the second quarter will decrease compared to the first quarter, but better than the same period last year.

Based on the overall supply and demand situation, natural gas supply is sufficient in the second quarter, and demand has declined. The overall price level will decline compared to the first quarter. However, under the driving force of demand for industrial gas and replacement gas, as well as the influence of geopolitical factors on international market price expectations, there will be a phased upward trend.

（4） Product oil price prediction

In the first quarter, OPEC+'s production reduction entered a substantial stage and the production reduction measures will be extended until the end of the second quarter of this year. It is expected that the supply will remain tight. Recently, economic data from both China and the United States have shown a positive trend of improvement, and crude oil demand is also expected to recover. It is expected that in the second quarter, under the influence of tight supply, demand recovery, and geopolitical disturbances, crude oil prices will tend to be stronger and drive up domestic refined oil prices accordingly.