Coal industry development or bid farewell to gold for 10 years

From 2002 to 2011, it was the first 10 years after China's accession to the WTO and it was also a decade of rapid economic development in China.

In 10 years, China's GDP has grown at an average annual rate of more than 9%. The annual growth rate of GDP from 2003 to 2007 and 2010 has reached over 10% (including 10%), and the average compound GDP growth rate was 10.6%.

Driven by the rapid economic growth, China’s total energy consumption increased from 150.406 million tons of standard coal in 2001 to 3.38 million tons of standard coal in 2011, with an average annual growth rate of 8.8%, of which coal’s apparent consumption was 1,384.36 million. Ton increased to 372.88 million tons, an average annual growth rate of up to 10.4%.

In the past 10 years, the upward trend of coal prices has become apparent. In December 2011, the closing price (average price) of 5,500 kcal/kg thermal coal at Qinhuangdao Port was 820 yuan per ton, which was more than double the number in 2001. In terms of average annual prices, from 2001 to 2011, the compound average annual growth rate was 11.8%, while the average annual growth rate of consumer prices and ex-factory prices of industrial products was only 2.6% and 2.9% respectively.

The achievements of the coal industry over the past 10 years of gold are written on economic indicators. In the 10 years, the total assets, net assets, product sales revenue, per capita sales revenue, and total profit of the coal industry increased from 417.16 billion yuan, 146.75 billion yuan, 148.57 billion yuan, 39,000 yuan, and 4.17 billion yuan in 2001 to 2011, respectively. In the year, it stood at 3.7574 trillion yuan, 1,544.44 billion yuan, 325.89 billion yuan, 614,000 yuan, and 434.17 billion yuan, which were respectively increased by 8 times, 9.5 times, 20.9 times, 14.6 times, and 103 times.

From the fourth quarter of 2011, the growth of coal demand has shown signs of slowing, and coal prices have entered the callback channel. This callback process continued until March this year. Obviously, the overall slowdown in economic growth at home and abroad is the direct cause of the correction of the coal market. However, this round of adjustment should not be regarded as a simple stage callback. Instead, the underlying reason behind the callback should be excavated. The underlying reason for the slowdown in economic growth.

On March 5 this year, the “Government Work Report” made by Premier Wen Jiabao at the Fifth Session of the 11th National Committee of the Communist Party of China proposed that the 2012 GDP growth target is 7.5%, which is the first time in 8 years that China’s GDP is expected to increase. Less than 8%. Is the reduction in growth targets necessarily linked to the slowdown in economic growth since the second half of last year? Why did the country take the initiative to cut its GDP growth target after 10 years of rapid growth? Is the economic growth target temporarily reduced or long-term downward? A series of questions lie before them.

The author believes that the goal of reducing GDP growth is a policy continuation of the fact that economic growth is slowing down. The downward adjustment of growth targets was due to the increasing pressure on the continued rapid economic growth. At the same time, the resources, environment, and social costs are increasing. On the other hand, it reflects the government's adjustment of economic structure and transformation of economic development methods. Determination. The downward adjustment of economic growth targets should not be a simple short-term behavior, because the slowdown of economic growth will be a long-term reality.

First, the economic growth driven by exports may be difficult to sustain. From 2002 to 2008, China's net exports of goods and services contributed positively to GDP. However, with the deepening of global economic imbalances and increasing trade protection in various countries, China’s export growth resistance has increased.

Second, the rapid growth of domestic real estate investment is difficult to sustain. Since 2001, the contribution rate of investment to GDP has always been above 40%, some years are above 50%, and individual years even exceed 90%. The continuous and rapid growth of investment is caused by a combination of factors, and real estate investment has undoubtedly played an important role in promoting it. After more than 10 years of rapid growth, the real estate investment base has been very large. The total investment has increased from 490.2 billion yuan in 2000 to 617.4 billion yuan in 2011, an increase of 11.6 times. The accumulation of high-speed growth has accumulated an inflated bubble. The government’s insistence on real estate control policies will inevitably squeeze these bubbles, which will lead to a slowdown in real estate investment growth and slower economic growth.

Third, the sustained and rapid growth of energy consumption is difficult to sustain. According to British Petroleum Corporation (BP) statistics, from 2001 to 2010, China’s total primary energy consumption accounted for 20.26% of the world’s total. China has surpassed the United States as the country’s largest energy consumer. The total world energy consumption increased from 9.465 billion tons of oil equivalent in 2001 to 12.02 billion tons of oil equivalent in 2010, of which the total energy consumption in China increased by 1.36 billion tons of oil equivalent, which accounted for 53.6% of the world's total increase.

With the rapid growth of energy consumption, increasing carbon emission pressures, the growing problem of energy security, and the declining domestic resource and environmental carrying capacity, the reasonable control of the growth of total energy consumption has increasingly become the ruler of the government. One of the important contents is that the most effective way is to lower the economic growth rate and adjust the economic structure.

Coal is the food of industry. If the economic growth slows down in the next few years, the growth of coal demand will inevitably slow down. In this regard, coal companies should have a sober and rational understanding - slowing does not mean that the coal industry is about to enter the down cycle. The author believes that in the next few years, the coal industry will enter a relatively stable period of development.

Coal demand will still maintain a certain degree of growth, which is determined by a combination of factors. First, China is in a stage of rapid industrialization and urbanization. It is expected that in the long run, infrastructure construction and investment in fixed assets will maintain an appropriate scale. Second, coal holds a dominant position in China's primary energy, and it will be the basis for ensuring energy supply for a long time to come. Third, China's relative lack of oil and gas resources determines the huge space for development of coal chemical industry. With the increasingly prominent oil security issues, it is reasonable to continue to vigorously promote the development of new coal chemical industry.

The reasonable control of coal supply has become the consensus of industry managers. In recent years, industry managers have increasingly attached importance to the sustainability of the development of the coal industry. The main coal producing areas such as Inner Mongolia, Shanxi, and Shaanxi have invariably reduced the coal output growth target in the next few years. Controlling the total supply of coal, the main output of underground coal production targets will help stabilize market expectations, thereby supporting the industry to maintain a stable operation.

The industry concentration has been significantly improved, and the market control of large-scale coal companies has continued to increase. In 2011, China's 100 million tons of coal enterprise groups have reached 7 and 50 million tons of coal enterprise groups have exceeded 10, and small coal mines in major producing areas such as Inner Mongolia and Shanxi have basically exited the market. At the same time, the raw coal output of China's large-scale coal enterprises reached 2.18 billion tons, accounting for 61.9% of the total coal production.

During the “Twelfth Five-Year Plan” period, the construction of large bases, large groups, and large coal mines will continue to advance, industry concentration will continue to increase, and the market control power of large-scale coal enterprise groups will continue to increase. The increase in concentration and market control will undoubtedly help guarantee the stable development of the industry and promote the smooth operation of the market.