Let's first discuss the issue of energy shortages abroad. Due to the surge in demand for economic recovery in the post-pandemic era, a severe cyclical energy shortage has occurred. Additionally, the relatively cold winter last year has resulted in Europe's gas storage not being fully replenished to date. Furthermore, Russia has recently reduced its natural gas exports to Europe. These factors combined have led to a significant increase in European energy prices.
According to data, Europe's energy benchmark prices have increased by about 600% this year, with coal prices reaching their highest level in 13 years. Australian coal prices have risen by 250% since last September. Germany's average energy prices are 25% higher year-on-year, with natural gas prices up by 44%.
As of September 2021, due to the rise in coal prices, the electricity price in the UK has also increased to £285 per megawatt-hour. This means that within a year, the UK's electricity prices have increased by more than 500%.
Apart from European countries, India's energy shortage situation is not much better. Due to the growing demand for coal for power generation, India is also facing a severe coal shortage. Relevant data shows that India has a total of 135 coal-fired power plants, of which 16 have already run out of stock, and more than half of the remaining power plants have less than three days' worth of coal inventory.
After discussing the energy shortage issues abroad, let's talk about the domestic situation. From March 2020 to the present, the price increase of coal in our country has already reached more than 190%. From August 17th to now, the price increase of thermal coal in our country has already reached more than 78%.
Logically, as the world's largest coal producer, why would the international energy shortage also affect our coal shortage and price increase? There are mainly the following three reasons.
1. The reduction in coal imports leads to supply and demand imbalance and price increases.
Although our country is the world's largest coal producer, due to the large population and high demand, since 2008, our country has shifted from a major coal exporter to a major coal importer. At this stage, due to the energy shortage in European countries, restrictions or reductions in coal exports have been imposed. Coupled with the surge in shipping prices caused by the pandemic, this has led to a significant decrease in our country's coal imports. From July to November 2020, our country's coal imports decreased by 50 million tons, a drop of 36%.
2. Elimination of backward production capacity, while new energy cannot keep up.
Under the development plan of de-capacity and environmental protection, by the end of 2020, a total of 5,500 coal mines have been closed nationwide, with more than 1 billion tons of backward coal production capacity phased out annually, and the number of coal mines has been reduced to below 4,700.However, while reducing production capacity, China's new energy sources, such as wind and hydroelectric power, are also temporarily unable to fill this gap. After all, the proportion of thermal power in China's current stage is still as high as over 70%.
In addition, the global stage is highly dependent on China's products at present, and enterprises are now working at full capacity to produce. This also makes China's already very tight power energy even more insufficient.
3. Some investors have started hoarding coal, further exacerbating the imbalance between coal supply and demand.
Some investors, after seeing the recent rise in coal prices, have started to hoard a large amount of coal, and then sell it externally after the coal price rises, thereby making a lot of money.
These three points are the core reasons for the current energy shortage and coal price surge in China.
Due to the recent shortage of coal and price increase in China, the final electricity price cannot be arbitrarily increased, which leads to the phenomenon that some power companies lose money more and more by generating electricity. A power plant in Shaanxi, in August, lost 0.12 yuan for every 1 degree of electricity generated, and the total electricity generated in August was 1 billion degrees, with a loss amounting to 127 million yuan. This loss in electricity generation will further lead to a decrease in the willingness of power companies to generate electricity.
In the case of energy interruption and insufficient power supply, it has led to an increase in operating costs for many manufacturing companies, and then led to the rise of many building materials at present.
Recently, the price of steel has broken through 6,000 yuan/ton, with an increase of 80 yuan to 100 yuan per ton. PVC materials closely related to doors and windows have increased by 2.76%, with the highest price even breaking through 12,000 yuan/ton. The raw materials for sealing strips are even more money without goods.
In addition, according to incomplete statistics, hundreds of ceramic factories in about 20 provinces such as Guangdong, Guangxi, Fujian, Jiangsu, Zhejiang, and Shandong have collectively issued price increase letters, and the price increase will be synchronized before and after October 1. Some insiders in the ceramic industry have said that although the price increase of ceramic tiles is very common, such a large-scale and dense price increase nationwide in the recent period is unprecedented.
Due to the continuous rise in raw material prices and the impact of power restrictions and production suspensions implemented in many domestic regions, building materials and home furnishing companies such as coatings, waterproofing, lighting, and customized home will also usher in a new round of price increases.