中文
Although Covid-19 epidemic is largely contained within China, the fallout has profoundly impacted the country's economy and its trade of coal and other commodities. As the epidemic is still spreading across the world, the black swan event has left many things worth summarizing and pondering.
In an online webinar on March 31, Sarah Liu, Principal Analyst of sxcoal.com, shared her opinions and struck a chord with audiences.
She started with the great impact of the coronavirus on China's economy and social life, saying the country's GDP would be smashed by a 4-5% drop in its growth, as industrial and logistics activities almost stagnated in February as well as early March.
The purchasing managers' index (PMI) for China's manufacturing sector stood at 35.7 in February, down sharply from 50 in January. In breakdown, all 21 surveyed industries of the manufacturing sector stayed in the contraction zone.
Source: NBS, sxcoal.com
For the coal industry, both coal supply and demand was affected. To prevent the spread of Covid-19 epidemic, China in early February locked down roads and isolated cities, resulting in workers unable to go back to work from the Spring Festival celebration. Even after the government lifted logistics bans, many workers were still unable to work due to the 14-day quarantine.
Facing supply shortage and price increases, the NDRC urged coal mines to resume production as soon as possible, Liu introduced. Large state-owned mining groups took the bellwether to resume work.
Fenwei Surveyed Mines Capacity Running Rate
Source: sxcoal.com
Capacity utilization has quickly resumed at coal mines since mid-February. As of March 10, over 90% of capacity has been restored, according to Fenwei's survey on mines in key production areas.
China has resumed 83.4% of its coal production capacity amid the fight against the novel coronavirus outbreak, the National Energy Administration (NEA) said on March 4.
Compared with supply, demand was more hit and slower to resume, even from late February, when the focus was shifting from fighting epidemic to supporting economic recovery.
Apart from the gradual resumption of factories, shopping malls, schools, and other public places remained shut. Electricity consumption and coal use were still quite lower than the same period last year, despite a significant rise from February to March.
The daily coal consumption of the six major coastal power plants fell by 36.4% from January to 395,000 tonnes in February, despite rising to 560,000 tonnes by the end of March, down 22% from the same period last year.
Coastal power plants daily burns and stock
Source: sxcoal.com
Liu also introduced how Covid-19 impact global economy and how countries responded. For China, it has rolled out New Infrastructure Investment covering 5G base stations, UHV transmission lines, High-speed and urban rails, auto charge piles and development of Big Data, AI and Industrial Internet.
Considering fallout of the virus epidemic, Liu expected China's domestic thermal coal prices to continue on the drop in the second quarter this year, while for coking coal, domestic prices could stabilize supported by strong steel output in China, and global prices could continue under pressures due to steel cut in other countries amid Covid-19 pandemic.
The online broadcast attracted nearly 300 participants from 23 countries and regions, including Singapore, the United Kingdom, the United States, Australia, Mongolia and Hong Kong, China.
Ms. Liu has 30 years of industry research experience, with deep understanding of China and global coal and downstream markets, in-depth insights into government policies and related industries (coal, power, iron & steel, coking, building materials, chemicals, clean energy) ranging from resources evaluation, supply, demand, cost, logistics, etc. She leads and participates in a great number of major consulting and research projects for domestic and overseas clients.
For more information, please contact inquiry@fwenergy.com for video and the presentation.
(Writing by Alex Guo Editing by Harry Huo)
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