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The State’s Intervention in coal prices will have many impacts on the 304 stainless steel pipe market.

The State’s Intervention in coal prices will have many impacts on the 304 stainless steel pipe market.

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Industry events: On the evening of October 19, the National Development and Reform Commission published an article titled “The National Development and Reform Commission’s Study on the Implementation of Intervention Measures on Coal Prices According to Law” on the homepage of its official website.

The article pointed out that the recent rapid rise in coal prices, hitting historical highs in succession, has significantly pushed up the production costs of downstream industries, and has adversely affected power supply and winter heating, which has been strongly reflected in all aspects of society. On the evening of the 19th, the Zhengzhou Commercial Exchange issued an announcement stating that after research and decision, starting from the night trading on October 20, 2021, the price limit of thermal coal futures contracts will be adjusted to 10%. Thermal coal, coking coal, and coke futures will be adjusted to 10%. The main contracts have all lowered their limits, and at the same time they have driven the main futures contracts to fluctuate and fall. On the 20th, various varieties of domestic 304 stainless steel pipe spot market declined to varying degrees.


At present, there is a significant imbalance between supply and demand in the global energy industry, which has led to a sharp rise in global energy prices. According to customs statistics, in the first three quarters, the price of imported crude oil increased by 32.8% year-on-year, the price of imported coal increased by 16.3% year-on-year, and the average price of imported natural gas increased by 5.1% year-on-year. %. The price of domestic thermal coal increased by 137% year-on-year, the price of domestic coking coal increased by 267% year-on-year, and the price of domestic metallurgical coke increased by 117% year-on-year. So what impact will the state’s intervention in coal prices have on the domestic 304 stainless steel pipe market?


First, from the perspective of the market price of 304 stainless steel pipes, the most direct impact of the state’s intervention in coal prices is to promote the return of coal prices to rationality, thereby alleviating the tight domestic power supply situation. For 304 stainless steel pipe manufacturers It also eases the pressure of soaring direct raw material costs, and the cost of 304 stainless steel pipe production will also have room for reduction.


Second, from the perspective of energy supply, the country is accelerating the release of coal production capacity. Since September, the National Development and Reform Commission has allowed 153 coal mines to increase their production capacity by 220 million tons per year. In the fourth quarter, they can increase production by more than 50 million tons, which will be safe. The 38 construction coal mines with production conditions are included in the emergency coal mines, allowing the phased release of production capacity, with a total production capacity of 100 million tons per year. While increasing supply, the state’s intervention in coal prices will help coal-fired power generation companies to generate more electricity, and play a positive role in promoting “energy supply”. At the same time, the country is also increasing its support for clean energy. On October 20, the National Energy Administration issued a notice on actively promoting the integration of new energy power generation projects and issuing more and more relevant work. The notice pointed out that this year , China’s electricity consumption has grown rapidly, and electricity supply and demand continue to be tight. Speeding up the construction of wind power and photovoltaic power generation projects and increasing the supply of clean power will not only help alleviate the tension of power supply and demand, but also help achieve the goal of dual energy consumption control, and promote the low-carbon transformation of energy. The guarantee of power supply will benefit domestic 304 Stable market demand for stainless steel pipes is especially important for the manufacturing industry.


Third, from the perspective of energy consumption, in the context of “carbon neutrality and carbon peaking”, China’s economy will gradually transition to a low-carbon economy, and power consumption will be restricted for high-energy-consuming industries, especially at the moment At the critical moment of “energy supply”, high energy consumption industries will become the key “objects of care.” On October 8, the National Standing Committee proposed to adjust the fluctuation range of the electricity market transaction price from no more than 10% and 15%, respectively, to no more than 20% in principle, and to make classification adjustments. For high energy-consuming industries, it can be traded by the market. The formation price is not subject to the 20% rise. For the 304 stainless steel pipe industry, “power curtailment” will mean a decrease in output, while “high electricity prices” will mean an increase in costs. At present, many provinces and cities have vigorously promoted electricity reform, and implementation of 304 stainless steel pipe manufacturers Electricity prices rise by 20-50%. Taking electric furnace steel as an example, this will eat up 60-70% of the profit of electric furnace steel.


In the short term, the state’s intervention in coal prices will obviously alleviate the pressure on the domestic coal and electricity market for tight supply. The impact on the domestic 304 stainless steel pipe market will also be multifaceted. Direct raw material prices will drop and the cost of electricity will increase. The decline in 304 stainless steel pipe market supply will stabilize the domestic market demand.

Jianglin Stainless Steel
Location

Jianglin steel, Yuanjiabao, Chagugang county, Wuqing District, Tianjin

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[email protected]

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+86 18621742353

main products

  • Stainless Steel Plate
  • Stainless Steel Coil
  • Stainless Steel Strip
  • Stainless Steel Tube
  • Stainless Steel Bar
  • Stainless Steel Wire

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