Electricity curtailment and energy control: geometric impact on the petrochemical industry

Editor's note: Recently, the "red light" of dual energy consumption control has been turned on in many places in China, and the regions "named" by the Ministry of Industry and Information Technology have successively taken measures to solve the energy consumption problem as soon as possible

Recently, Yunnan, Jiangsu, Qinghai, Ningxia, Guangxi, Guangdong, Sichuan, Henan, Chongqing, Inner Mongolia and other places have begun to implement measures to limit power consumption and control energy consumption for dual energy consumption control targets

Affected by the dual-control policy, many companies have issued announcements on suspending production and reducing production

Tight supply and demand, prices rise

Coal supply and demand continue to tighten

According to expert analysis, there are two main reasons for power rationing in many places

China's foreign trade has grown extremely fast this year

As exports increase, the raw materials needed will increase accordingly

In fact, the total amount of power generation in 2021 is not low

　　70% of China's electricity comes from coal-fired power.
The "lack" or "not lacking" of electricity has a lot to do with the supply of coal
.
The demand for electricity is growing rapidly, but the growth rate of domestic electricity production and coal supply is not as fast as the growth rate of demand
.

　　Since the beginning of this year, China's coal consumption has exceeded expectations, supply and demand have continued to be tight, thermal coal prices have not been weak in the off-season, and coal prices have risen sharply and maintained high levels
.

　　According to industry insiders, there are two main reasons for higher coal prices
.
One is the previous reform of the coal supply side.
A number of small coal mines and open-pit coal mines with safety issues were closed, but no large-scale coal mines were used
.
Therefore, in the context of improving coal demand this year, coal supply is tight
.
Second, the price of imported coal has risen sharply this year
.

　　The price of coal is so high that it is difficult to fall, and the production and sales costs of coal-fired power companies are seriously inverted, and the operating pressure is prominent
.
According to data from the China Electricity Council, the unit price of standard coal for large-scale power generation groups rose by 50.
5% year-on-year, while electricity prices remained basically unchanged.
The loss of coal-fired power companies was significantly enlarged, and the coal-fired power sector suffered a loss as a whole
.
According to estimates, the power plant will lose more than 0.
1 yuan per kilowatt-hour of power generation.
For those large coal-fired power companies, this means that the monthly loss will exceed 100 million yuan
.
On the one hand, the price of coal is high, and on the other hand, the price of electricity is under control.
It is difficult for coal-fired power companies to balance the cost by raising the on-grid power price.
Therefore, some power plants would rather generate less or even not generate electricity
.

　　Assessment intensified industry turbulence

　　Double-control assessment of energy consumption intensified production restriction will cause shocks in the petrochemical industry

　　The "dual control of energy consumption" policy refers to the relevant policy of dual control of energy consumption intensity and total amount
.
"Two highs" projects, namely projects with high energy consumption and high emissions, are classified according to the ecological environment, including six industry categories including coal power, petrochemical, chemical industry, steel, non-ferrous metal smelting, and building materials
.

　　Since the beginning of this year, in order to achieve the "dual carbon" goal, the state has been stricter in the assessment of dual energy consumption and "two highs" management and control, and the assessment results will be used as the basis for the evaluation of the work of the local leadership team
.

　　On August 12, the National Development and Reform Commission issued the "Barometer of Completion of Energy Consumption Dual Control Targets in Various Regions in the First Half of 2021", showing that in terms of energy consumption intensity reduction, Qinghai, Ningxia, Guangxi, Guangdong, Fujian, Xinjiang, Yunnan, Shaanxi , 9 Jiangsu provinces and autonomous regions increased their energy consumption intensity in the first half of the year, and were classified as a red first-level warning; in terms of total energy consumption control, 8 of Qinghai, Ningxia, Guangxi, Guangdong, Fujian, Yunnan, Jiangsu, and Hubei Provinces and autonomous regions are listed as red first-level warnings
.
In some regions, there are still problems such as the blind expansion of the "two highs" projects and the increase in total energy consumption.
In the first three quarters, energy consumption indicators were overused
.
Affected by the new crown epidemic in 2020, local governments have won many high-energy-consuming projects, such as chemical fiber, data centers, etc.
By the second half of this year, many projects were put into production, resulting in a sharp increase in total energy consumption.
9 provinces and autonomous regions have double control Indicators are all red lights
.
Limiting production has become the most direct and effective way to control energy consumption in various places
.

　　Entering the fourth quarter, the regions "named" by the Ministry of Industry and Information Technology have successively adopted measures to solve energy consumption problems as soon as possible and avoid exceeding energy consumption quotas
.
Major chemical provinces such as Jiangsu, Guangdong, and Zhejiang have even hit harder, taking measures such as suspension of production and power outages on thousands of companies, making local companies caught off guard
.

　　Since the beginning of this year, the changes in the economic situation, the repeated epidemics overseas, and the intricate trends of bulk commodities have caused various industries to face various problems, and the limited production caused by the dual control of energy consumption has once again caused shocks
.

　　For petrochemical companies, even though there have been power restrictions during peak power consumption in previous years, the situation of "opening two and stopping five", "restricting production by 90%" and "stopping production by thousands of companies" is unprecedented
.
If the electricity is long-term, the production capacity will definitely not keep up with the demand, and the company can only further reduce the orders, which will also make the demand side supply more tight
.

　　For the chemical industry with high energy consumption, in the traditional peak season of "Golden Nine and Silver Ten", the supply of goods is very scarce, and the superimposed double control of energy consumption will vigorously attack, which will lead to a reduction in the supply of high energy consumption chemicals
.
At the same time, driven by the continuous increase in raw material coal and natural gas prices, it is expected that the overall chemical product prices will continue to rise in the fourth quarter and hit high points.
Enterprises will also face the dual pressure of price increases and shortages, and the severe situation will continue
.

　　Regulation and Guaranteed Power Supply Price Adjustment

　　The state adopts control measures to ensure that the electricity prices for many provinces are adjusted successively

　　The impact of power curtailment on the industrial chain will undoubtedly continue to be transmitted to more links and more regions, and it will also force companies to further improve efficiency and reduce emissions.
This is conducive to promoting the development of China’s green economy, but for the chemical industry, if Sudden power outage and furnace shutdown, low-load operation, there is a great safety risk
.
In the face of the inevitable new round of raw material shocks, power shortages, and possible "off-track" phenomena, relevant departments have adopted a series of measures to strengthen energy supply guarantees in accordance with the deployment of the Party Central Committee and the State Council
.

　　The National Development and Reform Commission and the National Energy Administration jointly dispatched a supervision team to carry out supervision of energy supply and price stabilization in relevant key provinces, enterprises and ports, and set up a special class for power and coal supply, and included power plants that implement a differentiated coal storage system in the off-peak and peak seasons.
Focus on the scope of protection to ensure that the bottom line of safe coal storage in power plants for 7 days is firmly maintained
.
When the available days of thermal coal inventory during the operation of the power plant are less than 7 days, the key supply guarantee mechanism will be activated immediately, and relevant departments and key enterprises will provide key coordination guarantees in terms of coal sources and transportation capacity
.
On September 29, the National Development and Reform Commission and the National Railway Group issued the "Notice on Doing a Good Job in Guaranteeing the Railway Transportation Capacity of Full Coverage of Medium and Long-term Coal Direct Insurance Contracts for Power Generation and Heating Enterprises" to further increase the inclination of coal transportation for power generation and heating
.

　　The executive meeting of the State Council held on October 8 further made arrangements for the supply of electricity and coal this winter and next spring to ensure the basic lives of the people and the smooth operation of the economy
.
The meeting clarified that under the premise of maintaining the stability of electricity prices for residents, agriculture, and public welfare undertakings, the fluctuation range of market transaction electricity prices should be adjusted from no more than 10% and 15% respectively, to no more than 20% in principle, and do a good job Classified adjustments, for high energy-consuming industries, prices can be formed by market transactions, and are not subject to a 20% rise; promote coal mines with the potential to increase production to release production capacity as soon as possible, accelerate the commissioning of approved and basically completed open-pit mines, and promote coal mines that stop production for rectification Rectify according to laws and regulations, and resume production as soon as possible
.
At the same time, all localities must strictly implement territorial management responsibilities, do a good job in orderly management of electricity use, rectify "one size fits all" cessation of production and limit production or "exercise" carbon reduction behavior in some places, and oppose inaction and chaos
.

　　On October 11, the National Development and Reform Commission issued the "Notice on Further Deepening the Market-oriented Reform of Coal-fired Power Generation On-grid Tariffs", proposing four major reform measures: orderly liberalize the on-grid electricity prices for all coal-fired power generation; expand the range of fluctuations in market transaction electricity prices; Promote industrial and commercial users to enter the market; maintain stable electricity prices for residents, agriculture, and public welfare undertakings
.

　　With the implementation of a series of measures to ensure supply and price stabilization, many provinces have also begun to adjust electricity prices
.
Prior to this, Inner Mongolia, Ningxia, Shanghai and other places have successively initiated adjustments to "increasing electricity prices", allowing coal-fired electricity market transaction electricity prices to float upward on the basis of benchmark electricity prices
.
According to incomplete statistics, since the end of July, 8 provinces, autonomous regions, and municipalities have allowed on-grid electricity prices to rise, and the floating range does not exceed the 10% previously required by the State Council.
, To guide users to use electricity during peak periods
.
At present, electricity price adjustment policies in various regions do not involve residential electricity consumption for the time being
.
(Wei Jiaqi compiled according to public information such as olefins and high-end downstream)

Transfer from: China Petrochemical News