Welcome to this website!
  • banner-page

Regarding the impact of the 2021 power rationing order on enterprises

The current power curtailment is mainly affected by supply-side factors such as environmental protection and production restrictions and tight coal supply, and there has been no significant increase in power demand. The current fundamental environment is similar to that of 2008 and 2010. Combining historical experience and current fundamental characteristics, we believe that the subsequent prices of industrial products such as coal, non-ferrous metals and black will continue to rise, and some cyclical stocks are expected to benefit accordingly. The bond market will remain volatile under long-short disturbances.timg

Power rationing, why is it so? From the perspective of the supply side, one of the reasons for the increasing contradiction between coal supply and demand, the restriction of electricity consumption in some areas, or the near-term electricity. From the perspective of the demand side, the coming of the peak power season and strong export orders may also push up the demand for electricity in society, leading to a relatively tight power supply. On the whole, although the power curtailment is affected by both the supply and demand sides, the more important reason lies in the supply side.about (4)

Look back at several power-cut periods in history. Looking back at history, my country has experienced three snow disasters in 2008, 2010, and 2018. In each of the snow disasters, my country has had different levels of power curtailment policies. In 2008 and 2010, my country’s coal inventory pressure has been reflected, the contradiction between power supply and demand has intensified, the prices of industrial products such as coal, iron ore, and rebar have been rising overall, and inflationary pressure has increased, but industrial production has followed industrial power consumption. The stock market has adjusted, and the bond market has shown an upward trend. In 2018, my country’s coal supply was sufficient, and the pressure on power supply and demand did not rise significantly. Therefore, there has been no large-scale power outage. Under this environment, the industry Product prices fluctuated as a whole, while the stock and bond markets were mainly affected by the resonance of the global capital market. Taken together, large-scale electricity curtailment measures are usually launched in an environment of increasing pressure on coal inventories, often accompanied by rising prices of industrial products, but industrial production may also slow down, leading to a phenomenon of strong debt and weak stocks.

How does power curtailment affect the prices of major assets? The current fundamental environment is similar to that of 2008 and 2010. Combining historical experience and current fundamental characteristics, we believe that the subsequent prices of industrial products such as coal, non-ferrous metals, and black will continue to rise, and some cyclical stocks are expected to benefit, while the bond market will remain volatile under long-short disturbances.

The current power curtailment is mainly affected by supply-side factors such as environmental protection and production restrictions and tight coal supply, and there has been no significant increase in power demand. Looking back at history, my country has experienced three snow disasters in 2008, 2010, and 2018. During the previous snow disasters, my country has had power curtailment policies to varying degrees. Taken together, large-scale curtailment measures usually result in increased pressure on coal inventories. Launching under the environment is often accompanied by rising prices of industrial products, but industrial production may also slow down, leading to the phenomenon of strong debt and weak stocks. Based on the current situation, the current fundamental environment is similar to that of 2008 and 2010. Combining historical experience and current fundamental characteristics, we believe that the prices of industrial products such as coal, non-ferrous metals, and black will continue to rise, and some cyclical stocks are expected to follow suit. The bond market will remain volatile under long-short disturbances.

Risk factors: The trend of overseas epidemics exceeds expectations, domestic climate changes exceed expectations, market liquidity fluctuates sharply, and macroeconomic trends exceed expectations, etc.


Post time: Sep-29-2021