The past 2012 has been extremely extraordinary for the power and coal industries. Although the situation of the two days has not changed, the main body of happiness and worry has changed: the coal industry has ended the golden decade of history, and the price has fallen compared with the previous year; the power companies have finally come out of the quagmire of losses and achieved profits. However, in 2013, the fate of the coal and electricity industries will be how, this issue of special special analysis.

The 18th National Congress of the Communist Party of China and the convening of the 2012 Central Economic Work Conference will have a profound impact on the social and economic structure in 2013. With the introduction of a series of supporting measures for reforms, the country's macro-economy will recover and improve. As it is related to the national economy What will be the development trend of the power and coal industries with extremely high degree in 2013? How is the supply and demand situation? What is the growth rate of demand? Recently, we reviewed the power market and coal market in 2012, and analyzed and predicted the power market and coal market in 2013.

Overall situation of power market and coal market in 1. in 2012
In 2012, under the combined effect of the international economic downturn and the domestic economic downturn, my country's electricity market and coal market both experienced shrinking demand, and the contradiction between electricity and coal tended to ease. On the whole, the growth of demand in the power market has slowed down, and the balance of power supply and demand is loose; the coal market has reversed, the volume and price have fallen, and the buyer's market characteristics are obvious.
 
(I) electricity market: slower growth, loose overall balance
1. Electricity growth first suppressed and then rose, the overall decline is obvious. There are four main characteristics: First, the growth rate of electricity has dropped significantly. According to statistics from the National Energy Administration, in 2012, the total electricity consumption of the whole society reached 4959.1 billion kWh, a year-on-year increase of 5.5, and the growth rate dropped by 6.5 percentage points from the previous year. For the first time since 2010, it has been lower than the GDP growth rate. The electricity consumption of the secondary industry, which accounts for 73.7 per cent of electricity consumption, increased by 3.9 per cent over the same period last year, contributing only 51 per cent to the growth of electricity consumption in society as a whole, while the tertiary industry and residential electricity consumption grew by 11.5 per cent and 10.7 per cent, respectively, contributing a total of 49 per cent to the growth of electricity consumption in society as a whole. Second, the balance of power supply and demand is loose. Due to the slowdown in the growth of electricity demand, there has been no long-term high temperature and humidity weather in most parts of the country. At the same time, hydropower output has increased rapidly, and the supply of electricity and coal is significantly better than the previous year. The supply and demand are balanced, and the power supply in the northwest and northeast is surplus. Only the southern power grid was affected by drought in the first half of the year, and the maximum power gap reached 6.53 million kilowatts. Third, the growth of electricity first suppressed and then rose. In the second quarter of 2012, the growth rate of electricity consumption in the whole society dropped rapidly, and the utilization hours of thermal power units accelerated. In the third quarter of 1. 2., affected by the adjustment of economic structure and the slowdown of economic growth, the growth rate of electricity consumption in the whole society was 6.8, 4.3 and 3.9 respectively, showing a downward trend quarter by quarter. Compared with 2010 and 2011, the growth rate of electricity consumption was basically hovering at a low point. Taking October as the dividing line, with the moderate recovery of the domestic economy, the growth rate of electricity consumption in the whole society began to pick up, the production and operation of heavy industry accelerated, and the power generation of thermal power increased rapidly. In October, November and December, the growth rate of electricity consumption in that month rebounded to 6.1, 7.6 and 8.9. The growth rate of electricity consumption in the fourth quarter increased significantly, driving the growth rate of electricity consumption in the whole society to stabilize and rebound slightly. Fourth, thermal power generation is growing at a low rate, and hydropower generation is growing rapidly. According to statistics from the Electricity Regulatory Commission, the country's power generation in 2012 4.96 trillion kilowatt-hours, a year-on-year increase of 5.5 percent, and the growth rate was 6.51 percentage points lower than the previous year. Thermal power generation has only ended the continuous negative growth since April since November, reaching 3.91 trillion kWh for the whole year, an increase of only 0.3 percent over the same period last year, while hydropower generation has 864.1 billion kWh, an increase of 29.3 percent over the same period last year.
2. The use of hours of "water and fire" differentiation, the overall decline. Affected by the overall shortage of power demand, the cumulative average utilization hours of power generation equipment across the country declined in 2012, of which the utilization hours of hydropower increased significantly compared with the same period last year, and the utilization hours of thermal power decreased significantly compared with the same period last year. According to the statistics of the State Energy Administration, the cumulative average utilization hours of power generation equipment in power plants of 6000 kW and above were 4572 hours, down 158 hours from the same period of last year, of which 3555 hours of hydropower increased by 536 hours, 4965 hours of thermal power decreased by 340 hours, 7838 hours of nuclear power increased by 79 hours, and 1893 hours of wind power increased by 18 hours.
3. The scale of new installations in infrastructure decreased, and the new capacity of thermal power decreased significantly. According to statistics from the National Energy Administration, in 2012, the country's new installed capacity was 87 million kilowatts, a year-on-year decrease of 3.2 percent, of which thermal power added 51 million kilowatts, hydropower added 19 million kilowatts, and wind power added 15.37 million kilowatts, a year-on-year decrease of 3.9.%, nuclear power added 660000 kilowatts, a year-on-year decrease of 39.4 percent. By the end of 2012, the installed capacity of full-caliber power generation was 1.144 billion kilowatts, including 0.819 billion kilowatts of thermal power, 0.249 billion kilowatts of hydropower, 62.37 million kilowatts of wind power and 12.57 million kilowatts of nuclear power.
4. The benefits of electric enterprises have turned around. In the past ten years of power reform, power companies have actively changed their methods, adjusted their structures, optimized their stock assets, and reduced financial costs. The development energy and operating results accumulated in strategic transformation have been continuously released. In addition, due to the increase in electricity prices at the end of 2011 and the sharp drop in coal prices in 2012 Under the influence of the "double benefits", the long-term loss situation of power companies, especially thermal power companies, has been effectively curbed since 2008, and their operating conditions have improved significantly, the overall operating situation of the power generation industry is turning to good. According to preliminary estimates, the total profit of the five major power generation groups reached 46 billion yuan in 2012, the best level in history since the establishment of the power generation group.
 
(II) coal market: reversal, buyer's market characteristics are obvious
In 2012, due to the continued downturn in the world economy, the slowdown in domestic economic growth, the release of coal's own production capacity and the continuous influx of foreign coal, the coal industry encountered an inflection point in the golden decade. Since May, the national coal market has undergone rapid changes. The growth rate of coal demand, production and sales, railway and port transshipment volume has fallen sharply, net imports have continued to grow rapidly, thermal coal has fallen in March, and the inventory of Bohai Rim ports has exploded. This situation continued until the end of the year and gradually stabilized. Reviewing the operation of China's coal market in 2012, there are mainly the following characteristics:
First, raw coal production continues to maintain a rapid growth momentum. According to statistics from the China Coal Industry Association, the national raw coal output in 2012 was 3.66 billion tons, an increase of about 4% over the previous year, and the growth rate dropped by 4.7 percentage points year-on-year. In 2012, Inner Mongolia, Shanxi and Shaanxi still ranked among the top three in the country's raw coal production, with raw coal production of 1.08 billion tons, 0.83 billion tons and 0.463 billion tons respectively, an increase of 10 per cent, 5.2 per cent and 14.3 per cent respectively over the same period last year.
Second, coal imports increased significantly. Affected by factors such as the low growth rate of developed economies such as the United States, Europe, and Japan, and the obvious slowdown in economic growth in emerging economies such as the BRICS, the demand for coal in Europe has shrunk, while the United States has vigorously developed shale gas to replace coal-fired power plants for power generation. The international coal market is sluggish and prices have fallen. In 2012, my country's coal imports increased significantly. According to the latest data released by the General Administration of Customs of China, my country imported 0.29 billion tons of coal in 2012, an increase of 0.1076 billion tons over 2011, a year-on-year increase of 59%, and the annual net import reached 0.28 billion tons.
Third, the demand for coal for power generation is weak, and there is an oversupply in the coal market. Due to the slowdown in economic growth, the growth of electricity demand in the whole society is weak. As mentioned earlier, in 2012, the electricity consumption of the whole society increased by 5.5 year-on-year, and the growth rate dropped by 6.5 percentage points from the previous year; thermal power generation increased by only 0.3 year-on-year. The demand for coal for thermal power generation is weak, and the demand for coal for metallurgy and building materials has also slowed down significantly, resulting in oversupply in the coal market. As of the end of November, the whole society continued to maintain a high level of coal storage, reaching about 0.29 billion tons. Among them, coal enterprises have about 90 million tons of coal, and the pressure on the market to digest the inventory is still great.
Fourth, the overall correction of coal prices, regional differentiation characteristics are obvious. Rising coal production and weak demand, coupled with the impact of imported coal, led to an overall correction in China's coal market prices in 2012. According to the China Coal Industry Association Express, the comprehensive average price of 5500 kcal/kg thermal coal around the Bohai Sea dropped from 797 yuan/ton at the beginning of 2012 to 638 yuan/ton on December 19, a drop of nearly 20%. The purchase cost of power generation enterprises has also been reduced. Take Huadian Group as an example, from January to November 2012, the unit price of standard coal entering the plant of Huadian Group was 767.05 yuan/ton, down 44.62 yuan/ton or 5.5 percent from the same period in 2011. From a regional perspective, the trend of coal prices varies from region to region due to the different market environment. The vast majority of regions are consistent with the overall situation of the country, and coal prices have fallen to varying degrees, but there are also a few regions where coal prices have risen instead of falling. Take Huadian Group as an example. As of the end of November 2012, there were 17 areas where the cumulative unit price of standard coal in the factory had dropped year-on-year, while 6 areas had increased year-on-year. The regions with larger increases were Qinghai, Xinjiang, Yunnan, Guizhou, etc., They rose by 38~53 yuan/ton respectively.

2. Electricity Market and Coal Market Forecast in 2013
(I) Electricity Market Forecast
In 2013, with the gradual emergence of the effects of national policies, macroeconomic operations will stabilize and rebound and generally improve. Comprehensive media, professional institutions and some analysts predict that we believe that the electricity market will be generally loose and stable in 2013. The main indicators are predicted as follows:
 
1. Electricity consumption may be slightly higher. Due to the positive correlation between economic growth and electricity consumption growth, in the face of the macro situation of steady domestic economic growth, electric power, as a basic industry related to the national economy and people's livelihood and a leading industry in the development of the national economy, will be in the development trend of "maintaining growth" and "adjusting structure", and the power demand of the whole society will maintain a moderate and steady growth. It is expected that the production and operation of heavy industry will speed up in 2013, the growth rate of electricity consumption in manufacturing and high energy-consuming industries will pick up slightly, and the electricity consumption of the whole society will continue the upward trend since October last year, with a steady and slight increase compared with 2012. CLP believes that the demand for electricity will rise slightly in 2013 and the contradiction between coal and electricity will be in a period of remission. The Securities Guide predicts that electricity demand will remain relatively stable in 2013, with a growth rate of 6% to 8%. In summary, under the assumption of GDP growth rate of 7.5 ~ 8%, the elasticity of electricity demand is 0.9, the growth of electricity demand in 2013 will be 6.7~7.2, and the electricity consumption of the whole society will reach 53000~5.4 trillion kWh.
2. Installed capacity will grow at a low rate. As the domestic economy from a period of high-speed growth into a period of steady growth, the scale of new infrastructure installations will continue to decline, power engineering investment will further slow down, new power installations to clean and efficient thermal power projects and clean energy projects. In terms of thermal power, the rational return of coal prices will bring about further integration of coal power, but thermal power investment will continue to decline, the decline may be reduced. The chief analyst of the power industry of GF Securities believes that since thermal power is the closest form to the economic trend, it is predicted that the investment in thermal power projects will continue to decline in 2013. China Business Intelligence Network predicts that as the construction period of thermal power projects is 2~3 years, the change of investment will be reflected in the installed capacity from 2013 to 2014, so the new capacity of thermal power will shrink from 2013 to 2014. In terms of hydropower, with the decline in the rate of return on operating wind power, the power of power companies to invest in wind power is also declining. It is predicted that hydropower investment will increase in power investment in 2013. In terms of nuclear power, with the restart of nuclear power projects, China's nuclear power equipment industry is expected to usher in a new round of growth in 2013. In terms of other new energy sources, although the state's industrial policy supporting the development of new energy will trigger a new round of investment in new energy power generation, and the development space of circular economy, energy conservation and environmental protection and green low-carbon industries will be further expanded, due to the rapid development of new energy sources such as wind power, photovoltaic and natural gas in recent years, the market has become saturated or even surplus. In 2013, the development of new energy will focus on resolving the contradiction of overcapacity, infrastructure scale and project investment will tend to be rational and flat. At present, the scale of power supply projects under construction in the country is about 0.17 billion kilowatts, of which the scale of thermal power projects under construction is about 56 million kilowatts, with an average annual growth of 87 million kilowatts in the country's installed capacity from 2008 to 2012. Combined with the statistical analysis of the China Electric Power Union, considering decommissioning and shutting down small thermal power, it is predicted that the installed capacity will be 70 million -80 million kilowatts in 2013, up 6.1-7.0 from 1.14 billion kilowatts at the end of 2012.
3. utilization hours likely to be flat YoY. As the 6.7-7.2 growth in power generation is essentially the same as the 6.1-7.0 growth in installed capacity, it is predicted that the cumulative average utilization hours of power generation equipment nationwide are likely to remain at the 2012 level of about 4500-4700 hours. Due to the increase in marginal contribution of thermal power, the economic benefits will be reflected, and the enthusiasm for power generation will be increased. Hydropower has benefited from the substantial increase in electricity generated by abundant water in 2012, but hydropower enterprises basically depend on the weather for a living, "one year of abundance and one year of dryness". The annual imbalance is serious and may decline in 2013. China Business Intelligence Network predicts that due to the significant contraction of new power generation capacity in 2013, especially the significant reduction of new thermal power production units, the number of thermal power generation hours will increase. Based on the analysis of the above factors, we predict that the average utilization hours of hydropower enterprises will decline in 2013, and the average utilization hours of thermal power enterprises will have a recovery growth.
4. Electricity prices may remain at their current levels. Affected by the macroeconomic situation and seasonal market supply and demand, it is expected that coal prices in 2013 will stabilize after a slight increase in the first quarter, and generally maintain a low oscillation operation, and the possibility of electricity prices rising is extremely small. Although the decline in coal prices has led to the expectation of lowering electricity prices in public opinion, this is a rational callback for the coal market to adapt to economic development. Coupled with the cancellation of the dual-track system of thermal coal prices, the huge historical losses of thermal power companies since 2008 have not been made up, and the possibility of electricity price reduction It is also unlikely, and the actual settlement electricity price may remain at the current level. Although it is difficult to improve the overall level of electricity prices, but do not rule out the adjustment of electricity prices in some areas.
5. The process of electricity market reform will be accelerated. In 2013, China's economic system reform will speed up in an all-round way and enter the substantive operation stage, among which "deepening the price of resource products and the reform of environmental protection system" is one of the important contents, which will have a great impact on the power market elements such as feed-in electricity price, coal price, gas price, energy conservation and environmental protection subsidy. The "Guiding Opinions on Deepening the Market-oriented Reform of Thermal Coal" recently issued by the State Council further clarified the direction and main tasks of the market-oriented reform of thermal coal, and took an important step in the allocation of thermal coal resources by the market. With the acceleration of the reform process in the energy sector, it is expected that there will be more measures and actions towards the market-oriented reform of electricity in 2013, including macro-control and supervision, coal-electricity linkage, electricity and coal production and transportation, desulfurization and denitrification electricity prices, new energy power generation, and smart The grid and other aspects have introduced detailed plans and supporting mechanisms to further promote the stable and orderly development of the power market.
Business performance may continue to improve. As the main body of thermal power supply structure will not change in a long period of time, the efficiency of thermal power enterprises determines the operating performance of the power generation industry to a large extent. In 2013, the contraction of power production capacity is the consensus of the industry, the number of power generation hours can be expected to pick up, and the debt ratio and financial costs of power enterprises are in the downward channel, so the thermal power profitability is expected to continue to pick up. The chief analyst of the power industry of CITIC Securities believes that the further improvement of the coal-electricity linkage mechanism is slightly positive for power companies. In view of factors such as coal prices may remain weak and capital costs will fall, thermal power profits in 2013 are still expected to achieve more than 30% growth. "Securities Guide" believes that if the coal-electricity linkage policy is implemented in place, the thermal power industry will change from a cyclical industry to a weak cyclical industry, and it will be a pro-cyclical industry, and its profitability will be more stable.
 
Regarding the long-term impact of the merger of thermal coal prices on the operating performance of thermal power companies, some experts believe that although the current merger of thermal coal prices will not cause greater pressure on power companies, due to the limited resource attributes of coal, coal prices are in a long-term view. For the upward trend, the price of thermal coal that has been merged will have a greater impact on thermal power companies that account for 80% of power generation, in particular, the impact on the Northeast, Shandong and other regions with more key contract coal is greater. If the reform supporting measures such as electricity price formation mechanism, coal power linkage, railway transportation capacity, etc. are put in place, the enthusiasm of thermal power enterprises for power generation will be further improved, and their business performance will continue to improve, which will help to form a coordinated development pattern of coal power integration and promote the healthy and orderly development of the power market. Otherwise, it may give birth to new coal power contradictions, make thermal power enterprises fall back into the predicament of loss, and disrupt the normal power market order. Since the adjustment space of electricity price is much smaller than that of coal price, it is difficult to change the attribute of "planned electricity" in essence. Therefore, the long-term impact of the merger of electricity and coal price on the electricity market will do more harm than good.
To sum up, we believe that the power market will stabilize and improve in 2013, the national electricity consumption will rise slightly, the new capacity of power generation will continue to shrink, the utilization hours of thermal power units will rebound, the economic benefits of power enterprises may continue to improve, the market competition on the power generation side will further intensify, and the slowdown of power infrastructure investment will help to deepen structural adjustment and make better stock assets, the acceleration of the market-oriented reform of electricity and coal is conducive to the formation of a long-term coordinated development pattern of coal and electricity integration, and promotes the stable, healthy and orderly development of the economy.

(II) Coal Market Forecast
In the current coal market, driven by the macroeconomic stabilization and recovery and the peak of coal consumption in winter, coal demand has improved, and coal prices have rebounded slightly. In 2013, as my country's economy gradually stabilized and rebounded, the overall situation of the coal market will develop steadily and orderly, and there will be no big ups and downs. Our judgment on the coal market situation in 2013 is: the overall supply of coal is relatively loose, and the demand will increase, showing a low growth rate. After experiencing a slight increase in the peak of coal consumption in winter, the price of coal may be adjusted back in April and May. The overall decline in 2012 will continue, but the decline will not be too large, about 5% ~ 10%. The above prediction conclusion is mainly based on the following factors:
 
1. China's economic positive factors tend to increase but the rebound force is not strong, coal demand continues to grow but the magnitude will not be too large. The changes in economic data at the end of 2012 showed that my country's moderate economic recovery was basically established, laying a good start for the economic operation in 2013. It is expected that the favorable conditions and positive factors in my country's economic operation will increase in 2013, and the overall environment will further improve. The economic stabilization and recovery will lead to an increase in demand for electricity, which will lead to an increase in coal demand. However, the general rebound of the industry has not yet formed, the volatility is large, the foundation of economic recovery is unstable, and the momentum is weak. In addition, the country will continue to increase economic restructuring, energy structure adjustment, strengthen energy conservation and emission reduction, and reduce coal consumption. It is expected that coal demand will not increase significantly in 2013, and may continue to grow at a low speed. According to the forecast of relevant agencies, the national coal production will increase by about 5% in 2013, and the coal consumption will increase by 4%, which is a slight increase over the previous year.
2. Coal production capacity ahead of the problem is more serious, oversupply or will become the norm. From the perspective of coal supply, since the "Eleventh Five-Year Plan", my country's coal mining and dressing industry has invested a total of 2.2 trillion yuan in fixed assets. After years of large-scale coal investment, resource integration and technological transformation, coal mine production capacity has been greatly increased. According to statistics, as of the end of 2011, my country's coal production capacity has reached about 3.9 billion tons, and the scale under construction is 1.1 billion tons. The problem of advanced production capacity of existing coal mines and coal mines under construction in the country is relatively serious. According to estimates, the coal production capacity in 2013 may reach 4.63 billion tons. Will greatly exceed the demand by 4.12 billion tons. The phenomenon of coal supply exceeding demand will still exist for a long time. With the continuous improvement of coal supply capacity, overcapacity may become the norm in the future.
3. The investment in thermal power decreased, the number of new installations decreased, and the demand for thermal coal weakened. At present, China's thermal power in the low-profit operating state, investment may be less and less. State Grid Energy Research Institute recently released data that from January to November 2012, the national power investment was 302.1 billion yuan, of which thermal power investment was 79.4 billion yuan, down 13.2 percent. The installed capacity of 6000 kW and above was 57.3 million kilowatts, of which thermal power added 35.58 million kilowatts, down 22.1 percent from the same period last year, while thermal power generation in the same period was 3429.7 billion kilowatt-hours, up only 0.1 percent from the same period last year. It can be said that there were new installed capacity but almost no new electricity in 2012, and this situation is not expected to change much in 2013. The decline in thermal power investment and the reduction in the number of new installations are bound to reduce the demand for coal.
4. Coal imports will remain high, inhibiting the rebound in coal prices. In recent years, China's imports of coal into the growth trend, in 2012 China's imports of coal reached a record high. Looking forward to 2013, the further appreciation of the renminbi, the further increase in the number of resource-based companies acquired externally, coupled with the overall international economic downturn, the sluggish demand for coal, and the vigorous development of shale gas in the United States, coal consumption has decreased, prompting international coal prices to be lower than domestic These factors are conducive to coal imports. Therefore, we predict that the amount of coal imported by China in 2013 will be higher than that in 2012, but the growth rate of imports may be slightly lower than that in 2012. With the increase of coal import, the domestic coal supply in coastal market will be reduced accordingly, which will restrain the rebound of domestic coal price to a certain extent.
5. The merger of thermal coal prices has little impact on the price of contract coal. At the end of 2012, some coal ordering meetings have begun to implement the integration of thermal coal prices, and the long-term contract coal prices signed by large coal companies in Shanxi Province are still lower than the current market prices. Taking Shanxi Yangquan Coal Industry Group as an example, the number of contracts signed by the ordering meeting is 38.6 million tons. According to the published data, Yangquan Coal divides thermal coal into three prices according to its calorific value, namely 550 yuan/ton, 520 yuan/ton and 480 yuan/ton, which generally maintains the 2012 price level, which is 70 yuan/ton lower than the market price. Shenhua Group's medium-and long-term contract plan for 2013 has been issued, the specific content of which is that the price of medium-and long-term contract coal is 10 yuan/ton lower than that of Bohai Rim thermal coal in the current period, and the ratio of medium-and long-term contract volume to in stock volume is 7:3. Some coal enterprises follow the example of Shenhua Group, and also put forward a medium-and long-term contract plan of 10~15 yuan/ton lower than the current Bohai Rim thermal coal price. According to the forecast of China Business Intelligence Network, under the condition that the price of electricity and coal is fully merged, the contract coal price in 2013 will rise by 5% compared with 2012, while the market coal price in 2013 will be the same as that in the fourth quarter of 2012, and the average market coal price in 2013 will fall by 9% compared with 2012. Combining the contract coal price and the market coal price, the average coal price in 2013 will drop by about 5.4 percent compared with 2012. (Author: China Huadian Corporation, Department of Political and Legal Affairs)