In January 8th, Chicago has released a research report said that the diversification of buyers and sellers of coal market in Asia, the region has become an important place for price discovery. With the continuous development of Asia and the entity of the coal market, the demand for risk management in the region are on the rise. Effect of power plant, coal mine and coal traders using derivatives to protect their own profit space from price changes, the current world coal producers and exporters are looking at India, Chinese and demand in japan.

Chicago Institute of energy research and product development department director general manager Owain Johnson said that the coal price risk management in Asia, traditionally behind Europe, operating in a competitive environment of the Asian power company is also one of the few. They are usually able to fuel the rising costs onto consumers, so the demand for risk management is not high. But the situation is gradually changing. Japan and other Asian countries introduced liberalization measures in electric power industry. While Chinese countries such as power plants, in order to maintain industrial competitiveness, but also find the dynamic hedge to reduce fuel costs.

In fact, the market price of coal base, has traditionally been the import market in northwest Europe or South Africa and Australia under the export location. However, with the growing importance of Asia, is the rise of a new benchmark. The Chicago based on Argus/Coalindo for the Indonesian export sub bituminous coal to the baseline at the end of 2018, launched the Indonesia coal futures. Since listing, the contract volume of nearly 2 million tons, positions also maintained a growth trend.

Owain Johnson said that Indonesia coal futures is still in its infancy, but the regional benchmark may be more representative of the future direction of the coal market. As the northern hemisphere has slowed, Asian demand growth, the coal market is moving east, the market is undergoing a major transformation of the pattern of trade.

A few days ago, German President Steinmeier took the last piece of coal from miners, and the last hard coal mine in Germany, Hanel Coal Mine in Ruhr District, was officially closed, marking the official history of hard coal mining in Germany. In order to achieve energy transformation, the German government has set ambitious transformation goals. However, how to solve the energy demand gap and cope with the rising energy prices? Germany’s energy transformation still faces many difficulties.

Structural Adjustment Begins Early

Hard coal and lignite power generation is an important source of electricity supply in Germany, but the exploitation of hard coal in Germany is increasingly lacking in international competitiveness. The industry suffers from long-term losses and needs government subsidies to survive. In 2007, the German government decided to phase out hard coal mining. With the formal stop of hard coal mining in Germany, the “old topic” of energy transformation has once again become the focus of social attention.

The concept of energy transformation began in the 1970s. After experiencing a series of energy market shocks such as the oil crisis, the concept of environmental protection has been rising, and Germany began to formulate energy transformation strategy. Initially, Germany’s energy transformation strategy was driven more by the consideration of energy supply security. However, with the increasing pressure of emission reduction and concerns about nuclear power security, the pressure of energy transformation in Germany has been rising.

In the Energy Planning 2010, the German Federal Government has formulated a strategic goal to completely realize environmental-friendly energy supply throughout the country by 2050. In addition, the German government hopes to reduce greenhouse gas emissions by 40% by 2020. In order to achieve this goal, the German government formulated the Environmental Action Plan 2020 in 2014, the core of which is the process of energy transformation in Germany.

Structurally, the core work of Germany’s energy transformation mainly includes expanding the use of renewable energy, reducing greenhouse gas emissions and stopping the use of nuclear power. Under the background of vigorous energy transformation in recent years, renewable energy generation in Germany accounted for 33.1% of the total power generation in 2017. The overall goal of renewable energy formulated by the German Federal Government is to reach 18% of total energy consumption by 2020, 30% by 2030, 45% by 2040 and 60% by 2050. Among them, renewable energy accounts for 80% of total electricity consumption in 2050.

High Pressure on Supply Guarantee

Although the German government has set ambitious targets for energy transformation, public opinion is constantly calling for the process of energy transformation. However, Germany still has a long way to go on the road of energy transformation.

The first problem facing Germany is the challenge of energy supply. German oil and natural gas resources are scarce, and solar energy resources are relatively scarce compared with southern European countries. Therefore, Germany does not have an advantage in the use of renewable energy as a “congenital condition”. At present, traditional fossil energy, especially coal energy, still accounts for a large proportion in German energy structure. Data show that in 2016, about 40% of Germany’s electricity was supplied by coal resources, which dropped to 36.6% in 2017. At present, although hard coal mining has been stopped, the amount of lignite mining and utilization in Germany is still relatively high. In some areas, lignite mining is still the local economic pillar. Unlike hard coal, open-pit lignite mining is still a profitable business, and most of the coal mined is used in nearby pithead power stations.

In mid-2018, the German Federal Government set up a special committee on growth, structural transformation and employment (also known as the Coal Commission) to study and solve problems related to the abandonment of lignite. Recently, the committee said that it would come up with a specific plan on the schedule and related arrangements for the abandonment of lignite in Germany around February 2019. At that time, Germany will determine when and how to abandon lignite, which will also have a far-reaching impact on the German economy and society.

With the abandonment of lignite, Germany does not have many alternative energy options. Moreover, affected by the Fukushima nuclear power plant accident, the German Federal Government has decided to abandon nuclear power completely in 2022. Although this decision has been widely recognized, it has put great pressure on Germany’s energy supply and energy transformation. Data show that 11.6% of Germany’s total electricity generation in 2017 came from nuclear power. Although this proportion is not as high as coal, the time limit for abandoning nuclear power is quite urgent. In addition to the growing calls from all walks of life for abandoning coal-fired power in Germany, there are still many difficulties in fully using renewable energy to make up for the gap caused by abandoned nuclear power.

Economic development is constrained

What is more serious is that the contradiction between energy transformation and economic development is still difficult to reconcile.

Germany’s total abandonment of coal energy will have a decisive impact on the overall economic situation of a part of Eastern Germany, involving hundreds of thousands of jobs and regional economic development. To address the potential impact of coal abandonment, the Federal State of Eastern Germany asked the German Federal Government to allocate up to 60 billion euros in financial subsidies to the region in the coming decades. But not long ago, Federal Finance Minister Scholz said that only 1.5 billion euros of subsidies could be provided to the region by 2021. At the same time, the German economic community also proposed that the federal government should give appropriate compensation to the affected energy industry enterprises such as coal from financial and tax aspects.

Rising energy prices will constrain German economic development. Expert analysis points out that once Germany starts the process of abandoning lignite, energy prices will rise further. At present, German energy-intensive enterprises have complained about the rapid rise in energy prices in the past two years. The abandonment of lignite will make enterprises and ordinary residents face higher energy prices. This is a huge obstacle to enhance the competitiveness of German enterprises and stimulate consumer spending.

Although hard coal mining has become a history in Germany, there is still a long way to go for energy transformation in Germany. With the pressure of emission reduction, lignite abandonment and nuclear power abandonment being highly concentrated fermentation in a short period of time, the task of balancing economic development and energy transformation in Germany is very arduous, which will be a very serious challenge for the German federal and local governments.

According to Bloomberg News in London, OPEC’s output fell the most in nearly two years last month before an agreement was reached to cut oil supply.

Bloomberg’s survey of officials, analysts and ship tracking data showed that the cartel felt a sense of urgency as crude oil prices plunged, with Saudi Arabia, its main member, limiting production. The group’s agreement to limit production began only this week.

Last month, OPEC’s oil production fell by 530,000 barrels a day to 32.6 million barrels a day. This was the sharpest pullback since January 2017, when the group began implementing its strategy for the first time to eliminate the oversupply caused by the increased supply of shale oil in the United States.

A global coalition of oil producers, OPEC+, made up of members of the organization and other exporters, including Russia, agreed on Dec. 7 to cut production in the first six months of 2019. However, instead of rebounding, crude oil prices fell to their lowest level in more than a year.

Investors remain concerned that the OPEC + cut is not enough to make way for another surge in supply expected by U.S. shale drillers.

Phil Flynn, market analyst at Price Futures Group, said: “Concerns about the economic slowdown”put more pressure on OPEC to stabilize the oil market, so let the cuts begin.”

Saudi Arabia last month cut its daily production by 42,000 barrels to 10.65 million barrels, from a record level slightly higher than 11 million barrels in November. Energy Minister Fallich has promised to cut production further this month, beyond the cuts that the country has signed.

According to Reuters news agency New Delhi on October 17, HPS Ahuja, chief executive of India’s strategic oil reserve company, said that India hopes to purchase 19 million barrels of oil in the next 3-4 months to fill a strategy in southern India. Oil storage facility.

H.P.S. Ahuja said the company will use tenders to purchase crude oil to fill the Padur strategic oil reserve in Karnataka, southern India, which can store 2.5 million tons of oil.

The Padur Strategic Oil Reserve Center is approximately 5 km (3 miles) from the coast and 40 km from the refinery of Mangalore Refining and Petrochemical Company.

India currently has strategic oil storage facilities in three locations in the southern region with a total storage capacity of 5.33 million tons.

According to Reuters reported on October 16th Dhaka, an international bidding document issued by Bangladesh Petroleum Corporation (BPC) shows that it will import up to 1.425 million tons of refined oil in the first half of 2019.

The state-owned company is looking for 1.06 million tons to 1.18 million tons of gasoline with a sulfur content of 500 parts per million, and 80,000 to 120,000 tons of high-sulfur fuel oil, 110,000 tons of jet fuel and 15,000 tons. 95 octane gasoline.

The tender will end on October 25 and will be valid until February 25, 2019.

A senior BPC official said that delivery will be phased in the first half of 2019. He told Reuters that some of the quantities would be imported through separate regular transactions but did not provide detailed information.

After 15 years of disruption, BPC resumed the tender for long-term contracts in February 2016 and negotiated with fuel product suppliers during this period.

The company hopes to abandon direct deals and instead buy them at a lower price through international tenders.