China Coal Industry Association released a report on March 1 that in 2018, China’s coal market has basically balanced supply and demand, coal prices fluctuate in a reasonable range, and industry benefits continue to improve.

According to the Annual Report on the Development of the Coal Industry in 2018, the main objective of the “13th Five-Year Plan” to remove coal production capacity was basically completed in 2018, with the coal industry turning from total production capacity to systematic production capacity and structural high production capacity.

According to reports, in 2018, the main business income of Coal Enterprises above the national scale was 2.27 trillion yuan, an increase of 5.5% over the same period of last year, and their profits were 288.82 billion yuan, an increase of 5.2% over the same period of last year. According to the statistics of the association, the total profit of 90 large enterprises (including non-coal) is 156.3 billion yuan, an increase of 26.7% over the same period last year. The ratio of assets and liabilities of Coal Enterprises above scale is 65.7%, which is 2 percentage points lower than that of the previous year.

According to the report, in 2018, the output of raw coal of Enterprises above the scale of 8 billion-ton coal-producing provinces, such as Inner Mongolia and Shanxi, was 3.12 billion tons, accounting for 88.1% of the country, up 0.9 percentage points over the same period of last year. The number of coal mines in China has been greatly reduced. Large-scale modern coal mines have become the main coal producers. By the end of 2018, the number of coal mines has been reduced to about 5,800, and the average production capacity has been increased to about 920,000 tons per year.

“But we should also see that the reform and development of the coal industry still faces many deep-seated contradictions and problems.” According to the report, the overall situation of coal production capacity in China remains relatively excessive, the basis of market balance between supply and demand is still fragile, and the problem of insufficient industry development is prominent.

Looking ahead to the industry development situation in 2019, the report said that coal consumption in 2019 is expected to remain basically stable with little increase; the release of domestic coal production capacity is accelerated, and the supply and demand of the national coal market will gradually change to a relaxed direction.

In 2018, the global upstream oil and gas resources M&A market failed to continue the “warming” trend. The total amount of M&A transactions in the whole year was only 110 billion US dollars, down about 14% from 2017, the lowest value since 2004; the total amount of M&A transactions was 344, down 11% from 2017. During this period, different types of mergers and acquisitions were carried out in different regions of the world based on their own business strategies, which made the upstream oil and gas resources mergers and acquisitions market present new characteristics.

Characteristics 1: Private equity and other non-traditional upstream oil and gas industry background of the main performance of the trading, various types of international oil companies trading amount has been significantly reduced.

Private equity and other non-traditional upstream oil and gas industry background trading entities have maintained their active performance in the global oil and gas resources M&A market in recent years, with a total transaction value of more than 70 billion US dollars. Among them, North America, which has a large number of small and medium-sized oil enterprises and a perfect market-oriented trading system, is the most active region for non-traditional upstream oil and gas industry background trading subjects, such as private capital. Europe is also the region with more non-traditional upstream oil and gas industry background trading subjects such as private capital in 2018.

In terms of international oil giants, 20 mergers and acquisitions of upstream oil and gas assets took place in 2018, the highest in recent three years, but the transaction amount was only 12 billion US dollars, half of that in 2017. Among them, BP’s $10.5 billion “package” acquisition of BHP Billiton’s unconventional assets in the United States was the largest acquisition of international oil giants in that year.

For large and medium-sized international oil companies, 26 mergers and acquisitions of upstream oil and gas assets took place in 2018, the highest since 2014, but the transaction amount was only US$23 billion, far less than US$32 billion in 2017.

On the part of National Petroleum Corporation, in 2018, the transaction value of participating in upstream oil and gas assets M&A activities reached 2.7 billion US dollars, slightly higher than that of 17.7 billion US dollars in 2017, but still remained at the lowest level in nearly 10 years.

Characteristic 2: Mergers and acquisitions of oil and gas resources in the upper reaches of the Middle East and Asia-Pacific region have increased significantly, while the United States remains strong. In the Middle East, upstream M&A transactions in 2018 amounted to $3.1 billion, much higher than the $100 million in 2017; the total number of transactions was 10, the highest in nearly five years. Among them, Shell’s $1.5 billion divestiture of crude oil assets in West Gurna Oilfield and heavy oil assets in Amman Meihezna, Iraq, is the most remarkable project in the region. In the Asia-Pacific region, upstream M&A transactions in 2018 amounted to $8.7 billion, up more than 60% from 2017, a new high since 2014, but the number of transactions was only 25, down from 30 in 2017. Australian LNG-related upstream assets are the hotspot of mergers and acquisitions in the Asia-Pacific region throughout the year, with a total value of more than US$3 billion, also the highest since 2014. Among them, Santos Petroleum Company acquired Australian assets of Quadrant Energy Company, which is the largest upstream M&A activity in the Asia-Pacific region in 2018, with a background of private equity investment of $2.15 billion.

North America continues a dominant trend in the global oil and gas resources M&A market in recent years. In 2018, the total amount of transactions was about 86 billion US dollars and 218 transactions accounted for 78% and 63.4% of the global market in that year, respectively. In 2018, the largest oil and gas resources M&A transactions occurred in North America, with a total amount of more than 51 billion US dollars. Overall, North American shale oil and gas, Canadian oil sands and offshore oil and gas-related assets in the Gulf of Mexico are the focus of market attention. Among them, the total amount of mergers and acquisitions of oil and gas related assets in North America is more than $71 billion, mainly concentrated in the Permian Basin of the United States, Shale belts such as Barken, Eagleford and Montenegro Shale Belt of Canada.

Characteristic 3: The average annual evaluation of oil price in M&A transactions is lower than that in previous years. The evaluation of oil price in merger and acquisition usually refers to the long-term balance of payments price under the 10% discount rate of the project. According to Wood McKenzie’s estimates, the global oil and gas acquisition price in 2018 was $64 per barrel, which was significantly lower than the annual average of $68 per barrel in 2017. The main reason for the gloomy trend of oil price in 2018 is that the global oil and gas resources M&A market does not look forward to the rising prospects of international oil price in the future. Firstly, the total cost of shale oil barrel in the United States has been greatly reduced, which has led to a higher level of production growth at the current oil price level; secondly, global environmental governance and energy efficiency improvements have limited the expansion of crude oil demand market, which will have a restraining effect on international oil price rise in the future; thirdly, the appreciation of the US dollar is expected to restrain oil price growth from the pricing system; lastly, in recent years, it will restrain oil price growth. The expanding market scale of electric vehicles, shared travel and other industries will also have a greater negative impact on the rise of international oil prices.

Fourth, unconventional oil and gas resources such as shale oil are still hot spots in the global upstream oil and gas resources M&A market. In 2018, the amount of global unconventional oil and gas resources M&A transactions represented by North American shale oil and gas, oil sands, etc. was basically the same as in 2017, totaling about 78.6 billion US dollars, accounting for 70% of the total global oil and gas resources M&A transactions in that year. Among them, shale oil-related M&A transactions amount to more than $60 billion, the highest value in the past decade. Permian Basin is still the core area of M&A transactions in 2018, but its spillover effect in technology and management has also increased the number and amount of shale oil-related M&A activities in other shale zones. Among them, the total value of shale oil-related assets M&A transactions in Permian Basin is about 28.8 billion US dollars, accounting for half of the total scale of North America’s shale oil-related M&A transactions; the total value of Shale oil-related assets M&A transactions in Eaglford Shale Area is about 15.5 billion US dollars, which is the highest in nearly ten years; and the total value of M&A transactions in COOP/STACK and Barken Shale Area are respectively. Both $8.3 billion and $2.7 billion are higher than in 2017.

Although the global upstream oil and gas resources M&A market in 2018 presents new characteristics different from those in previous years, on the whole, it is still an indisputable business focus of the upstream sector of China’s petroleum enterprises; actively embracing the global upstream oil and gas resources M&A market, making full use of M&A activities to obtain high-quality assets, is still an important hand for China’s petroleum companies to ensure the safety of domestic oil and gas supply at this stage. Paragraph. Therefore, China’s oil companies should grasp the time window and do a good job in the research of oil and gas resources M&A, especially in the judgment of international oil price trend and the screening of potential M&A targets; on this basis, through dynamic adjustment of trading strategies, continue to optimize the asset portfolio, and comprehensively improve the development quality and efficiency of the upstream plate.

The European crude oil market has unexpectedly become weak recently.

Although Europe has never been a key driver of the global crude oil market and its consumption has remained stable for most of the time, the significant decline in crude oil consumption in recent months may not bode well for the European economy as a whole.

Most noteworthy, according to S&P, the rating company, crude oil consumption in Germany is declining sharply, with a year-on-year decline of 302,000 barrels per day in December, and a decline of more than 100,000 barrels per day in the 10th consecutive month from an annual perspective.

Just last November, Germany seemed to be the only European country with relatively strong demand for crude oil. But by December, Germany was also “occupied”. In the same month, consumption in France fell by 124,000 barrels a day, in the Netherlands by 85,000 barrels a day, in Italy by 38,000 barrels a day and in Britain by 36,000 barrels a day.

From the perspective of European countries belonging to OECD, overall crude oil demand fell by 755,000 barrels per day in December.

S&P believes that Europe is the biggest threat to global crude oil demand.

With the global economic slowdown, large international organizations and crude oil producers have lowered their expectations for global crude oil demand this year. OPEC cut crude oil demand by 50,000 barrels a day this year, and EIA cut by the same margin.

In the middle of this month, EIA lowered its global crude oil demand growth forecast of 50,000 barrels per day in 2019 to 1.49 million barrels per day year, and lowered its global crude oil demand growth forecast of 50,000 barrels per day in 2020 to 1.48 million barrels per day year.

The biggest question is whether the downward adjustment of crude oil demand expectations by major international organizations is a temporary adjustment or the beginning of more downward expectations.

Prospects for Europe’s largest economy are declining

As Wall Street reported last week, the German Business Climate Index fell to 98.5 in February from 99.3 in January, a bigger decline than expected, with the market generally predicting 99. The lowest level since January 2015.

Meanwhile, the initial value of PMI in German manufacturing industry fell to 47.6 in February from 49.7 in January, a 74-month low, which was lower than the market expectation of 49.7. Germany’s manufacturing output index fell to 48.0 from 50.3 in January, a 74-month low. Export orders fell the most in more than six years.

Phil Smith, chief economist at IHS Markit, pointed out that factors contributing to the slowdown in German manufacturing orders included uncertainties in trade tensions, a weak automotive sector and growing competition within Europe.

Key economic data across the euro area are also disappointing. Industrial output in the euro area fell by 0.9% in December, twice as much as expected, and the biggest annual decline since 2009.

Fertilizer Export Data of China

According to the statistics of the Chinese Customs, in January 2019, China exported 2.28 million tons of fertilizers (in kind, the same below).

Among them, 590,000 tons of urea and 390,000 tons of diammonium phosphate were exported. Compared with the same period in 2018, the export volume of fertilizers (including fertilizer grade ammonium chloride and potassium nitrate) increased by 62.8%, urea export volume increased by 312.8% and diammonium phosphate export volume increased by 59.6%.

In January 2019, China’s exports of potassium sulfate and nitrogen, phosphorus and potassium ternary compound fertilizers were 7203 tons and 40608 tons respectively, up 1703.3% and 1163.1% respectively from the same period last year. Since January 2019, China has stopped imposing temporary export tariffs on potassium fertilizers and ternary compound fertilizers to boost exports.

Fertilizer Import Data in China

On the import side, 1.28 million tons of fertilizers were imported in January 2019. Among them, 1.08 million tons of potassium chloride and 150,000 tons of nitrogen, phosphorus and potassium ternary compound fertilizer were imported.

The import of potassium chloride increased by 14.4% and the ternary compound fertilizer of nitrogen, phosphorus and potassium increased by 35.7% over the same period.

On February 24, the PX commodity index was 70.20, unchanged from yesterday, down 31.45% from the peak of 102.40 points in the cycle (2013-02-28), and up 54.12% from the low of 45.55 points on February 15, 2016. (Note: Period refers to 2013-02-01 to date).

Recently, the domestic market price trend of p-xylene has been temporarily stable. Pengzhou Petrochemical Plant has been running steadily in the field. Urumqi Petrochemical Plant has started 50% of its operation. Fuhaichuang Aromatic Hydrocarbon Plant has been restarted. Other plants have been running steadily for the time being. The domestic market supply of p-xylene is normal. The market price trend of p-xylene is temporarily stable. The opening rate of PX plant in Asia is about 80%. On February 22, the closing price of p-xylene in Asia dropped by 4 US dollars per ton. The closing price was US$109-1101 per ton FOB Korea and US$118-1120 per ton CFR in China. More than 50% of the domestic units need to be imported. The decline of foreign prices has a negative impact on the domestic market price of p-xylene. The domestic market price maintained 8,800 yuan per ton.

On February 22, the price of WTI crude oil in April rose to 57.26 U.S. dollars per barrel, an increase of 0.3 U.S. dollars. Brent crude oil in April rose to 67.12 U.S. dollars per barrel, an increase of 0.05 U.S. dollars. crude oil price rose slightly, which has a certain supporting effect on the price of downstream petrochemical products. The price trend of xylene market is temporarily stable. Recently, the textile industry has declined, PTA prices shocked on the 25th. The average price of East China is around 6400-6550 yuan per ton. As of the 22nd, the domestic PTA start-up rate is about 80%, the polyester industry start-up rate is about 77%. In addition, the guerrilla production and sales rate is low. The PTA market price shocks. It is expected that the price of PX market will rise slightly in the later period.