Since the second quarter, price increases have begun to appear more and more in the media.
First of all, the price of resources has risen, and non-ferrous metals such as gold, oil, copper, aluminum, tungsten and so on...... Prices have risen.
This is the first wave, which is caused by the replenishment of inventories in overseas markets, plus the turbulent supply-side disturbances in the Middle East.
In the beginning, a lot of people didn't feel much.
After all, the domestic CPI is still downward and in a deflationary state, so many people think it is only temporary.
Unexpectedly, more and more data have been supporting it recently, and this wave of price increases has begun to be transmitted to China.
Not only have the prices of chemicals started to rise, but the utilities sector has also recently kicked off the price hike in an all-round way.
First, the price of water
On May 9, a hearing was held on the tap water price reform plan in the central urban area of Guangzhou, with a total of 17 representatives attending the hearing, and the adjusted average water price increased by 0.87 yuan/m3 (+34.4%) compared with the current price.
The government has proposed two sets of price adjustment plans, the first, second and third tiers of residential water prices in the first plan will increase by 31.3%/31.3%/97.0% respectively, and the price of non-residential water will increase by 31.8%;
In the second scenario, the first, second and third tiers of residential water prices increased by 24.2%/24.2%/86.4% respectively, and the prices of non-residential water increased by 39.0%.
The average water supply price of both schemes was RMB3.4 per cubic metre, an increase of RMB0.87 per cubic metre (+34.4%) from the current price.
The difference is that the increase in residential water use is greater in option 1 and the increase in non-residential water use in option 2 is even greater.
The 17 representatives at the scene all supported the water price adjustment, of which 9 supported option 1, 7 supported option 2, and 1 did not make a specific choice.
The price increase is a certainty.
In fact, as early as January this year, Shanghai Pudong, Qingpu and other places received the "Reply on Adjusting the Water Price of Residential Users under the Management of the District", proposing that the comprehensive water price of Shanghai's first tier will be increased from 3.37 yuan/square meter to 4.05 yuan/square meter (+20.2%).
In this way, the increase in water prices in major cities across the country will also begin one after another.
Second, gas
Since the issuance of the "Guiding Opinions on Establishing and Improving the Linkage Mechanism for Upstream and Downstream Prices of Natural Gas" in 2023, gas prices have become more and more market-oriented.
As the price of upstream energy rises, the price of downstream gas will naturally follow.
According to the statistics of Huachuang Securities, in 2023, at least 52 cities and counties will raise the price of residential gas, and the basic residential gas price (i.e., the first-tier gas price) within the statistical range will be increased by an average of 0.256 yuan per square meter, an increase of nearly 10%.
Among them, the basic residential gas prices in 10 regions of Hebei increased by an average of 0.391 yuan/square, an increase of 14%.
In 2024, the linkage mechanism of gas prices in various regions will continue to be promoted.
On March 15, the Shenzhen Municipal Development and Reform Commission issued a notice of price adjustment, and the sales price of piped natural gas for residents was raised to 3.41 yuan/square meter in the first tranche, and the prices in the second and third tranches were raised to 3.91 yuan/square meter and 5.16 yuan/square meter respectively, an increase of 10%, 9% and 6% respectively.
Some media have comprehensively counted the price adjustment documents in Shenzhen, Nanjing, Chengdu, Chongqing and other places and found that the current round of natural gas price increases are about 5%-11%.
Third, high-speed rail
The official website of China Railway issued an announcement on the price adjustment, starting from June 15, the four high-speed rail lines of Wuhan-Guangzhou high-speed railway, Shanghai-Hangzhou passenger dedicated, Shanghai-Kunming passenger dedicated, and Hangzhou-Ningbo passenger dedicated will adjust passenger fares.
After the price adjustment, taking the Hangzhou-Ningbo section of the Hangzhou-Shenzhen Railway as an example, the second-class ticket price from Hangzhou East Railway Station to Ningbo Station will be 85 yuan from June 15, an increase of about 19.72% compared with the current announced ticket price of 71 yuan.
Taking the Hangzhou-long section of the Shanghai-Kunming high-speed railway as an example, the second-class ticket price from Hangzhou East Railway Station to Changsha South Railway Station will be 485 yuan from June 15, an increase of about 19.75% compared with the current announced ticket price of 405 yuan.
Taking the Wuguang section of the Beijing-Guangzhou high-speed railway as an example, the second-class ticket price from Wuhan Station to Guangzhou South Railway Station will be 553 yuan from June 15, an increase of about 19.31% compared with the current announced ticket price of 463.5 yuan.
The overall increase is around 19-20%, and the price increase is greater than the last time.
The last time the price was raised was in June 2021, when the maximum ticket price for the second-class seat of the Beijing-Shanghai high-speed railway was increased from 598 yuan to 662 yuan, an increase of 10.70%.
Fourth, the price of electricity
There is no comprehensive notice of the increase in electricity prices for the time being, but the expectation has come out.
First of all, according to the current rules, from May, the tiered electricity price for residents will enter the "summer mode".
For example, according to the standards of Guangdong, in the summer mode -
When the monthly electricity consumption of residents is below 260 kWh (inclusive), the first level of billing standard shall apply, and the electricity price will not be adjusted;
When the monthly electricity consumption is between 261 kWh and 600 kWh, the second level of billing standard applies, and the electricity price needs to be charged by 0.05 yuan per kWh;
When the monthly electricity consumption reaches 601 kWh or more, the third level of billing standard applies, and the electricity price needs to be charged by 0.30 yuan per kWh.
In summer, when the weather is hot, the air conditioner is turned on a lot, and the power demand is large, and it may unconsciously enter the second and third gears.
Second, fine-tuning is also being carried out in various places.
One trend is to optimize peak-to-valley time-of-use tariffs while keeping the total price unchanged.
For example, in Anhui, the current peak and valley time period of July and August has been expanded to five months: July, August, September, January and December.
In addition, the proportion of peak price increase increased from 81.3% to 84.3%, and the proportion of valley price increase increased from 58.8% to 61.8%, that is, the peak price is higher and the valley price is lower.
Overall, electricity prices have remained the same, but actual consumption has certainly risen.
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Water, electricity, gas, high-speed rail, various public utilities are raising prices explicitly or implicitly.
The main reason is the transmission effect of inflation.
The price of upstream energy has risen, and it has been transmitted from abroad, and the price of relatively market-oriented gas has risen directly.
Industries such as electricity, water supply, and high-speed rail, which are relatively less market-oriented, will also face rising costs, and it is only a matter of time before prices are raised.
Second, it will help alleviate the financial pressure on local governments.
In the past two years, the pressure on local government debt in China has been very great, the real estate has been sluggish, and the fiscal revenue has declined, and public utilities have no choice but to find ways to open up sources and reduce expenditure.
Due to the above two factors, it seems that this round of public utility price increases will not stop for a while.
In the future, it is likely to intensify.
Its impact on all aspects of China's economy seems to be increasing.
The first is the CPI and PPI data.
The CPI data for April turned positive year-on-year, at 0.3%, compared with 0.1% in the previous month.
PPI was -2.5% year-on-year, which looks bad and negative, but the previous value was -2.8%, which has actually improved.
Of course, this round of inflation is caused by rising costs, not driven by downstream demand, which may not be good for the broader economy.
Therefore, the next market may be more structural opportunities.
Second, focus on price increase opportunities in the midstream and upstream sectors.
Utilities are cyclical in nature, with consumption largely unchanged and performance changes largely driven by cost prices and consumer prices.
Take the annual report data as an example -
In 2023, the overall operating income of the SW public utilities segment will be 2,251.5 billion yuan, a year-on-year increase of 3.2%, and the net profit attributable to the parent company will be 169.9 billion yuan, a year-on-year increase of 72.1%.
Revenue has not changed much, but net profit has increased by 72%!
The main reason is that the price of coal has fallen, and the decline in costs has led to a sharp increase in the performance of the power industry.
The power sector accounts for the largest share of the utilities sector, and thermal power plays a pivotal role in the power sector, so it contributes significantly to the incremental sector as a whole.
In the first quarter of this year, this trend continued, and thermal power still contributed the largest increase in performance.
However, it is important to note that:
Although the performance of thermal power in the first quarter was very good, as inflation input continues, the sustainability of thermal power performance is doubtful if the price of coal rises.
What is more worthy of optimism is the gas with declining performance in the first quarter, as well as hydropower, photovoltaic, and nuclear power with rigid costs.
After all, among the various segments, the market-oriented mechanism of gas is the smoothest, the transmission is the most direct, and the price increase of gas will directly bring about the recovery of performance.
Once hydropower is built, the cost is almost zero, and the summer is full of water, the power generation is greatly increased, coupled with the rising electricity price and rising demand, the summer is often the peak of performance.
In terms of photovoltaics, there is more haze and less sunshine in the first quarter, and it is normal for the performance to be poor.