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Monday, 27 December 10
ANALYSIS: CHINA'S COAL PRODUCTION MISMATCHED WITH DOMESTIC DEMAND
 As reported by iStock Analyst, China's coal market has been trapped in a strange cycle. Large coal production bases are facing overcapacity, while large coal consumption provinces are in short supply of power coal.
This structural contradiction between supply and demand in China's coal market has highlighted heated discussions recently.
Coal producers facing mounting pressure of excess in output capacity
China is facing severe excess of production capacity and oversupply of coal in 2010 due to the expansion of coal production and surging imports amid sluggish demand, and this situation is expected to carry on into 2011 as new coal companies begin operation.
Wang Zhanjun, director-general of the China Coal (TSXV:CKO) Industry Association, said that China's coal supply capacity has seen a remarkable increase in 2010 due to the operation of newly formed coal companies after mergers and acquisitions.
In the first 11 months of 2010, the country's leading coal producing provinces and regions including Shanxi, Inner Mongolia, Shaanxi, and Ningxia all saw more than 20 percent growth in coal output.
According to a report by the association, in the first 11 months of 2010 China's coal output surged 15.5 percent or 418 million metric tons (tonnes) year on year to 3.039 billion tonnes, while coal sales were up 13.5 percent or 390 million tonnes to 2.892 billion tonnes. Coal deliveries increased by 15.3 percent year on year to 1.827 billion tonnes during the same period.
The investment in fixed assets in the coal industry has continued to increase this year. In the first 11 months of 2010, fixed assets investment in coal mining and washing saw 22.7 percent year-on-year growth to 320.7 billion yuan.
Meanwhile, China's coal imports keep rising while exports keep declining. In January-November, China's coal exports dropped 13.5 percent to 17.58 million tonnes, and are expected to remain low in December. Total coal exports are estimated at 19 million tonnes for the whole year.
In sharp contrast to declining exports, coal imports maintained fast growth in 2010. Net imports of coal are expected to reach 145 million tonnes in 2010.
However, China's coal demand has remained sluggish this year. Affected by the measures for energy conservation and emissions reduction, electricity consumption growth of high energy-consuming industries like ferrous metals, chemicals, non-ferrous metals, and building materials has fallen back quickly since May of 2010, which in turn has cut coal consumption severely.
Coal consumption in the steel industry moved from positive growth to negative growth in 2010.
According to official statistics, China's daily crude steel output saw fast growth in the first half of 2010 but registered three months of negative growth in the third quarter, and only increased 4.8 percent in November.
Also, coal consumption in the chemicals industry has also remained sluggish this year. According to preliminary forecasts, coal consumption in the chemicals industry in 2010 will stay at the same level as in 2009, at 140 million tonnes.
The China Electricity Council predicted that electricity demand in China would not increase much in 2010 and 2011, estimating the growth at 10 percent in 2010, 14 percentage points lower than in 2009.
Therefore, coal industry is expected to face mounting oversupply pressure in 2011 since the output of majority coal enterprises would double. Meanwhile, large numbers of coalmines in Shanxi, Henan, Shaanxi, and Inner Mongolia are scheduled to begin operation in 2011, and the coal oversupply will be aggravated by the participation of more downstream firms in power generation and metallurgy, said Wang Zhanjun, head of the China Coal Industry Association.
Wang predicted that coal supply in China would increase 300 million tonnes in 2011, and China would face excess in supply of coal.
Short supply of coal at power plants
In sharp contrast with the excessive output and supply of coal, a number of power plants in parts of China are suffering from shortages of power coal.
In Guizhou province, coal output capacity is significantly less than demand. The local coal output is expected to increase by 160 million tonnes at most in 2011, which would exacerbate the tight supply. This is because the output capacity of newly formed coalmines is inadequate to make up for eliminated production capacity, and the newly formed capacity will not come into operation until the second half of 2011.
At the same time, power plants in Guizhou cannot afford coal produced outside the province because of higher coal prices.
Similar short supply of coal has also occurred in Hubei province. Coal stocks at power plants in Hubei have remained at critical level since the beginning of this year, and sometimes were even not enough for one week's consumption.
The power coal shortage is not only a headache for power plants in non-coal production areas, but also hit power plants in major coal production areas like Shanxi and Henan.
Take the Datang Taiyuan Second Thermal Power Plant for example. The plant has suffered coal shortages four times since the beginning of 2010 because its contracted coal supplier supplied only 400,000 tonnes of coal towards meeting the 1.5-million-tonne coal contract.
As of December 4, power coal stocks of Henan have slid sharply from 3.84 million tonnes at the beginning of November to 2.65 million tonnes, far below the critical level of 3.5 million tonnes.
This has led to a daily supply shortage of 700,000 tonnes. Current coal production system might be primary cause
The short supply of power coal against excess of overall output capacity in China is believed to be caused mainly by system contradictions existing in the coal industry.
Actually, China's coal industry has trapped in a strange circle. Coal demand weakens after power plants stockpile power coal, but after the stockpiling, coal stocks of coal producers are down. Therefore, the coalmines produce more coal, which eventually leads to excess of output and excessive supply of coal.
Some coal suppliers have complained that if they carry on supplying coal according to their coal contracts with the power plants at the contracted price, the coalmines would all suffer (OOTC:WLVTQ) losses while the power plants all make profits.
A senior manager of the Shenhua Group said that it is difficult to avoid the structural contradictions of disjointed coal output and demand under the current government-capped management system. The outlook of China's coal industry remains troubled for 2011, and the problem of excessive output capacity would continue to be widespread in China, especially in western areas.
According to the manager, branches of the Shenhua Group in Xinjiang are all in the red due to heavy coal inventory pressure, while some provinces in east and south China are suffering from severe shortages of coal.
An insider with the Shanxi Coking Coal Group said that the group was ambitiously planning to double its output capacity during the period of the 12th Five Year Plan (2011-15), but the current market environment is very unfavorable for the coal industry. The cost of acquiring small coalmines has spiraled far beyond expectations.
Therefore, the mismatch between coal supply and demand at the turn of the new year is manageable, and the market is expected to see increasing supply and decreasing demand soon, noted the insider.
But Wang Xianzheng expressed disagreement. He believed that China's coal demand would increase by 200 million to 300 million tonnes in 2011. Besides which, the government-planned construction of 10 million units of affordable housing would drive coal demand by 60 million tonnes at least. Wang believed that the coal price would remain buoyant in 2011 but would not rise much.
Source: Quotemedia, Xinhua News Agency (Edited by Li Xiaohui), istockanalyst
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Monday, 13 December 10
NALCO TO START WORK ON RS 18K CR ($ 4,010,695,091) INDONESIAN PROJECT BY JUNE - MSN
MSN reported that, State-owned NALCO today said it has selected UAE-based RAK Minerals as JV partner for its Rs 18,000 crore (US$ 4,010,695,091 ...
Monday, 13 December 10
DEUTSCHE BANK RAISES COAL FORECASTS ON MARKET SHORTAGE - BLOOMBERG
Deutsche Bank AG raised price forecasts for thermal coal by as much as 17 percent on expectations that a shortage of the fuel will widen over the ne ...
Monday, 13 December 10
K SERA SERA TO SPEND RS325CR TO BUY COAL,OIL & GAS FIRMS STAKE - LIVE MINT
The company might have to dole out around Rs 225 crore (US$ 50,122,522) for picking up the majority stake in the coal mine in Indonesia and around R ...
Thursday, 09 December 10
OVERSUPPLY OF SHIPS BOUND TO KEEP DRY BULK FREIGHT RATES SUBDUED DURING 2011 SAYS BIMCO - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
An oversupply of vessels is expected to keep freight rates from flying as high as in recent years said a relative shipping report from BIMCO’s ...
Thursday, 09 December 10
INDONESIAN COAL PRICE REFERENCE REACHED US$ 103.41 PMT FOR DECEMBER DELIVERY
COALspot.com: The Directorate General of Mineral, Coal and Geothermal of Indonesia has been publishing a monthly coal price reference (HBA) since Fe ...
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- Makarim & Taira - Indonesia
- Iligan Light & Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Orica Australia Pty. Ltd.
- Indika Energy - Indonesia
- Thai Mozambique Logistica
- IHS Mccloskey Coal Group - USA
- Pendopo Energi Batubara - Indonesia
- Ind-Barath Power Infra Limited - India
- Mjunction Services Limited - India
- Uttam Galva Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Leighton Contractors Pty Ltd - Australia
- India Bulls Power Limited - India
- Minerals Council of Australia
- Australian Commodity Traders Exchange
- Sree Jayajothi Cements Limited - India
- Parry Sugars Refinery, India
- Kalimantan Lumbung Energi - Indonesia
- Timah Investasi Mineral - Indoneisa
- Indonesian Coal Mining Association
- ASAPP Information Group - India
- Kepco SPC Power Corporation, Philippines
- Indian Energy Exchange, India
- Chettinad Cement Corporation Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Renaissance Capital - South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Sinarmas Energy and Mining - Indonesia
- Kartika Selabumi Mining - Indonesia
- Riau Bara Harum - Indonesia
- Bukit Baiduri Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Cement Manufacturers Association - India
- Indogreen Group - Indonesia
- Meenaskhi Energy Private Limited - India
- Savvy Resources Ltd - HongKong
- Posco Energy - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Binh Thuan Hamico - Vietnam
- Chamber of Mines of South Africa
- Maharashtra Electricity Regulatory Commission - India
- Essar Steel Hazira Ltd - India
- Intertek Mineral Services - Indonesia
- Siam City Cement PLC, Thailand
- Kumho Petrochemical, South Korea
- Electricity Authority, New Zealand
- Salva Resources Pvt Ltd - India
- ICICI Bank Limited - India
- Antam Resourcindo - Indonesia
- TeaM Sual Corporation - Philippines
- The University of Queensland
- Electricity Generating Authority of Thailand
- GMR Energy Limited - India
- Mercuria Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Heidelberg Cement - Germany
- Energy Development Corp, Philippines
- Marubeni Corporation - India
- Singapore Mercantile Exchange
- Karbindo Abesyapradhi - Indoneisa
- Sarangani Energy Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Port Waratah Coal Services - Australia
- VISA Power Limited - India
- Eastern Energy - Thailand
- New Zealand Coal & Carbon
- Standard Chartered Bank - UAE
- Sical Logistics Limited - India
- Goldman Sachs - Singapore
- CIMB Investment Bank - Malaysia
- Agrawal Coal Company - India
- Ceylon Electricity Board - Sri Lanka
- GVK Power & Infra Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coalindo Energy - Indonesia
- Central Electricity Authority - India
- Coastal Gujarat Power Limited - India
- Sojitz Corporation - Japan
- Rio Tinto Coal - Australia
- International Coal Ventures Pvt Ltd - India
- Petron Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Vizag Seaport Private Limited - India
- IEA Clean Coal Centre - UK
- Sakthi Sugars Limited - India
- Georgia Ports Authority, United States
- SN Aboitiz Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Sindya Power Generating Company Private Ltd
- Grasim Industreis Ltd - India
- Bulk Trading Sa - Switzerland
- Merrill Lynch Commodities Europe
- Aditya Birla Group - India
- Karaikal Port Pvt Ltd - India
- Latin American Coal - Colombia
- OPG Power Generation Pvt Ltd - India
- White Energy Company Limited
- MS Steel International - UAE
- SMC Global Power, Philippines
- Gujarat Sidhee Cement - India
- Indian Oil Corporation Limited
- Interocean Group of Companies - India
- Ministry of Finance - Indonesia
- Edison Trading Spa - Italy
- Barasentosa Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- London Commodity Brokers - England
- Lanco Infratech Ltd - India
- Bhoruka Overseas - Indonesia
- Planning Commission, India
- Star Paper Mills Limited - India
- Power Finance Corporation Ltd., India
- Energy Link Ltd, New Zealand
- Medco Energi Mining Internasional
- Baramulti Group, Indonesia
- San Jose City I Power Corp, Philippines
- Bhatia International Limited - India
- Semirara Mining Corp, Philippines
- Orica Mining Services - Indonesia
- Ambuja Cements Ltd - India
- Ministry of Transport, Egypt
- Mintek Dendrill Indonesia
- Siam City Cement - Thailand
- McConnell Dowell - Australia
- Economic Council, Georgia
- PetroVietnam Power Coal Import and Supply Company
- Australian Coal Association
- LBH Netherlands Bv - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Aboitiz Power Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Global Business Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Larsen & Toubro Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tamil Nadu electricity Board
- Bayan Resources Tbk. - Indonesia
- Jaiprakash Power Ventures ltd
- Maheswari Brothers Coal Limited - India
- Straits Asia Resources Limited - Singapore
- Dalmia Cement Bharat India
- CNBM International Corporation - China
- Xindia Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- Anglo American - United Kingdom
- Eastern Coal Council - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Madhucon Powers Ltd - India
- Borneo Indobara - Indonesia
- Videocon Industries ltd - India
- The State Trading Corporation of India Ltd
- Meralco Power Generation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Africa Commodities Group - South Africa
- Carbofer General Trading SA - India
- Bangladesh Power Developement Board
- Ministry of Mines - Canada
- Directorate Of Revenue Intelligence - India
- Coal and Oil Company - UAE
- Altura Mining Limited, Indonesia
- Global Green Power PLC Corporation, Philippines
- Bharathi Cement Corporation - India
- Metalloyd Limited - United Kingdom
- Vedanta Resources Plc - India
- Romanian Commodities Exchange
- Deloitte Consulting - India
- Oldendorff Carriers - Singapore
- Trasteel International SA, Italy
- Wilmar Investment Holdings
- Bukit Asam (Persero) Tbk - Indonesia
- Tata Chemicals Ltd - India
- PTC India Limited - India
- Samtan Co., Ltd - South Korea
- Parliament of New Zealand
- Manunggal Multi Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- Semirara Mining and Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Thiess Contractors Indonesia
- Therma Luzon, Inc, Philippines
- Jindal Steel & Power Ltd - India
- SMG Consultants - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Kobexindo Tractors - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Independent Power Producers Association of India
- Central Java Power - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Commonwealth Bank - Australia
- The Treasury - Australian Government
- PowerSource Philippines DevCo
- Rashtriya Ispat Nigam Limited - India
- Holcim Trading Pte Ltd - Singapore
- Wood Mackenzie - Singapore
- Formosa Plastics Group - Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Krishnapatnam Port Company Ltd. - India
- Asmin Koalindo Tuhup - Indonesia
- South Luzon Thermal Energy Corporation
- GAC Shipping (India) Pvt Ltd
- Banpu Public Company Limited - Thailand
- Simpson Spence & Young - Indonesia
- Mercator Lines Limited - India
- Attock Cement Pakistan Limited
- Bhushan Steel Limited - India
- Globalindo Alam Lestari - Indonesia
- Malabar Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
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