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Tuesday, 08 October 13
CHINA: INTENSE COMPETITION AMONG DOMESTIC COAL MINERS AS 2013 IMPORT DEMAND REMAINS STRONG - WOOD MACKENZIE
 Prices will not fall under RMB500/t or risk supply availability to the coastal market
Despite China's lower economic growth, Wood Mackenzie says that import demand will still meet previous high expectations, although overall demand growth will be lower. This is due to lower seaborne coal prices compared to domestic coal prices in coastal China. As such, domestic producers are competing for market share by lowering prices in spite of negative margins. This explains the recent continuous drop in Chinese coal prices. However, Wood Mackenzie says that coastal China coal prices will be supported at *RMB500 per tonne (t) as at this price level 40% of domestic supply operates at negative margins.
China's gross domestic product (GDP) growth has slowed from 9.3% to 7.5% from 2011 to 2013. As a result, power demand growth has slowed in China and coal demand in coastal provinces has remained flat, staying at 2011 levels of 1.2 billion tonnes(Bt). In contrast, seaborne demand increased rapidly - This year, Wood Mackenzie expects China to import 235Mt of thermal and 67Mt of metallurgical coal, up from 168Mt and 31Mt respectively in 2011. This translates to a growth in share of seaborne imports into coastal China from 17% to about 25% between 2011 to 2013.
Wood Mackenzie's Senior Analyst Coal Market Research, Mr. Prakash Sharma says, "The trend of increased coal imports has been aided by weak coal prices in the international market. This means that Chinese coal import demand is almost entirely driven by the competitiveness of imported versus domestic supply. As such, large Chinese miners are adopting volume strategy by producing more to bring down operating costs and pricing lower to maintain market share."
These measures will hold market share in the short-term but may be counter-effective if prices fall too low in coastal China. Therefore we believe prices find a floor at RMB500/t. Small to medium sized domestic players will be most affected due to relatively high fixed labour costs and mine safety expenses in China. Large producers such as Shenhua and China Coal, who have resorted to aggressive pricing, contribute almost 50% of China's domestic coal production. The remainder 50% comes from the small to medium size miners.
Rohan Kendall, Senior Analyst for Coal Supply Research, says, "At RMB 500/t, we estimate that 40% of China's thermal coal production will produce at negative margins. Small to medium sized producers operating at negative margins, particularly those producing low-energy coal, face a real risk of mine closures. The situation may also trigger further consolidation of small loss-making mines in China."
Summarizing, Mr Sharma says, "The 40% of domestic production producing at negative margins equates to about 150% of the size of the current seaborne market. Full replacement volumes cannot feasibly be sourced from imports without creating a price response that will actually incentivise domestic miners to remain in production. Therefore, we believe prices will be supported above RMB 500/t, turning the tide on the current price trend."
*All prices refer to benchmark FOB Qinghuangdao Thermal coal price (5500 kcal/kg NAR basis) inclusive of 17% VAT.
Editor's notes:
Wood Mackenzie is the most comprehensive source of knowledge about the world's energy and metals industries. We analyse and advise on every stage along the value chain - from discovery to delivery, and beyond - to provide clients with the commercial insight that makes them stronger. For more information visit: www.woodmac.com
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Tuesday, 15 October 13
CHINA COAL IMPORTS TO KEEP GROWING IN THE YEARS TO COME, ALBEIT AT A SLOWER RATE - EVA TZIMA / NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
In its latest monthly report, shipbroker Intermodal highlighted the growing role of coal in the energy mix. According to Intermodal's research anal ...
Tuesday, 15 October 13
NEWCASTLE PORT SHIPPED 6.50% MORE COAL W-O-W
COALspot.com: Power plant and semi-soft coking coal shipments from Australia's Newcastle port up 6.50 per cent week on week to 3.19 million mt for ...
Monday, 14 October 13
MEMR OF INDONESIA SETS THE COAL'S SPOT PRICE AT US$ 76.61 FOR OCT'13 DELIVERY
COALspot. com - The Indonesian government has revised down government declared coal bench mark price by US$ 0.28/ MT to US$ 76.61 for October 2013 d ...
Monday, 14 October 13
CARBON POLICIES UNLIKELY TO PREVENT A COAL-FUELLED WORLD - WOOD MACKENZIE
China will propel coal growth but US, Europe and Asia will sustain global demand.
At the World Energy Congress (WEC) today Wood Mackenzie's Pres ...
Sunday, 13 October 13
Q4'13 DELIVERY SUB-BIT INDO COAL SWAP FALLS SEVEN STRAIGHT WEEK
COALspot.com – Sub-Bit Indonesia coal swap (FOB ) for average Q4 2013 delivery fell 1.72 percept month on month on Friday 11 October 201 ...
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- Malabar Cements Ltd - India
- Africa Commodities Group - South Africa
- Bhatia International Limited - India
- Standard Chartered Bank - UAE
- Wilmar Investment Holdings
- Salva Resources Pvt Ltd - India
- Agrawal Coal Company - India
- Electricity Authority, New Zealand
- PetroVietnam Power Coal Import and Supply Company
- PTC India Limited - India
- Edison Trading Spa - Italy
- Heidelberg Cement - Germany
- Vizag Seaport Private Limited - India
- The University of Queensland
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- Coal and Oil Company - UAE
- The Treasury - Australian Government
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- Krishnapatnam Port Company Ltd. - India
- Minerals Council of Australia
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- Alfred C Toepfer International GmbH - Germany
- PNOC Exploration Corporation - Philippines
- Ambuja Cements Ltd - India
- Eastern Energy - Thailand
- London Commodity Brokers - England
- Deloitte Consulting - India
- Binh Thuan Hamico - Vietnam
- Interocean Group of Companies - India
- Singapore Mercantile Exchange
- Global Green Power PLC Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mjunction Services Limited - India
- Eastern Coal Council - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Transport, Egypt
- Billiton Holdings Pty Ltd - Australia
- Essar Steel Hazira Ltd - India
- Australian Coal Association
- Bayan Resources Tbk. - Indonesia
- Siam City Cement PLC, Thailand
- Merrill Lynch Commodities Europe
- Mercuria Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Parliament of New Zealand
- Bhoruka Overseas - Indonesia
- SMC Global Power, Philippines
- Indonesian Coal Mining Association
- Kepco SPC Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Posco Energy - South Korea
- Directorate Of Revenue Intelligence - India
- Kalimantan Lumbung Energi - Indonesia
- Chamber of Mines of South Africa
- Sree Jayajothi Cements Limited - India
- ICICI Bank Limited - India
- Parry Sugars Refinery, India
- Indian Oil Corporation Limited
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Independent Power Producers Association of India
- Asmin Koalindo Tuhup - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Maheswari Brothers Coal Limited - India
- Price Waterhouse Coopers - Russia
- Coastal Gujarat Power Limited - India
- Madhucon Powers Ltd - India
- Toyota Tsusho Corporation, Japan
- Semirara Mining Corp, Philippines
- Oldendorff Carriers - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Trasteel International SA, Italy
- Kideco Jaya Agung - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- European Bulk Services B.V. - Netherlands
- Globalindo Alam Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Aditya Birla Group - India
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- Planning Commission, India
- Romanian Commodities Exchange
- Wood Mackenzie - Singapore
- Metalloyd Limited - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Iligan Light & Power Inc, Philippines
- Thiess Contractors Indonesia
- Miang Besar Coal Terminal - Indonesia
- CNBM International Corporation - China
- Holcim Trading Pte Ltd - Singapore
- International Coal Ventures Pvt Ltd - India
- Tata Chemicals Ltd - India
- Videocon Industries ltd - India
- Xindia Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMG Consultants - Indonesia
- Central Electricity Authority - India
- Antam Resourcindo - Indonesia
- Manunggal Multi Energi - Indonesia
- White Energy Company Limited
- Cigading International Bulk Terminal - Indonesia
- McConnell Dowell - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- South Luzon Thermal Energy Corporation
- Ministry of Finance - Indonesia
- Cement Manufacturers Association - India
- Tamil Nadu electricity Board
- Sical Logistics Limited - India
- Indian Energy Exchange, India
- Rashtriya Ispat Nigam Limited - India
- Baramulti Group, Indonesia
- GVK Power & Infra Limited - India
- Straits Asia Resources Limited - Singapore
- Anglo American - United Kingdom
- Jaiprakash Power Ventures ltd
- Kaltim Prima Coal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- India Bulls Power Limited - India
- Star Paper Mills Limited - India
- Altura Mining Limited, Indonesia
- Petron Corporation, Philippines
- Port Waratah Coal Services - Australia
- Bukit Makmur.PT - Indonesia
- Economic Council, Georgia
- Chettinad Cement Corporation Ltd - India
- Savvy Resources Ltd - HongKong
- Aboitiz Power Corporation - Philippines
- Georgia Ports Authority, United States
- Maharashtra Electricity Regulatory Commission - India
- Meralco Power Generation, Philippines
- Medco Energi Mining Internasional
- Jindal Steel & Power Ltd - India
- Mercator Lines Limited - India
- CIMB Investment Bank - Malaysia
- Australian Commodity Traders Exchange
- Indika Energy - Indonesia
- Bharathi Cement Corporation - India
- Goldman Sachs - Singapore
- Barasentosa Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Orica Australia Pty. Ltd.
- Lanco Infratech Ltd - India
- Ind-Barath Power Infra Limited - India
- Banpu Public Company Limited - Thailand
- Mintek Dendrill Indonesia
- Kapuas Tunggal Persada - Indonesia
- Uttam Galva Steels Limited - India
- Carbofer General Trading SA - India
- ASAPP Information Group - India
- Samtan Co., Ltd - South Korea
- Timah Investasi Mineral - Indoneisa
- Intertek Mineral Services - Indonesia
- Attock Cement Pakistan Limited
- Directorate General of MIneral and Coal - Indonesia
- Energy Link Ltd, New Zealand
- Orica Mining Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- OPG Power Generation Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Thai Mozambique Logistica
- Kartika Selabumi Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- The State Trading Corporation of India Ltd
- Grasim Industreis Ltd - India
- Dalmia Cement Bharat India
- Simpson Spence & Young - Indonesia
- Ministry of Mines - Canada
- Power Finance Corporation Ltd., India
- TeaM Sual Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Makarim & Taira - Indonesia
- GAC Shipping (India) Pvt Ltd
- Electricity Generating Authority of Thailand
- Bangladesh Power Developement Board
- Commonwealth Bank - Australia
- SN Aboitiz Power Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Indo Tambangraya Megah - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Siam City Cement - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Leighton Contractors Pty Ltd - Australia
- Sojitz Corporation - Japan
- GN Power Mariveles Coal Plant, Philippines
- VISA Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Marubeni Corporation - India
- San Jose City I Power Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Bahari Cakrawala Sebuku - Indonesia
- IEA Clean Coal Centre - UK
- Energy Development Corp, Philippines
- GMR Energy Limited - India
- Karaikal Port Pvt Ltd - India
- Renaissance Capital - South Africa
- Rio Tinto Coal - Australia
- Gujarat Mineral Development Corp Ltd - India
- Sakthi Sugars Limited - India
- Riau Bara Harum - Indonesia
- Bulk Trading Sa - Switzerland
- IHS Mccloskey Coal Group - USA
- Borneo Indobara - Indonesia
- Larsen & Toubro Limited - India
- New Zealand Coal & Carbon
- Bhushan Steel Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Global Business Power Corporation, Philippines
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- PowerSource Philippines DevCo
- Central Java Power - Indonesia
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