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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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Thursday, 03 October 13
INDONESIA AUGUST COAL EXPORTS FALL 12.90 % FROM JULY TO 30.71 MIL MT
COALspot.com: Indonesia, the 15th largest economy in world, 4th largest coal producer in world and world's largest multi grade coal exporter ...
Thursday, 03 October 13
TOP FOUR U.S. COAL COMPANIES SUPPLIED MORE THAN HALF OF U.S. COAL PRODUCTION IN 2011 - EIA
In the past two years, more than half of U.S. coal production was attributable to the top four coal producers, the result of changes in regional pro ...
Thursday, 03 October 13
HANDY: PERIOD MARKET STAND IN GOOD POSITION - FEARNRESEARCH
Handy
Nickel ore and Bauxite was active last week but slowed down now due to Chinese holidays. Ships opened in North China fixed at US$ 11-13k leve ...
Wednesday, 02 October 13
DRY BULK MARKET IS STILL MAINTAINING ITS UPWARD DIRECTION
Chartering (Wet: Stable- / Dry: Firm+)
Despite the fact that rates for Capes didn't continue their crazy ride this past week, the Dry Bulk market ...
Wednesday, 02 October 13
HOW LONG WILL THIS LATEST CAPESIZE RALLY LAST? - TASOS PAPADOPOULOS
By Tasos Papadopoulos, SnP Broker, Intermodal
The surge in iron ore trade has translated into a massive boost in daily earnings for capes; with t ...
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- Electricity Generating Authority of Thailand
- Orica Mining Services - Indonesia
- McConnell Dowell - Australia
- Gujarat Mineral Development Corp Ltd - India
- The Treasury - Australian Government
- Miang Besar Coal Terminal - Indonesia
- Central Java Power - Indonesia
- Indika Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Makarim & Taira - Indonesia
- Wilmar Investment Holdings
- Binh Thuan Hamico - Vietnam
- PetroVietnam Power Coal Import and Supply Company
- Iligan Light & Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Indo Tambangraya Megah - Indonesia
- CNBM International Corporation - China
- Malabar Cements Ltd - India
- Rio Tinto Coal - Australia
- Eastern Energy - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Banpu Public Company Limited - Thailand
- Goldman Sachs - Singapore
- Siam City Cement - Thailand
- Antam Resourcindo - Indonesia
- India Bulls Power Limited - India
- IEA Clean Coal Centre - UK
- Bayan Resources Tbk. - Indonesia
- Carbofer General Trading SA - India
- Ambuja Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- European Bulk Services B.V. - Netherlands
- CIMB Investment Bank - Malaysia
- London Commodity Brokers - England
- Alfred C Toepfer International GmbH - Germany
- Merrill Lynch Commodities Europe
- Sakthi Sugars Limited - India
- Central Electricity Authority - India
- Bhatia International Limited - India
- Formosa Plastics Group - Taiwan
- Thiess Contractors Indonesia
- Orica Australia Pty. Ltd.
- Power Finance Corporation Ltd., India
- Chettinad Cement Corporation Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Independent Power Producers Association of India
- Petrochimia International Co. Ltd.- Taiwan
- Semirara Mining Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Aboitiz Power Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- Ministry of Finance - Indonesia
- Kapuas Tunggal Persada - Indonesia
- ICICI Bank Limited - India
- AsiaOL BioFuels Corp., Philippines
- Pendopo Energi Batubara - Indonesia
- Larsen & Toubro Limited - India
- Toyota Tsusho Corporation, Japan
- Intertek Mineral Services - Indonesia
- Commonwealth Bank - Australia
- Interocean Group of Companies - India
- Thai Mozambique Logistica
- LBH Netherlands Bv - Netherlands
- PTC India Limited - India
- Sarangani Energy Corporation, Philippines
- Parliament of New Zealand
- SMC Global Power, Philippines
- Energy Link Ltd, New Zealand
- Kobexindo Tractors - Indoneisa
- Therma Luzon, Inc, Philippines
- Ministry of Mines - Canada
- Uttam Galva Steels Limited - India
- Lanco Infratech Ltd - India
- Siam City Cement PLC, Thailand
- Neyveli Lignite Corporation Ltd, - India
- Bangladesh Power Developement Board
- South Luzon Thermal Energy Corporation
- Jorong Barutama Greston.PT - Indonesia
- Essar Steel Hazira Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Meralco Power Generation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Trasteel International SA, Italy
- Maheswari Brothers Coal Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Renaissance Capital - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Savvy Resources Ltd - HongKong
- Simpson Spence & Young - Indonesia
- Bharathi Cement Corporation - India
- International Coal Ventures Pvt Ltd - India
- Australian Coal Association
- GMR Energy Limited - India
- Krishnapatnam Port Company Ltd. - India
- Economic Council, Georgia
- New Zealand Coal & Carbon
- Global Green Power PLC Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- ASAPP Information Group - India
- Timah Investasi Mineral - Indoneisa
- Coalindo Energy - Indonesia
- MS Steel International - UAE
- Ceylon Electricity Board - Sri Lanka
- Kaltim Prima Coal - Indonesia
- Mercator Lines Limited - India
- Indian Oil Corporation Limited
- Grasim Industreis Ltd - India
- Chamber of Mines of South Africa
- The University of Queensland
- Holcim Trading Pte Ltd - Singapore
- Indian Energy Exchange, India
- Star Paper Mills Limited - India
- Parry Sugars Refinery, India
- Coastal Gujarat Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kartika Selabumi Mining - Indonesia
- Tamil Nadu electricity Board
- Sinarmas Energy and Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Indonesian Coal Mining Association
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Dalmia Cement Bharat India
- Cement Manufacturers Association - India
- Kumho Petrochemical, South Korea
- Africa Commodities Group - South Africa
- Oldendorff Carriers - Singapore
- Agrawal Coal Company - India
- Planning Commission, India
- Standard Chartered Bank - UAE
- Leighton Contractors Pty Ltd - Australia
- Bhushan Steel Limited - India
- Mintek Dendrill Indonesia
- Attock Cement Pakistan Limited
- Eastern Coal Council - USA
- Madhucon Powers Ltd - India
- Global Business Power Corporation, Philippines
- Electricity Authority, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhoruka Overseas - Indonesia
- Ministry of Transport, Egypt
- Xindia Steels Limited - India
- Edison Trading Spa - Italy
- Minerals Council of Australia
- TeaM Sual Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Price Waterhouse Coopers - Russia
- Directorate General of MIneral and Coal - Indonesia
- Marubeni Corporation - India
- Bukit Baiduri Energy - Indonesia
- Deloitte Consulting - India
- Riau Bara Harum - Indonesia
- Borneo Indobara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Coal and Oil Company - UAE
- Directorate Of Revenue Intelligence - India
- Straits Asia Resources Limited - Singapore
- Salva Resources Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Petron Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meenaskhi Energy Private Limited - India
- Australian Commodity Traders Exchange
- Gujarat Sidhee Cement - India
- PNOC Exploration Corporation - Philippines
- Sical Logistics Limited - India
- Aditya Birla Group - India
- Romanian Commodities Exchange
- Gujarat Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- Global Coal Blending Company Limited - Australia
- Vedanta Resources Plc - India
- OPG Power Generation Pvt Ltd - India
- Georgia Ports Authority, United States
- Medco Energi Mining Internasional
- Sojitz Corporation - Japan
- SMG Consultants - Indonesia
- The State Trading Corporation of India Ltd
- Bulk Trading Sa - Switzerland
- Karaikal Port Pvt Ltd - India
- Videocon Industries ltd - India
- Samtan Co., Ltd - South Korea
- Posco Energy - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Vizag Seaport Private Limited - India
- Singapore Mercantile Exchange
- GVK Power & Infra Limited - India
- VISA Power Limited - India
- Barasentosa Lestari - Indonesia
- Wood Mackenzie - Singapore
- Mercuria Energy - Indonesia
- Tata Chemicals Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Baramulti Group, Indonesia
- Manunggal Multi Energi - Indonesia
- Mjunction Services Limited - India
- Cigading International Bulk Terminal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Latin American Coal - Colombia
- Semirara Mining and Power Corporation, Philippines
- Anglo American - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Port Waratah Coal Services - Australia
- Kohat Cement Company Ltd. - Pakistan
- GN Power Mariveles Coal Plant, Philippines
- Altura Mining Limited, Indonesia
- Energy Development Corp, Philippines
- White Energy Company Limited
- PowerSource Philippines DevCo
- Heidelberg Cement - Germany
- Indogreen Group - Indonesia
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