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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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Friday, 27 September 13
TAIWAN'S FORMOSA TO IMPORT 140K MT OF BITUMINOUS COAL FOR Q4
COALspot.com : Taiwan's Formosa Plastics Group is inviting bids for 140,000 mt of bituminous coal for delivery in the Q4 for its China plant.
Ac ...
Friday, 27 September 13
CAPESIZES REGAINING PART OF THEIR FORMER GLORY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The latest dry bulk market rally has been nothing short of spectacular, with freight rates more than doubling over the past few weeks. This growth h ...
Friday, 27 September 13
US PRODUCED 19.30 MMST OF COAL IN SEVEN DAYS
COALspot.com – United States the world’s second largest coal producer produced approximately 19.30 million short tons (mmst) of coal in ...
Thursday, 26 September 13
PANAMAX MARKET CONTINUE WITH STRONG RATES IN BOTH BASINS - FEARNRESEARCH
Handy
Feast rates are still firm, some fresh stems entered the market. Vessels trading around $15k passing Singapore for coal to India, and a bit l ...
Thursday, 26 September 13
INTERCARGO PUBLISHES BENCHMARKING BULK CARRIERS 2012-13 REPORT
The International Association of Dry Cargo Shipowners (Intercargo) has today launched Benchmarking Bulk Carriers 2012-13, the latest edition of our ...
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- Mercator Lines Limited - India
- Africa Commodities Group - South Africa
- Sree Jayajothi Cements Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Australia Pty. Ltd.
- Bulk Trading Sa - Switzerland
- Larsen & Toubro Limited - India
- Eastern Coal Council - USA
- Semirara Mining and Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Rio Tinto Coal - Australia
- GN Power Mariveles Coal Plant, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Coalindo Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- New Zealand Coal & Carbon
- Power Finance Corporation Ltd., India
- Sical Logistics Limited - India
- Krishnapatnam Port Company Ltd. - India
- Samtan Co., Ltd - South Korea
- Semirara Mining Corp, Philippines
- Thiess Contractors Indonesia
- Sojitz Corporation - Japan
- Neyveli Lignite Corporation Ltd, - India
- Parliament of New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- ICICI Bank Limited - India
- Independent Power Producers Association of India
- McConnell Dowell - Australia
- Gujarat Electricity Regulatory Commission - India
- Anglo American - United Kingdom
- Formosa Plastics Group - Taiwan
- Rashtriya Ispat Nigam Limited - India
- Directorate Of Revenue Intelligence - India
- The State Trading Corporation of India Ltd
- Meralco Power Generation, Philippines
- Metalloyd Limited - United Kingdom
- Essar Steel Hazira Ltd - India
- Standard Chartered Bank - UAE
- Goldman Sachs - Singapore
- Malabar Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- Videocon Industries ltd - India
- AsiaOL BioFuels Corp., Philippines
- GAC Shipping (India) Pvt Ltd
- Trasteel International SA, Italy
- Kohat Cement Company Ltd. - Pakistan
- Therma Luzon, Inc, Philippines
- TeaM Sual Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Indonesian Coal Mining Association
- Central Java Power - Indonesia
- Iligan Light & Power Inc, Philippines
- Attock Cement Pakistan Limited
- Energy Development Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Cement Manufacturers Association - India
- Aboitiz Power Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Grasim Industreis Ltd - India
- Eastern Energy - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indogreen Group - Indonesia
- Australian Coal Association
- Commonwealth Bank - Australia
- Central Electricity Authority - India
- Baramulti Group, Indonesia
- Ministry of Transport, Egypt
- Indo Tambangraya Megah - Indonesia
- Karaikal Port Pvt Ltd - India
- Ministry of Mines - Canada
- Marubeni Corporation - India
- CIMB Investment Bank - Malaysia
- Bhoruka Overseas - Indonesia
- South Luzon Thermal Energy Corporation
- Petron Corporation, Philippines
- Borneo Indobara - Indonesia
- Bukit Makmur.PT - Indonesia
- Wilmar Investment Holdings
- Vedanta Resources Plc - India
- PowerSource Philippines DevCo
- IEA Clean Coal Centre - UK
- Edison Trading Spa - Italy
- Holcim Trading Pte Ltd - Singapore
- Electricity Authority, New Zealand
- Georgia Ports Authority, United States
- SMC Global Power, Philippines
- Parry Sugars Refinery, India
- Merrill Lynch Commodities Europe
- Altura Mining Limited, Indonesia
- Indian Oil Corporation Limited
- Salva Resources Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- PTC India Limited - India
- Bhatia International Limited - India
- Bhushan Steel Limited - India
- Interocean Group of Companies - India
- Meenaskhi Energy Private Limited - India
- Australian Commodity Traders Exchange
- Port Waratah Coal Services - Australia
- Posco Energy - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- White Energy Company Limited
- Leighton Contractors Pty Ltd - Australia
- Mercuria Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Chamber of Mines of South Africa
- Sakthi Sugars Limited - India
- LBH Netherlands Bv - Netherlands
- Mintek Dendrill Indonesia
- Medco Energi Mining Internasional
- Mjunction Services Limited - India
- Kepco SPC Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Coastal Gujarat Power Limited - India
- The Treasury - Australian Government
- Agrawal Coal Company - India
- OPG Power Generation Pvt Ltd - India
- Star Paper Mills Limited - India
- Tamil Nadu electricity Board
- Energy Link Ltd, New Zealand
- Barasentosa Lestari - Indonesia
- Minerals Council of Australia
- Ind-Barath Power Infra Limited - India
- Oldendorff Carriers - Singapore
- Ceylon Electricity Board - Sri Lanka
- Price Waterhouse Coopers - Russia
- Madhucon Powers Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Kobexindo Tractors - Indoneisa
- Singapore Mercantile Exchange
- Economic Council, Georgia
- IHS Mccloskey Coal Group - USA
- Bharathi Cement Corporation - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CNBM International Corporation - China
- Alfred C Toepfer International GmbH - Germany
- Gujarat Sidhee Cement - India
- Makarim & Taira - Indonesia
- Heidelberg Cement - Germany
- Global Green Power PLC Corporation, Philippines
- Simpson Spence & Young - Indonesia
- European Bulk Services B.V. - Netherlands
- GMR Energy Limited - India
- Siam City Cement - Thailand
- Global Business Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Bangladesh Power Developement Board
- Globalindo Alam Lestari - Indonesia
- Kumho Petrochemical, South Korea
- Ambuja Cements Ltd - India
- Savvy Resources Ltd - HongKong
- Planning Commission, India
- Coal and Oil Company - UAE
- Kalimantan Lumbung Energi - Indonesia
- Romanian Commodities Exchange
- Carbofer General Trading SA - India
- Antam Resourcindo - Indonesia
- Pendopo Energi Batubara - Indonesia
- Riau Bara Harum - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Energy Exchange, India
- The University of Queensland
- Intertek Mineral Services - Indonesia
- MS Steel International - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Wood Mackenzie - Singapore
- San Jose City I Power Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Kaltim Prima Coal - Indonesia
- Thai Mozambique Logistica
- Renaissance Capital - South Africa
- Vizag Seaport Private Limited - India
- SMG Consultants - Indonesia
- Bukit Baiduri Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Indika Energy - Indonesia
- Aditya Birla Group - India
- Binh Thuan Hamico - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- London Commodity Brokers - England
- Lanco Infratech Ltd - India
- Dalmia Cement Bharat India
- Electricity Generating Authority of Thailand
- Latin American Coal - Colombia
- VISA Power Limited - India
- GVK Power & Infra Limited - India
- Ministry of Finance - Indonesia
- Manunggal Multi Energi - Indonesia
- Tata Chemicals Ltd - India
- Uttam Galva Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Deloitte Consulting - India
- Gujarat Mineral Development Corp Ltd - India
- Kideco Jaya Agung - Indonesia
- Jaiprakash Power Ventures ltd
- PNOC Exploration Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Xindia Steels Limited - India
- Sarangani Energy Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Orica Mining Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- ASAPP Information Group - India
- Siam City Cement PLC, Thailand
- Banpu Public Company Limited - Thailand
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