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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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- Economic Council, Georgia
- SMG Consultants - Indonesia
- Meenaskhi Energy Private Limited - India
- Meralco Power Generation, Philippines
- Bukit Makmur.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Bangladesh Power Developement Board
- Independent Power Producers Association of India
- Billiton Holdings Pty Ltd - Australia
- McConnell Dowell - Australia
- Sojitz Corporation - Japan
- Gujarat Electricity Regulatory Commission - India
- Kapuas Tunggal Persada - Indonesia
- Romanian Commodities Exchange
- South Luzon Thermal Energy Corporation
- Orica Mining Services - Indonesia
- Straits Asia Resources Limited - Singapore
- IHS Mccloskey Coal Group - USA
- Tata Chemicals Ltd - India
- PowerSource Philippines DevCo
- Jorong Barutama Greston.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Uttam Galva Steels Limited - India
- Indian Oil Corporation Limited
- Grasim Industreis Ltd - India
- Oldendorff Carriers - Singapore
- Trasteel International SA, Italy
- Chamber of Mines of South Africa
- Parry Sugars Refinery, India
- Eastern Coal Council - USA
- Bukit Asam (Persero) Tbk - Indonesia
- VISA Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- GVK Power & Infra Limited - India
- Latin American Coal - Colombia
- LBH Netherlands Bv - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Carbofer General Trading SA - India
- Mercator Lines Limited - India
- Rio Tinto Coal - Australia
- PNOC Exploration Corporation - Philippines
- Standard Chartered Bank - UAE
- Alfred C Toepfer International GmbH - Germany
- Kumho Petrochemical, South Korea
- Port Waratah Coal Services - Australia
- Bhoruka Overseas - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- White Energy Company Limited
- Merrill Lynch Commodities Europe
- Power Finance Corporation Ltd., India
- Singapore Mercantile Exchange
- Bhatia International Limited - India
- Indika Energy - Indonesia
- Petron Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Timah Investasi Mineral - Indoneisa
- Wood Mackenzie - Singapore
- Cement Manufacturers Association - India
- Manunggal Multi Energi - Indonesia
- Bhushan Steel Limited - India
- SMC Global Power, Philippines
- Siam City Cement PLC, Thailand
- Tamil Nadu electricity Board
- Globalindo Alam Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- The Treasury - Australian Government
- Coastal Gujarat Power Limited - India
- European Bulk Services B.V. - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Mercuria Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Australian Commodity Traders Exchange
- Aditya Birla Group - India
- TNB Fuel Sdn Bhd - Malaysia
- Thiess Contractors Indonesia
- Kepco SPC Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Bayan Resources Tbk. - Indonesia
- Maheswari Brothers Coal Limited - India
- Wilmar Investment Holdings
- Leighton Contractors Pty Ltd - Australia
- Orica Australia Pty. Ltd.
- Central Java Power - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Georgia Ports Authority, United States
- Central Electricity Authority - India
- Ministry of Mines - Canada
- Savvy Resources Ltd - HongKong
- Asmin Koalindo Tuhup - Indonesia
- Goldman Sachs - Singapore
- Dalmia Cement Bharat India
- Larsen & Toubro Limited - India
- Price Waterhouse Coopers - Russia
- Interocean Group of Companies - India
- Global Green Power PLC Corporation, Philippines
- Global Business Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Madhucon Powers Ltd - India
- ICICI Bank Limited - India
- Sindya Power Generating Company Private Ltd
- Kartika Selabumi Mining - Indonesia
- Energy Development Corp, Philippines
- London Commodity Brokers - England
- Borneo Indobara - Indonesia
- Planning Commission, India
- The State Trading Corporation of India Ltd
- Coalindo Energy - Indonesia
- Attock Cement Pakistan Limited
- Salva Resources Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- San Jose City I Power Corp, Philippines
- Gujarat Sidhee Cement - India
- New Zealand Coal & Carbon
- Minerals Council of Australia
- Semirara Mining and Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Essar Steel Hazira Ltd - India
- Toyota Tsusho Corporation, Japan
- GMR Energy Limited - India
- MS Steel International - UAE
- Chettinad Cement Corporation Ltd - India
- Pendopo Energi Batubara - Indonesia
- Metalloyd Limited - United Kingdom
- Jaiprakash Power Ventures ltd
- Kideco Jaya Agung - Indonesia
- Ambuja Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Energy - Thailand
- GAC Shipping (India) Pvt Ltd
- Coal and Oil Company - UAE
- Simpson Spence & Young - Indonesia
- Kobexindo Tractors - Indoneisa
- Binh Thuan Hamico - Vietnam
- Holcim Trading Pte Ltd - Singapore
- Krishnapatnam Port Company Ltd. - India
- PetroVietnam Power Coal Import and Supply Company
- Electricity Authority, New Zealand
- ASAPP Information Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Energy Link Ltd, New Zealand
- Posco Energy - South Korea
- Indogreen Group - Indonesia
- Siam City Cement - Thailand
- Bharathi Cement Corporation - India
- Barasentosa Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- The University of Queensland
- Lanco Infratech Ltd - India
- Deloitte Consulting - India
- Sical Logistics Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Finance - Indonesia
- AsiaOL BioFuels Corp., Philippines
- PTC India Limited - India
- Indonesian Coal Mining Association
- Iligan Light & Power Inc, Philippines
- CNBM International Corporation - China
- Mintek Dendrill Indonesia
- Global Coal Blending Company Limited - Australia
- Makarim & Taira - Indonesia
- Thai Mozambique Logistica
- Antam Resourcindo - Indonesia
- Commonwealth Bank - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Aboitiz Power Corporation - Philippines
- Mjunction Services Limited - India
- Edison Trading Spa - Italy
- Formosa Plastics Group - Taiwan
- Vedanta Resources Plc - India
- Directorate Of Revenue Intelligence - India
- Therma Luzon, Inc, Philippines
- Renaissance Capital - South Africa
- Parliament of New Zealand
- Semirara Mining Corp, Philippines
- India Bulls Power Limited - India
- Sarangani Energy Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Medco Energi Mining Internasional
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indo Tambangraya Megah - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- Agrawal Coal Company - India
- Kaltim Prima Coal - Indonesia
- CIMB Investment Bank - Malaysia
- Heidelberg Cement - Germany
- Xindia Steels Limited - India
- Sakthi Sugars Limited - India
- Ministry of Transport, Egypt
- Videocon Industries ltd - India
- Indian Energy Exchange, India
- Marubeni Corporation - India
- Australian Coal Association
- Rashtriya Ispat Nigam Limited - India
- Vizag Seaport Private Limited - India
- Samtan Co., Ltd - South Korea
- Star Paper Mills Limited - India
- Riau Bara Harum - Indonesia
- Electricity Generating Authority of Thailand
- Altura Mining Limited, Indonesia
- Bulk Trading Sa - Switzerland
- Baramulti Group, Indonesia
- Jindal Steel & Power Ltd - India
- IEA Clean Coal Centre - UK
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- International Coal Ventures Pvt Ltd - India
- Anglo American - United Kingdom
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