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