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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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Monday, 16 September 13
CFR SOUTH CHINA COAL SWAP: STABLE TO STEADY
COALspot.com : SGX has launched API 8 CFR South China Coal Swap on 29 April 2013 and SGX replaced the previous swap.
API 8 CFR South China Coal s ...
Monday, 16 September 13
INDONESIAN SUB-BIT COAL SWAP STRUGGLING TO FINDS THE RIGHT PATH
COALspot.com – Sub-Bit Indonesia coal swap (FOB ) for average Q4 2013 delivery down 0.75 percept month on month on Friday 13 Septe ...
Sunday, 15 September 13
CAPE FREIGHT RATES RISE ON HIGH DEMAND AND TIGHT AVAILABILITY - CAPT. REDDY
COALspot.com : The BDI, Cape and Panamax indices are continued to rise and saw a steep surge with average index in these segments up around 25 pct w ...
Friday, 13 September 13
US COAL OUTPUT SLIPS 3.34% ON-WEEK
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 20.20 million short tons (mmst) of ...
Friday, 13 September 13
DIRECTOR GENERAL OF MINERAL AND COAL OF INDONESIA REVISED UP COAL PRICE REFERENCE TO US$ 76.89
COALspot. com - The Indonesian government has revised up its owned coal bench mark price by US$ 0.19/ MT to US$ 76.89 for September 2013 deliveries ...
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- Mintek Dendrill Indonesia
- Africa Commodities Group - South Africa
- Interocean Group of Companies - India
- Samtan Co., Ltd - South Korea
- Jindal Steel & Power Ltd - India
- Bhushan Steel Limited - India
- Kalimantan Lumbung Energi - Indonesia
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- Sojitz Corporation - Japan
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- Savvy Resources Ltd - HongKong
- Global Coal Blending Company Limited - Australia
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- Mercator Lines Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Manunggal Multi Energi - Indonesia
- Siam City Cement - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- White Energy Company Limited
- SMG Consultants - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- Edison Trading Spa - Italy
- SMC Global Power, Philippines
- Essar Steel Hazira Ltd - India
- Parliament of New Zealand
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- Neyveli Lignite Corporation Ltd, - India
- Electricity Authority, New Zealand
- Australian Coal Association
- Metalloyd Limited - United Kingdom
- Merrill Lynch Commodities Europe
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- Mjunction Services Limited - India
- Riau Bara Harum - Indonesia
- Central Java Power - Indonesia
- Siam City Cement PLC, Thailand
- Lanco Infratech Ltd - India
- Bukit Makmur.PT - Indonesia
- Parry Sugars Refinery, India
- Anglo American - United Kingdom
- Australian Commodity Traders Exchange
- Borneo Indobara - Indonesia
- Agrawal Coal Company - India
- Cigading International Bulk Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Thai Mozambique Logistica
- Georgia Ports Authority, United States
- Ministry of Finance - Indonesia
- Economic Council, Georgia
- Meralco Power Generation, Philippines
- The Treasury - Australian Government
- Jaiprakash Power Ventures ltd
- Chettinad Cement Corporation Ltd - India
- LBH Netherlands Bv - Netherlands
- San Jose City I Power Corp, Philippines
- CIMB Investment Bank - Malaysia
- Medco Energi Mining Internasional
- Cement Manufacturers Association - India
- Tata Chemicals Ltd - India
- Maheswari Brothers Coal Limited - India
- VISA Power Limited - India
- Energy Development Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- London Commodity Brokers - England
- McConnell Dowell - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Madhucon Powers Ltd - India
- GAC Shipping (India) Pvt Ltd
- Ministry of Mines - Canada
- The University of Queensland
- Bangladesh Power Developement Board
- Banpu Public Company Limited - Thailand
- European Bulk Services B.V. - Netherlands
- Heidelberg Cement - Germany
- New Zealand Coal & Carbon
- Vedanta Resources Plc - India
- Kapuas Tunggal Persada - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tamil Nadu electricity Board
- Larsen & Toubro Limited - India
- Uttam Galva Steels Limited - India
- Coalindo Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Minerals Council of Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Latin American Coal - Colombia
- Marubeni Corporation - India
- India Bulls Power Limited - India
- Renaissance Capital - South Africa
- Miang Besar Coal Terminal - Indonesia
- PowerSource Philippines DevCo
- Vizag Seaport Private Limited - India
- Therma Luzon, Inc, Philippines
- Power Finance Corporation Ltd., India
- Orica Australia Pty. Ltd.
- Simpson Spence & Young - Indonesia
- Baramulti Group, Indonesia
- Kartika Selabumi Mining - Indonesia
- Kobexindo Tractors - Indoneisa
- Ministry of Transport, Egypt
- Carbofer General Trading SA - India
- Wilmar Investment Holdings
- Mercuria Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Indika Energy - Indonesia
- Commonwealth Bank - Australia
- GVK Power & Infra Limited - India
- Sakthi Sugars Limited - India
- Sree Jayajothi Cements Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Barasentosa Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- ASAPP Information Group - India
- Ind-Barath Power Infra Limited - India
- Star Paper Mills Limited - India
- Sindya Power Generating Company Private Ltd
- TeaM Sual Corporation - Philippines
- Orica Mining Services - Indonesia
- Intertek Mineral Services - Indonesia
- International Coal Ventures Pvt Ltd - India
- Independent Power Producers Association of India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Toyota Tsusho Corporation, Japan
- Karbindo Abesyapradhi - Indoneisa
- Rio Tinto Coal - Australia
- Bayan Resources Tbk. - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Rashtriya Ispat Nigam Limited - India
- Salva Resources Pvt Ltd - India
- Romanian Commodities Exchange
- Central Electricity Authority - India
- Videocon Industries ltd - India
- Indian Energy Exchange, India
- Bhatia International Limited - India
- Goldman Sachs - Singapore
- The State Trading Corporation of India Ltd
- ICICI Bank Limited - India
- Indian Oil Corporation Limited
- South Luzon Thermal Energy Corporation
- IEA Clean Coal Centre - UK
- Krishnapatnam Port Company Ltd. - India
- Binh Thuan Hamico - Vietnam
- Semirara Mining Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Sical Logistics Limited - India
- OPG Power Generation Pvt Ltd - India
- Indonesian Coal Mining Association
- Dalmia Cement Bharat India
- Oldendorff Carriers - Singapore
- Altura Mining Limited, Indonesia
- Posco Energy - South Korea
- Xindia Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- Thiess Contractors Indonesia
- IHS Mccloskey Coal Group - USA
- Holcim Trading Pte Ltd - Singapore
- MS Steel International - UAE
- Antam Resourcindo - Indonesia
- Meenaskhi Energy Private Limited - India
- Pendopo Energi Batubara - Indonesia
- Global Green Power PLC Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- Indo Tambangraya Megah - Indonesia
- Eastern Energy - Thailand
- Bulk Trading Sa - Switzerland
- Bhoruka Overseas - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Planning Commission, India
- CNBM International Corporation - China
- Bukit Asam (Persero) Tbk - Indonesia
- Deloitte Consulting - India
- Grasim Industreis Ltd - India
- Petron Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Generating Authority of Thailand
- Directorate Of Revenue Intelligence - India
- Singapore Mercantile Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- Trasteel International SA, Italy
- Global Business Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Indogreen Group - Indonesia
- Bharathi Cement Corporation - India
- Gujarat Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Attock Cement Pakistan Limited
- Malabar Cements Ltd - India
- Kumho Petrochemical, South Korea
- GMR Energy Limited - India
- AsiaOL BioFuels Corp., Philippines
- Gujarat Sidhee Cement - India
- Energy Link Ltd, New Zealand
- PNOC Exploration Corporation - Philippines
- Wood Mackenzie - Singapore
- Formosa Plastics Group - Taiwan
- Kideco Jaya Agung - Indonesia
- Standard Chartered Bank - UAE
- Kohat Cement Company Ltd. - Pakistan
- Aditya Birla Group - India
- Coal and Oil Company - UAE
- Port Waratah Coal Services - Australia
- Makarim & Taira - Indonesia
- Kepco SPC Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Chamber of Mines of South Africa
- Eastern Coal Council - USA
- Price Waterhouse Coopers - Russia
- PetroVietnam Power Coal Import and Supply Company
- Offshore Bulk Terminal Pte Ltd, Singapore
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