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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, 12 September 13
PANAMAX : PACIFIC ROUNDS ARE NOW REPORTED BETWEEN USD 13K AND 15K PER DAY - FEARNRESEARCH
Handy
Nickel ore is a key support SE Asia/Feast rate at the moment; vessel in N.China were fixed around USD 11-12k, ships in mid China can expect a ...
Thursday, 12 September 13
CAPESIZE MARKET WILL BECOME EVEN TIGHTER - JEFFREY LANDSBERG
COALspot.com : While it is no secret that current capesize availability has become tight and has caused capesize rates to surge, availability is set ...
Thursday, 12 September 13
OVER THE WORST? WE MIGHT FIND OUT THIS WEEK - BIMCO
The shipping market has a spring in its step, even as summer draws to a close. There is it seems, confidence that finally, we are emerging into the ...
Thursday, 12 September 13
DRY BULK MARKET RALLY COMES AT A GOOD TIME FOR MOST SHIP OWNERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The latest surge of the dry bulk market has helped offset other lingering factors, which otherwise, could have plunged freight rates to new lows. Fo ...
Wednesday, 11 September 13
ASIA - PACIFIC THERMAL COAL MARKET TO REMAIN OVERSUPPLIED IN NEXT 12 MONTHS - FITCH RATINGS
COALspot.com: Fitch Ratings says the Asia-Pacific thermal coal market will remain oversupplied in the next 12 months because strong production has b ...
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- Gujarat Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- Tamil Nadu electricity Board
- Neyveli Lignite Corporation Ltd, - India
- Sinarmas Energy and Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Mercuria Energy - Indonesia
- Coalindo Energy - Indonesia
- Bharathi Cement Corporation - India
- Ministry of Finance - Indonesia
- Indian Oil Corporation Limited
- Maheswari Brothers Coal Limited - India
- Edison Trading Spa - Italy
- IEA Clean Coal Centre - UK
- Wilmar Investment Holdings
- Renaissance Capital - South Africa
- Ind-Barath Power Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Australian Coal Association
- Rashtriya Ispat Nigam Limited - India
- The University of Queensland
- Indo Tambangraya Megah - Indonesia
- Merrill Lynch Commodities Europe
- Gujarat Sidhee Cement - India
- Antam Resourcindo - Indonesia
- Savvy Resources Ltd - HongKong
- Central Electricity Authority - India
- Chettinad Cement Corporation Ltd - India
- Parry Sugars Refinery, India
- GVK Power & Infra Limited - India
- Siam City Cement - Thailand
- White Energy Company Limited
- Bangladesh Power Developement Board
- Deloitte Consulting - India
- International Coal Ventures Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Central Java Power - Indonesia
- Africa Commodities Group - South Africa
- Therma Luzon, Inc, Philippines
- Trasteel International SA, Italy
- Manunggal Multi Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Metalloyd Limited - United Kingdom
- PowerSource Philippines DevCo
- South Luzon Thermal Energy Corporation
- Standard Chartered Bank - UAE
- Star Paper Mills Limited - India
- Borneo Indobara - Indonesia
- CNBM International Corporation - China
- Goldman Sachs - Singapore
- Krishnapatnam Port Company Ltd. - India
- AsiaOL BioFuels Corp., Philippines
- Alfred C Toepfer International GmbH - Germany
- Commonwealth Bank - Australia
- Dalmia Cement Bharat India
- Marubeni Corporation - India
- Sindya Power Generating Company Private Ltd
- Riau Bara Harum - Indonesia
- The State Trading Corporation of India Ltd
- Semirara Mining Corp, Philippines
- Australian Commodity Traders Exchange
- India Bulls Power Limited - India
- Bhatia International Limited - India
- Semirara Mining and Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- PTC India Limited - India
- Xindia Steels Limited - India
- SMG Consultants - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- GMR Energy Limited - India
- European Bulk Services B.V. - Netherlands
- Mercator Lines Limited - India
- Essar Steel Hazira Ltd - India
- Orica Mining Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Ambuja Cements Ltd - India
- Rio Tinto Coal - Australia
- Indika Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Salva Resources Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Sical Logistics Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Energy Link Ltd, New Zealand
- Parliament of New Zealand
- Altura Mining Limited, Indonesia
- Bukit Baiduri Energy - Indonesia
- Carbofer General Trading SA - India
- Heidelberg Cement - Germany
- Petron Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Videocon Industries ltd - India
- LBH Netherlands Bv - Netherlands
- OPG Power Generation Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- SN Aboitiz Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Malabar Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Kideco Jaya Agung - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Jaiprakash Power Ventures ltd
- New Zealand Coal & Carbon
- Indian Energy Exchange, India
- Interocean Group of Companies - India
- Oldendorff Carriers - Singapore
- Energy Development Corp, Philippines
- Makarim & Taira - Indonesia
- Independent Power Producers Association of India
- Straits Asia Resources Limited - Singapore
- Electricity Generating Authority of Thailand
- Meralco Power Generation, Philippines
- GAC Shipping (India) Pvt Ltd
- The Treasury - Australian Government
- McConnell Dowell - Australia
- Formosa Plastics Group - Taiwan
- Global Green Power PLC Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Bhoruka Overseas - Indonesia
- Iligan Light & Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Energy - Thailand
- Singapore Mercantile Exchange
- Georgia Ports Authority, United States
- Bukit Makmur.PT - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Thai Mozambique Logistica
- Uttam Galva Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Jindal Steel & Power Ltd - India
- Eastern Coal Council - USA
- Globalindo Alam Lestari - Indonesia
- Aditya Birla Group - India
- Sojitz Corporation - Japan
- Billiton Holdings Pty Ltd - Australia
- Cement Manufacturers Association - India
- Siam City Cement PLC, Thailand
- ICICI Bank Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Thiess Contractors Indonesia
- IHS Mccloskey Coal Group - USA
- Attock Cement Pakistan Limited
- Coal and Oil Company - UAE
- Ministry of Mines - Canada
- Bank of Tokyo Mitsubishi UFJ Ltd
- Anglo American - United Kingdom
- Simpson Spence & Young - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Toyota Tsusho Corporation, Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sakthi Sugars Limited - India
- Tata Chemicals Ltd - India
- Global Business Power Corporation, Philippines
- London Commodity Brokers - England
- Asmin Koalindo Tuhup - Indonesia
- Port Waratah Coal Services - Australia
- Pendopo Energi Batubara - Indonesia
- Directorate Of Revenue Intelligence - India
- Mintek Dendrill Indonesia
- VISA Power Limited - India
- Grasim Industreis Ltd - India
- MS Steel International - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ASAPP Information Group - India
- Mjunction Services Limited - India
- Romanian Commodities Exchange
- Electricity Authority, New Zealand
- CIMB Investment Bank - Malaysia
- Offshore Bulk Terminal Pte Ltd, Singapore
- PetroVietnam Power Coal Import and Supply Company
- Indogreen Group - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Chamber of Mines of South Africa
- Holcim Trading Pte Ltd - Singapore
- Cigading International Bulk Terminal - Indonesia
- Wood Mackenzie - Singapore
- Leighton Contractors Pty Ltd - Australia
- Planning Commission, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Madhucon Powers Ltd - India
- Orica Australia Pty. Ltd.
- Larsen & Toubro Limited - India
- Power Finance Corporation Ltd., India
- Ministry of Transport, Egypt
- SMC Global Power, Philippines
- Sree Jayajothi Cements Limited - India
- Kartika Selabumi Mining - Indonesia
- Vedanta Resources Plc - India
- Sarangani Energy Corporation, Philippines
- Indonesian Coal Mining Association
- Kaltim Prima Coal - Indonesia
- Posco Energy - South Korea
- Kobexindo Tractors - Indoneisa
- Price Waterhouse Coopers - Russia
- Baramulti Group, Indonesia
- Lanco Infratech Ltd - India
- Medco Energi Mining Internasional
- Binh Thuan Hamico - Vietnam
- Minerals Council of Australia
- Economic Council, Georgia
- Bulk Trading Sa - Switzerland
- PNOC Exploration Corporation - Philippines
- Bhushan Steel Limited - India
- Kohat Cement Company Ltd. - Pakistan
- GN Power Mariveles Coal Plant, Philippines
- Directorate General of MIneral and Coal - Indonesia
- TeaM Sual Corporation - Philippines
- Latin American Coal - Colombia
- Intertek Mineral Services - Indonesia
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