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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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Sunday, 18 August 13
INDO - INDIA FREIGHT EXPECTED TO BE FIRM NEXT WEEK - VISTAAR
COALspot.com - The freight market was up this week with the BDI gaining more than 10 pct due to strong Cape Sector.
The BDI was closed at 1,102 p ...
Friday, 16 August 13
US COAL PRODUCTION SLIGHTLY UP ON WEEK
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 20.10 million short tons (mmst) of ...
Thursday, 15 August 13
CAPESIZE : TRENDS SOMETIMES SHIFT WITH NO PRIOR WARNING - FEARNRESEARCH
Handy
The influence of the summer holidays across Europe was felt in the Atlantic basin this week. Very little activity and a growing list of avail ...
Wednesday, 14 August 13
ANOTHER WEEK IN THE RED FOR DRY BULK CARRIERS - INTERMODAL
Chartering (Wet: Stable- / Dry: Stable- )
Another week in the red for Dry Bulk carriers with the market losing further steam as fewer an ...
Tuesday, 13 August 13
AUSTRALIA NEWCASTLE COAL EXPORTS JUMP 30.61 PERCENT ON WEEK
COALspot.com: Power plant and semi-soft coking coal shipments from Australia's Newcastle port up 30.61 per cent week on week to 2.95 million mt for ...
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- Pipit Mutiara Jaya. PT, Indonesia
- Port Waratah Coal Services - Australia
- Bulk Trading Sa - Switzerland
- Timah Investasi Mineral - Indoneisa
- Marubeni Corporation - India
- Lanco Infratech Ltd - India
- Mercator Lines Limited - India
- GVK Power & Infra Limited - India
- Ceylon Electricity Board - Sri Lanka
- Manunggal Multi Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Goldman Sachs - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Orica Australia Pty. Ltd.
- Bangladesh Power Developement Board
- Meenaskhi Energy Private Limited - India
- Wilmar Investment Holdings
- Electricity Generating Authority of Thailand
- Latin American Coal - Colombia
- Semirara Mining and Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Minerals Council of Australia
- Malabar Cements Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement PLC, Thailand
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- Karaikal Port Pvt Ltd - India
- Oldendorff Carriers - Singapore
- European Bulk Services B.V. - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Africa Commodities Group - South Africa
- Sakthi Sugars Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- India Bulls Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Sical Logistics Limited - India
- MS Steel International - UAE
- Posco Energy - South Korea
- Formosa Plastics Group - Taiwan
- Iligan Light & Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- Binh Thuan Hamico - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Gujarat Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- New Zealand Coal & Carbon
- Holcim Trading Pte Ltd - Singapore
- Kepco SPC Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Agrawal Coal Company - India
- Kobexindo Tractors - Indoneisa
- Edison Trading Spa - Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- Singapore Mercantile Exchange
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- Cigading International Bulk Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Sree Jayajothi Cements Limited - India
- OPG Power Generation Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Uttam Galva Steels Limited - India
- Barasentosa Lestari - Indonesia
- Trasteel International SA, Italy
- Indian Oil Corporation Limited
- Aboitiz Power Corporation - Philippines
- Samtan Co., Ltd - South Korea
- GAC Shipping (India) Pvt Ltd
- Parliament of New Zealand
- Planning Commission, India
- SN Aboitiz Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- LBH Netherlands Bv - Netherlands
- Maheswari Brothers Coal Limited - India
- Toyota Tsusho Corporation, Japan
- Bharathi Cement Corporation - India
- Madhucon Powers Ltd - India
- Tamil Nadu electricity Board
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thiess Contractors Indonesia
- Orica Mining Services - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Mercuria Energy - Indonesia
- Tata Chemicals Ltd - India
- Power Finance Corporation Ltd., India
- Commonwealth Bank - Australia
- Simpson Spence & Young - Indonesia
- Riau Bara Harum - Indonesia
- Economic Council, Georgia
- Petron Corporation, Philippines
- Ministry of Finance - Indonesia
- Star Paper Mills Limited - India
- McConnell Dowell - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coalindo Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Sarangani Energy Corporation, Philippines
- Sojitz Corporation - Japan
- IEA Clean Coal Centre - UK
- Interocean Group of Companies - India
- Bukit Makmur.PT - Indonesia
- Aditya Birla Group - India
- Bahari Cakrawala Sebuku - Indonesia
- Ind-Barath Power Infra Limited - India
- Renaissance Capital - South Africa
- The Treasury - Australian Government
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Romanian Commodities Exchange
- Videocon Industries ltd - India
- Price Waterhouse Coopers - Russia
- Mintek Dendrill Indonesia
- PetroVietnam Power Coal Import and Supply Company
- White Energy Company Limited
- Meralco Power Generation, Philippines
- SMG Consultants - Indonesia
- Banpu Public Company Limited - Thailand
- Medco Energi Mining Internasional
- VISA Power Limited - India
- Carbofer General Trading SA - India
- International Coal Ventures Pvt Ltd - India
- Cement Manufacturers Association - India
- Georgia Ports Authority, United States
- Ministry of Transport, Egypt
- Rio Tinto Coal - Australia
- Indogreen Group - Indonesia
- Kideco Jaya Agung - Indonesia
- Thai Mozambique Logistica
- San Jose City I Power Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Australian Commodity Traders Exchange
- Global Green Power PLC Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Electricity Authority, New Zealand
- Ministry of Mines - Canada
- PTC India Limited - India
- The State Trading Corporation of India Ltd
- Directorate General of MIneral and Coal - Indonesia
- Salva Resources Pvt Ltd - India
- ASAPP Information Group - India
- Kalimantan Lumbung Energi - Indonesia
- Larsen & Toubro Limited - India
- Bhushan Steel Limited - India
- Vedanta Resources Plc - India
- Miang Besar Coal Terminal - Indonesia
- Bhatia International Limited - India
- Energy Link Ltd, New Zealand
- Semirara Mining Corp, Philippines
- PowerSource Philippines DevCo
- Essar Steel Hazira Ltd - India
- Indo Tambangraya Megah - Indonesia
- Deloitte Consulting - India
- Independent Power Producers Association of India
- Therma Luzon, Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- ICICI Bank Limited - India
- Parry Sugars Refinery, India
- Borneo Indobara - Indonesia
- Sindya Power Generating Company Private Ltd
- SMC Global Power, Philippines
- Eastern Coal Council - USA
- Standard Chartered Bank - UAE
- IHS Mccloskey Coal Group - USA
- Xindia Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Ambuja Cements Ltd - India
- Kartika Selabumi Mining - Indonesia
- The University of Queensland
- Leighton Contractors Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- CNBM International Corporation - China
- Grasim Industreis Ltd - India
- Central Java Power - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Jindal Steel & Power Ltd - India
- Australian Coal Association
- Directorate Of Revenue Intelligence - India
- PNOC Exploration Corporation - Philippines
- Siam City Cement - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Makarim & Taira - Indonesia
- Indian Energy Exchange, India
- Bayan Resources Tbk. - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Central Electricity Authority - India
- London Commodity Brokers - England
- Krishnapatnam Port Company Ltd. - India
- Sinarmas Energy and Mining - Indonesia
- Global Business Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Mjunction Services Limited - India
- GMR Energy Limited - India
- Energy Development Corp, Philippines
- Gujarat Sidhee Cement - India
- Indika Energy - Indonesia
- Eastern Energy - Thailand
- Heidelberg Cement - Germany
- Kumho Petrochemical, South Korea
- GN Power Mariveles Coal Plant, Philippines
- Anglo American - United Kingdom
- Baramulti Group, Indonesia
- Pendopo Energi Batubara - Indonesia
- Straits Asia Resources Limited - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- South Luzon Thermal Energy Corporation
- Kaltim Prima Coal - Indonesia
- TeaM Sual Corporation - Philippines
- Coal and Oil Company - UAE
- Savvy Resources Ltd - HongKong
- Merrill Lynch Commodities Europe
- Wood Mackenzie - Singapore
- Antam Resourcindo - Indonesia
- Chamber of Mines of South Africa
- Indonesian Coal Mining Association
- Jaiprakash Power Ventures ltd
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