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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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Tuesday, 06 August 13
UNLEASHING SHALE GAS POTENTIAL AS A GLOBAL ENERGY GAME CHANGER
In its 4th year running, the Annual Shale Gas Conference will bring leaders from North American shale gas operators, key Asian regulators, multi ...
Tuesday, 06 August 13
GBCE APPOINTS BENJAMIN WILEY AS NEW MANAGING DIRECTOR
COALspot.com : GB Clean Energy Ltd. (GBCE) announced today that Mr. Benjamin Wiley has been appointed as Managing Director.
Mr. Wiley has ...
Tuesday, 06 August 13
AUSTRALIAN NEWCASTLE PORT'S COAL EXPORTS FALL 23.16 PERCENT ON WEEK TO 2.26 MMT
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Monday, 05 August 13
PAPERLESS TRADING (ELECTRONIC BILLS OF LADING) - FREQUENTLY ASKED QUESTIONS ("FAQS") - UK P&I CLUB
A number of Members have contacted the Club with queries regarding the use of electronic bills of lading and any potential consequences for P&I ...
Monday, 05 August 13
INDO GOVERNMENT'S DECLARED HBA IN AUGUST '13 FALL TO LOWEST LEVEL SINCE JANUARY '10
COALspot. com - HBA fell to US$ 76.70 this month, the lowest since January 2010. Indonesian Coal Price Reference fell 6.11% and hitting a 2013 ...
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- Independent Power Producers Association of India
- Ministry of Finance - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Ceylon Electricity Board - Sri Lanka
- Bukit Makmur.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- Videocon Industries ltd - India
- Essar Steel Hazira Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Orica Australia Pty. Ltd.
- Maheswari Brothers Coal Limited - India
- Sical Logistics Limited - India
- Jaiprakash Power Ventures ltd
- CNBM International Corporation - China
- Indonesian Coal Mining Association
- Trasteel International SA, Italy
- Commonwealth Bank - Australia
- Merrill Lynch Commodities Europe
- VISA Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Edison Trading Spa - Italy
- Mjunction Services Limited - India
- Eastern Coal Council - USA
- Neyveli Lignite Corporation Ltd, - India
- Savvy Resources Ltd - HongKong
- Power Finance Corporation Ltd., India
- Simpson Spence & Young - Indonesia
- Star Paper Mills Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- IEA Clean Coal Centre - UK
- Mercator Lines Limited - India
- New Zealand Coal & Carbon
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Sindya Power Generating Company Private Ltd
- Romanian Commodities Exchange
- Sarangani Energy Corporation, Philippines
- Riau Bara Harum - Indonesia
- Renaissance Capital - South Africa
- European Bulk Services B.V. - Netherlands
- Indian Oil Corporation Limited
- Indika Energy - Indonesia
- Orica Mining Services - Indonesia
- Cement Manufacturers Association - India
- Bharathi Cement Corporation - India
- Holcim Trading Pte Ltd - Singapore
- Petron Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Directorate Of Revenue Intelligence - India
- Thai Mozambique Logistica
- Ministry of Transport, Egypt
- Tamil Nadu electricity Board
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Mines - Canada
- ASAPP Information Group - India
- South Luzon Thermal Energy Corporation
- Maharashtra Electricity Regulatory Commission - India
- Parry Sugars Refinery, India
- Ind-Barath Power Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- Leighton Contractors Pty Ltd - Australia
- Parliament of New Zealand
- Madhucon Powers Ltd - India
- Eastern Energy - Thailand
- Kobexindo Tractors - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Global Coal Blending Company Limited - Australia
- Indian Energy Exchange, India
- Semirara Mining Corp, Philippines
- Bangladesh Power Developement Board
- Bukit Baiduri Energy - Indonesia
- Mercuria Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Singapore Mercantile Exchange
- Vizag Seaport Private Limited - India
- Vedanta Resources Plc - India
- Bhatia International Limited - India
- Rio Tinto Coal - Australia
- Port Waratah Coal Services - Australia
- Meralco Power Generation, Philippines
- Price Waterhouse Coopers - Russia
- Agrawal Coal Company - India
- Latin American Coal - Colombia
- Bahari Cakrawala Sebuku - Indonesia
- Xindia Steels Limited - India
- Minerals Council of Australia
- Larsen & Toubro Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tata Chemicals Ltd - India
- Central Electricity Authority - India
- GN Power Mariveles Coal Plant, Philippines
- Energy Development Corp, Philippines
- Altura Mining Limited, Indonesia
- Mintek Dendrill Indonesia
- Coal and Oil Company - UAE
- Antam Resourcindo - Indonesia
- Goldman Sachs - Singapore
- Semirara Mining and Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Baramulti Group, Indonesia
- Economic Council, Georgia
- Australian Commodity Traders Exchange
- Heidelberg Cement - Germany
- ICICI Bank Limited - India
- India Bulls Power Limited - India
- SMC Global Power, Philippines
- International Coal Ventures Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Sojitz Corporation - Japan
- LBH Netherlands Bv - Netherlands
- MS Steel International - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jindal Steel & Power Ltd - India
- Borneo Indobara - Indonesia
- Dalmia Cement Bharat India
- Ambuja Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Intertek Mineral Services - Indonesia
- The Treasury - Australian Government
- Interocean Group of Companies - India
- Meenaskhi Energy Private Limited - India
- Planning Commission, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Banpu Public Company Limited - Thailand
- Deloitte Consulting - India
- Gujarat Sidhee Cement - India
- Straits Asia Resources Limited - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Bulk Trading Sa - Switzerland
- SMG Consultants - Indonesia
- Karaikal Port Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Electricity Authority, New Zealand
- Aboitiz Power Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Global Business Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Wood Mackenzie - Singapore
- Kepco SPC Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Global Green Power PLC Corporation, Philippines
- Attock Cement Pakistan Limited
- Energy Link Ltd, New Zealand
- Barasentosa Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- Sree Jayajothi Cements Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- The State Trading Corporation of India Ltd
- Sakthi Sugars Limited - India
- Siam City Cement - Thailand
- Standard Chartered Bank - UAE
- Rashtriya Ispat Nigam Limited - India
- Samtan Co., Ltd - South Korea
- AsiaOL BioFuels Corp., Philippines
- Therma Luzon, Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Malabar Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Oldendorff Carriers - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Central Java Power - Indonesia
- Siam City Cement PLC, Thailand
- Chamber of Mines of South Africa
- Coalindo Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- GMR Energy Limited - India
- Wilmar Investment Holdings
- Grasim Industreis Ltd - India
- Posco Energy - South Korea
- Africa Commodities Group - South Africa
- San Jose City I Power Corp, Philippines
- PTC India Limited - India
- Thiess Contractors Indonesia
- PNOC Exploration Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Anglo American - United Kingdom
- Lanco Infratech Ltd - India
- Medco Energi Mining Internasional
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Salva Resources Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Aditya Birla Group - India
- Manunggal Multi Energi - Indonesia
- McConnell Dowell - Australia
- Australian Coal Association
- Indogreen Group - Indonesia
- TeaM Sual Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Coastal Gujarat Power Limited - India
- The University of Queensland
- Gujarat Electricity Regulatory Commission - India
- GVK Power & Infra Limited - India
- Kumho Petrochemical, South Korea
- London Commodity Brokers - England
- Chettinad Cement Corporation Ltd - India
- Kideco Jaya Agung - Indonesia
- Uttam Galva Steels Limited - India
- IHS Mccloskey Coal Group - USA
- Binh Thuan Hamico - Vietnam
- Krishnapatnam Port Company Ltd. - India
- PowerSource Philippines DevCo
- Marubeni Corporation - India
- Pendopo Energi Batubara - Indonesia
- Makarim & Taira - Indonesia
- White Energy Company Limited
- Bhushan Steel Limited - India
- Georgia Ports Authority, United States
- Carbofer General Trading SA - India
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