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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, 30 July 13
AUSTRALIA'S NEWCASTLE SHIPPED 12.58 PERCENT LESS COAL W-O-W
COALspot.com: Newcastle port in Australia has loaded 2,945,848 tons of coal for the week ended 0700 hours 29 July 2013, Newcastle Port Corp. s ...
Monday, 29 July 13
INDONESIA'S ENERGY NEEDS COULD SPELL GOOD NEWS FOR TANKER OWNERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Despite abundant energy resources, Indonesia has still failed meet its own demand, which led to a rising import of crude. According to the latest we ...
Sunday, 28 July 13
SUB-BIT INDONESIA COAL SWAP UP SLIGHTLY FOR SEPTEMBER CARGOES
COALspot.com – Sub-Bit Indonesia coal swaps (FOB ) for average September 2013 delivery slightly up on day and week but fell on month on ...
Saturday, 27 July 13
CEPL INDIA TO BAG 0.3 MILLION TONS OF COAL SUPPLY ORDER FROM TNPL
COALspot.com - An India based coal trader Coastal Energy Private Limited has offered the lowest price of US$ 73.00 per metric ton for calorific valu ...
Saturday, 27 July 13
INDONESIA TO INDIA SUPRAMAX FREIGHT RATES ARE EXPECTED TO REMAIN STEADY - CAPT.REDDY
COALspot.com : The freight market seemed to soften this week with BDI , Cape and Panamax indices dropped average 5 percent on week.
The BDI was d ...
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- Cigading International Bulk Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Africa Commodities Group - South Africa
- Gujarat Sidhee Cement - India
- Ambuja Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Bahari Cakrawala Sebuku - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Toyota Tsusho Corporation, Japan
- Georgia Ports Authority, United States
- CNBM International Corporation - China
- Rashtriya Ispat Nigam Limited - India
- Larsen & Toubro Limited - India
- Sree Jayajothi Cements Limited - India
- Orica Australia Pty. Ltd.
- Coalindo Energy - Indonesia
- Meralco Power Generation, Philippines
- Dalmia Cement Bharat India
- Renaissance Capital - South Africa
- Petron Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- GN Power Mariveles Coal Plant, Philippines
- Thai Mozambique Logistica
- Jindal Steel & Power Ltd - India
- South Luzon Thermal Energy Corporation
- Port Waratah Coal Services - Australia
- PowerSource Philippines DevCo
- Indogreen Group - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Indian Oil Corporation Limited
- Power Finance Corporation Ltd., India
- Baramulti Group, Indonesia
- Merrill Lynch Commodities Europe
- Commonwealth Bank - Australia
- Siam City Cement PLC, Thailand
- Maharashtra Electricity Regulatory Commission - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Mjunction Services Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Business Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Sakthi Sugars Limited - India
- The Treasury - Australian Government
- Leighton Contractors Pty Ltd - Australia
- Heidelberg Cement - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cement Manufacturers Association - India
- Asmin Koalindo Tuhup - Indonesia
- Formosa Plastics Group - Taiwan
- Sojitz Corporation - Japan
- AsiaOL BioFuels Corp., Philippines
- Jaiprakash Power Ventures ltd
- Vizag Seaport Private Limited - India
- Wilmar Investment Holdings
- PetroVietnam Power Coal Import and Supply Company
- Attock Cement Pakistan Limited
- Kideco Jaya Agung - Indonesia
- Minerals Council of Australia
- Antam Resourcindo - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bulk Trading Sa - Switzerland
- CIMB Investment Bank - Malaysia
- Pendopo Energi Batubara - Indonesia
- Bayan Resources Tbk. - Indonesia
- Timah Investasi Mineral - Indoneisa
- Binh Thuan Hamico - Vietnam
- Aboitiz Power Corporation - Philippines
- PTC India Limited - India
- Kepco SPC Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Oldendorff Carriers - Singapore
- Kumho Petrochemical, South Korea
- Karaikal Port Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- IEA Clean Coal Centre - UK
- VISA Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Energy Development Corp, Philippines
- Interocean Group of Companies - India
- Central Java Power - Indonesia
- Anglo American - United Kingdom
- Indo Tambangraya Megah - Indonesia
- Uttam Galva Steels Limited - India
- GMR Energy Limited - India
- Vedanta Resources Plc - India
- Directorate General of MIneral and Coal - Indonesia
- Eastern Energy - Thailand
- The University of Queensland
- Wood Mackenzie - Singapore
- Madhucon Powers Ltd - India
- Global Green Power PLC Corporation, Philippines
- SMG Consultants - Indonesia
- ASAPP Information Group - India
- Electricity Authority, New Zealand
- Sinarmas Energy and Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Neyveli Lignite Corporation Ltd, - India
- White Energy Company Limited
- Australian Coal Association
- Gujarat Mineral Development Corp Ltd - India
- Salva Resources Pvt Ltd - India
- Lanco Infratech Ltd - India
- Grasim Industreis Ltd - India
- Edison Trading Spa - Italy
- Chettinad Cement Corporation Ltd - India
- Mercator Lines Limited - India
- Planning Commission, India
- TeaM Sual Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- European Bulk Services B.V. - Netherlands
- Therma Luzon, Inc, Philippines
- Price Waterhouse Coopers - Russia
- Electricity Generating Authority of Thailand
- Malabar Cements Ltd - India
- London Commodity Brokers - England
- Makarim & Taira - Indonesia
- Bhushan Steel Limited - India
- Thiess Contractors Indonesia
- Bhatia International Limited - India
- Posco Energy - South Korea
- Chamber of Mines of South Africa
- Medco Energi Mining Internasional
- Sindya Power Generating Company Private Ltd
- India Bulls Power Limited - India
- McConnell Dowell - Australia
- SN Aboitiz Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Deloitte Consulting - India
- Ministry of Transport, Egypt
- Tata Chemicals Ltd - India
- Mintek Dendrill Indonesia
- Indonesian Coal Mining Association
- Kalimantan Lumbung Energi - Indonesia
- Altura Mining Limited, Indonesia
- Central Electricity Authority - India
- Eastern Coal Council - USA
- Bukit Baiduri Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GVK Power & Infra Limited - India
- Ind-Barath Power Infra Limited - India
- Indian Energy Exchange, India
- Essar Steel Hazira Ltd - India
- OPG Power Generation Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Bharathi Cement Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- Trasteel International SA, Italy
- Metalloyd Limited - United Kingdom
- Singapore Mercantile Exchange
- Energy Link Ltd, New Zealand
- MS Steel International - UAE
- Kapuas Tunggal Persada - Indonesia
- Kaltim Prima Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- PNOC Exploration Corporation - Philippines
- Goldman Sachs - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parry Sugars Refinery, India
- Iligan Light & Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- Aditya Birla Group - India
- Indika Energy - Indonesia
- Borneo Indobara - Indonesia
- San Jose City I Power Corp, Philippines
- Marubeni Corporation - India
- Romanian Commodities Exchange
- Kartika Selabumi Mining - Indonesia
- Independent Power Producers Association of India
- Maheswari Brothers Coal Limited - India
- ICICI Bank Limited - India
- Bangladesh Power Developement Board
- Xindia Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Mines - Canada
- Globalindo Alam Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- SMC Global Power, Philippines
- Kobexindo Tractors - Indoneisa
- Australian Commodity Traders Exchange
- Agrawal Coal Company - India
- Banpu Public Company Limited - Thailand
- Orica Mining Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Sical Logistics Limited - India
- The State Trading Corporation of India Ltd
- Straits Asia Resources Limited - Singapore
- Riau Bara Harum - Indonesia
- Bhoruka Overseas - Indonesia
- New Zealand Coal & Carbon
- Latin American Coal - Colombia
- Semirara Mining Corp, Philippines
- Carbofer General Trading SA - India
- LBH Netherlands Bv - Netherlands
- Savvy Resources Ltd - HongKong
- Tamil Nadu electricity Board
- Coal and Oil Company - UAE
- Siam City Cement - Thailand
- Star Paper Mills Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Parliament of New Zealand
- Rio Tinto Coal - Australia
- Coastal Gujarat Power Limited - India
- Standard Chartered Bank - UAE
- Barasentosa Lestari - Indonesia
- Mercuria Energy - Indonesia
- Videocon Industries ltd - India
- Sarangani Energy Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Economic Council, Georgia
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