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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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Friday, 12 July 13
U.S. PRODUCED 18.40 MMST COAL WEEK ENDED 6 JULY 2013
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 18.40 million short tons (mmst) of ...
Thursday, 11 July 13
PANAMAX: PACIFIC ROUND PAY AROUND $6,500/D; ATLANTIC ROUND VOYAGE PAY AROUND US$ 10,000/D - FEARNLEYS AS
Handy
The Feast market is quiet, July date cargoes remain unfixed as there is a gap between what owners aiming and charterers willing to pay. There ...
Wednesday, 10 July 13
DRY BULK MARKET IS STILL STRUGGLING TO SURVIVE - INTERMODAL
COALspot.com : With the first half of the year now behind us and, as expected, most shipping segments in the dry bulk market are struggling to survi ...
Tuesday, 09 July 13
COAL PRICE REMAINS SLUGGISH - TRIMEGAH
COALspot.com - Newcastle coal price has reached US$ 76.30/ton (-15.9% YTD), bringing YTD’13 average to stand at US$ 87.90/ton, 6.80% lower tha ...
Tuesday, 09 July 13
NEWCASTLE COAL EXPORTS JUMP 27.53% ON WEEK TO 2.97 MILLION MT
COALspot.com - Newcastle Coal exports up 27.53% to 2.97 million tons W-o-W.
Newcastle port in Australia has loaded 2,974,715 tons of coal for the ...
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- Standard Chartered Bank - UAE
- MS Steel International - UAE
- Jaiprakash Power Ventures ltd
- Ministry of Finance - Indonesia
- Mercator Lines Limited - India
- Bukit Baiduri Energy - Indonesia
- Uttam Galva Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Sical Logistics Limited - India
- PTC India Limited - India
- Power Finance Corporation Ltd., India
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- Ind-Barath Power Infra Limited - India
- Ceylon Electricity Board - Sri Lanka
- Posco Energy - South Korea
- Krishnapatnam Port Company Ltd. - India
- Star Paper Mills Limited - India
- Mintek Dendrill Indonesia
- Maharashtra Electricity Regulatory Commission - India
- ASAPP Information Group - India
- Global Green Power PLC Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Madhucon Powers Ltd - India
- TeaM Sual Corporation - Philippines
- Planning Commission, India
- Indian Oil Corporation Limited
- Sree Jayajothi Cements Limited - India
- Gujarat Electricity Regulatory Commission - India
- Deloitte Consulting - India
- Romanian Commodities Exchange
- IEA Clean Coal Centre - UK
- Africa Commodities Group - South Africa
- Antam Resourcindo - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Coalindo Energy - Indonesia
- Malabar Cements Ltd - India
- Energy Development Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- TNB Fuel Sdn Bhd - Malaysia
- Orica Australia Pty. Ltd.
- PetroVietnam Power Coal Import and Supply Company
- Ambuja Cements Ltd - India
- Trasteel International SA, Italy
- Renaissance Capital - South Africa
- Wood Mackenzie - Singapore
- Rio Tinto Coal - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Borneo Indobara - Indonesia
- Baramulti Group, Indonesia
- Bharathi Cement Corporation - India
- Intertek Mineral Services - Indonesia
- Essar Steel Hazira Ltd - India
- Altura Mining Limited, Indonesia
- Goldman Sachs - Singapore
- Latin American Coal - Colombia
- Minerals Council of Australia
- Therma Luzon, Inc, Philippines
- Orica Mining Services - Indonesia
- Chamber of Mines of South Africa
- Bukit Makmur.PT - Indonesia
- Energy Link Ltd, New Zealand
- Billiton Holdings Pty Ltd - Australia
- Electricity Generating Authority of Thailand
- Barasentosa Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Vedanta Resources Plc - India
- Videocon Industries ltd - India
- Attock Cement Pakistan Limited
- Manunggal Multi Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Parliament of New Zealand
- Commonwealth Bank - Australia
- Indian Energy Exchange, India
- Coal and Oil Company - UAE
- Independent Power Producers Association of India
- Tamil Nadu electricity Board
- San Jose City I Power Corp, Philippines
- New Zealand Coal & Carbon
- Thiess Contractors Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Sakthi Sugars Limited - India
- Bhushan Steel Limited - India
- Leighton Contractors Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- Jindal Steel & Power Ltd - India
- Bhoruka Overseas - Indonesia
- Kobexindo Tractors - Indoneisa
- Straits Asia Resources Limited - Singapore
- Riau Bara Harum - Indonesia
- London Commodity Brokers - England
- Global Business Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- PowerSource Philippines DevCo
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Economic Council, Georgia
- Aditya Birla Group - India
- Coastal Gujarat Power Limited - India
- Sarangani Energy Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Aboitiz Power Corporation - Philippines
- Indika Energy - Indonesia
- Metalloyd Limited - United Kingdom
- PNOC Exploration Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- Marubeni Corporation - India
- South Luzon Thermal Energy Corporation
- Jorong Barutama Greston.PT - Indonesia
- Makarim & Taira - Indonesia
- Edison Trading Spa - Italy
- The Treasury - Australian Government
- Ministry of Mines - Canada
- Carbofer General Trading SA - India
- Karbindo Abesyapradhi - Indoneisa
- Bulk Trading Sa - Switzerland
- Agrawal Coal Company - India
- Globalindo Alam Lestari - Indonesia
- The University of Queensland
- VISA Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- GMR Energy Limited - India
- Directorate General of MIneral and Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- India Bulls Power Limited - India
- Georgia Ports Authority, United States
- Oldendorff Carriers - Singapore
- Mjunction Services Limited - India
- Mercuria Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Rashtriya Ispat Nigam Limited - India
- Grasim Industreis Ltd - India
- Central Electricity Authority - India
- Wilmar Investment Holdings
- White Energy Company Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Simpson Spence & Young - Indonesia
- Port Waratah Coal Services - Australia
- Larsen & Toubro Limited - India
- Thai Mozambique Logistica
- Bayan Resources Tbk. - Indonesia
- Global Coal Blending Company Limited - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Interocean Group of Companies - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- SMC Global Power, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Xindia Steels Limited - India
- International Coal Ventures Pvt Ltd - India
- Petron Corporation, Philippines
- Eastern Coal Council - USA
- Cement Manufacturers Association - India
- Kideco Jaya Agung - Indonesia
- Heidelberg Cement - Germany
- Eastern Energy - Thailand
- ICICI Bank Limited - India
- Meralco Power Generation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Ministry of Transport, Egypt
- Maheswari Brothers Coal Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Dalmia Cement Bharat India
- Kartika Selabumi Mining - Indonesia
- Price Waterhouse Coopers - Russia
- Salva Resources Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Bhatia International Limited - India
- McConnell Dowell - Australia
- Gujarat Sidhee Cement - India
- Kapuas Tunggal Persada - Indonesia
- Kepco SPC Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Meenaskhi Energy Private Limited - India
- Indo Tambangraya Megah - Indonesia
- Medco Energi Mining Internasional
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vizag Seaport Private Limited - India
- Merrill Lynch Commodities Europe
- Bukit Asam (Persero) Tbk - Indonesia
- Kumho Petrochemical, South Korea
- Indonesian Coal Mining Association
- AsiaOL BioFuels Corp., Philippines
- Banpu Public Company Limited - Thailand
- Chettinad Cement Corporation Ltd - India
- IHS Mccloskey Coal Group - USA
- Lanco Infratech Ltd - India
- Australian Commodity Traders Exchange
- Sinarmas Energy and Mining - Indonesia
- Singapore Mercantile Exchange
- Indogreen Group - Indonesia
- Formosa Plastics Group - Taiwan
- The State Trading Corporation of India Ltd
- Tata Chemicals Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CNBM International Corporation - China
- Australian Coal Association
- Semirara Mining Corp, Philippines
- SMG Consultants - Indonesia
- Parry Sugars Refinery, India
- Anglo American - United Kingdom
- Sojitz Corporation - Japan
- Electricity Authority, New Zealand
- OPG Power Generation Pvt Ltd - India
- Central Java Power - Indonesia
- Directorate Of Revenue Intelligence - India
- GVK Power & Infra Limited - India
- Bangladesh Power Developement Board
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