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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, 09 July 13
CAPESIZE: SHOT UP; PANAMAXES: NOT SO LUCK; SUPRAS: SLIGHTLY BETTER; HANDIES: SOFT - INTERMODAL
COALspot.com : June 2013 Recap
A renewed Capesize market this month (June 2013) was the cause for much of the overall noteworthy performanc ...
Tuesday, 09 July 13
THE 11TH DEEP COAL PROCESSING FORUM 2013
Press Release : The 11th Deep Coal Processing Forum 2013 will be held in November Beijing China.
CDMC Events is pleased to announce that 11 ...
Monday, 08 July 13
ECO-FRIENDLY COAL FOR CHINA - VALUE FOR THE ENVIRONMENT AND VALUE FOR THE POWER GENERATOR - BY: LINDSAY JUNIPER
COALspot.com : January 2013 saw an episode of extreme particulate pollution in Beijing 35 times worse than the safe level recommended by the World H ...
Sunday, 07 July 13
FREIGHT MARKET IS EXPECTED TO BE SOFT TO STABLE NEXT WEEK- VISTAAR
COALspot.com - The freight market softened for the week ended 5 July 2013, and experienced a decline in all sectors, including BDI. Bulk dry Index d ...
Sunday, 07 July 13
COAL PRICES REMAIN UNDER PRESSURE
COALspot.com – Coal swaps for the year 2014 indicate that, the pressure on coal prices will continue at least until next year. Ave ...
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- Vizag Seaport Private Limited - India
- Ambuja Cements Ltd - India
- Ministry of Finance - Indonesia
- Minerals Council of Australia
- Sojitz Corporation - Japan
- Pipit Mutiara Jaya. PT, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Power Finance Corporation Ltd., India
- Tamil Nadu electricity Board
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Edison Trading Spa - Italy
- Karbindo Abesyapradhi - Indoneisa
- Marubeni Corporation - India
- Chettinad Cement Corporation Ltd - India
- European Bulk Services B.V. - Netherlands
- SMC Global Power, Philippines
- Xindia Steels Limited - India
- CIMB Investment Bank - Malaysia
- Sakthi Sugars Limited - India
- Kapuas Tunggal Persada - Indonesia
- AsiaOL BioFuels Corp., Philippines
- PowerSource Philippines DevCo
- Ministry of Transport, Egypt
- Agrawal Coal Company - India
- Petron Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Goldman Sachs - Singapore
- LBH Netherlands Bv - Netherlands
- London Commodity Brokers - England
- GN Power Mariveles Coal Plant, Philippines
- Rio Tinto Coal - Australia
- The State Trading Corporation of India Ltd
- Videocon Industries ltd - India
- Alfred C Toepfer International GmbH - Germany
- Price Waterhouse Coopers - Russia
- PTC India Limited - India
- Wood Mackenzie - Singapore
- Economic Council, Georgia
- Antam Resourcindo - Indonesia
- Samtan Co., Ltd - South Korea
- Jorong Barutama Greston.PT - Indonesia
- Heidelberg Cement - Germany
- Mercuria Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- MS Steel International - UAE
- CNBM International Corporation - China
- Simpson Spence & Young - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mjunction Services Limited - India
- Intertek Mineral Services - Indonesia
- Directorate Of Revenue Intelligence - India
- Bukit Baiduri Energy - Indonesia
- Standard Chartered Bank - UAE
- VISA Power Limited - India
- Australian Coal Association
- Bukit Asam (Persero) Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- Attock Cement Pakistan Limited
- Bhoruka Overseas - Indonesia
- Anglo American - United Kingdom
- Manunggal Multi Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Kideco Jaya Agung - Indonesia
- Kobexindo Tractors - Indoneisa
- Central Electricity Authority - India
- GMR Energy Limited - India
- Global Business Power Corporation, Philippines
- Star Paper Mills Limited - India
- Meralco Power Generation, Philippines
- Bangladesh Power Developement Board
- Semirara Mining and Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Renaissance Capital - South Africa
- GVK Power & Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Commodity Traders Exchange
- Grasim Industreis Ltd - India
- Trasteel International SA, Italy
- Makarim & Taira - Indonesia
- Electricity Authority, New Zealand
- New Zealand Coal & Carbon
- Larsen & Toubro Limited - India
- Aditya Birla Group - India
- Dalmia Cement Bharat India
- Metalloyd Limited - United Kingdom
- Eastern Coal Council - USA
- Mintek Dendrill Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Makmur.PT - Indonesia
- Ministry of Mines - Canada
- India Bulls Power Limited - India
- Jaiprakash Power Ventures ltd
- Wilmar Investment Holdings
- Romanian Commodities Exchange
- Sinarmas Energy and Mining - Indonesia
- Indian Energy Exchange, India
- Cigading International Bulk Terminal - Indonesia
- Planning Commission, India
- SN Aboitiz Power Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Salva Resources Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Leighton Contractors Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- Binh Thuan Hamico - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- Tata Chemicals Ltd - India
- Interocean Group of Companies - India
- Thai Mozambique Logistica
- Indian Oil Corporation Limited
- Madhucon Powers Ltd - India
- Baramulti Group, Indonesia
- Sindya Power Generating Company Private Ltd
- Singapore Mercantile Exchange
- Bhatia International Limited - India
- Iligan Light & Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Billiton Holdings Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- White Energy Company Limited
- TeaM Sual Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Posco Energy - South Korea
- Miang Besar Coal Terminal - Indonesia
- Lanco Infratech Ltd - India
- Formosa Plastics Group - Taiwan
- Kaltim Prima Coal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Coastal Gujarat Power Limited - India
- Electricity Generating Authority of Thailand
- Semirara Mining Corp, Philippines
- IEA Clean Coal Centre - UK
- ASAPP Information Group - India
- Riau Bara Harum - Indonesia
- Independent Power Producers Association of India
- Uttam Galva Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- Latin American Coal - Colombia
- Coalindo Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- McConnell Dowell - Australia
- Sree Jayajothi Cements Limited - India
- Karaikal Port Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Ind-Barath Power Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- Borneo Indobara - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Energy Link Ltd, New Zealand
- San Jose City I Power Corp, Philippines
- Energy Development Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Indonesian Coal Mining Association
- Indika Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Globalindo Alam Lestari - Indonesia
- Mercator Lines Limited - India
- Pendopo Energi Batubara - Indonesia
- Sical Logistics Limited - India
- GAC Shipping (India) Pvt Ltd
- Siam City Cement PLC, Thailand
- Neyveli Lignite Corporation Ltd, - India
- Oldendorff Carriers - Singapore
- Chamber of Mines of South Africa
- Parry Sugars Refinery, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Therma Luzon, Inc, Philippines
- Altura Mining Limited, Indonesia
- Sarangani Energy Corporation, Philippines
- Vedanta Resources Plc - India
- Kumho Petrochemical, South Korea
- Malabar Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ICICI Bank Limited - India
- Bharathi Cement Corporation - India
- OPG Power Generation Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Parliament of New Zealand
- Bayan Resources Tbk. - Indonesia
- Eastern Energy - Thailand
- Straits Asia Resources Limited - Singapore
- Medco Energi Mining Internasional
- Merrill Lynch Commodities Europe
- Africa Commodities Group - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement - Thailand
- Coal and Oil Company - UAE
- South Luzon Thermal Energy Corporation
- The Treasury - Australian Government
- Bhushan Steel Limited - India
- Jindal Steel & Power Ltd - India
- Orica Mining Services - Indonesia
- Central Java Power - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- Indogreen Group - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Deloitte Consulting - India
- Commonwealth Bank - Australia
- The University of Queensland
- Holcim Trading Pte Ltd - Singapore
- SMG Consultants - Indonesia
- Meenaskhi Energy Private Limited - India
- Indo Tambangraya Megah - Indonesia
- Thiess Contractors Indonesia
- Global Coal Blending Company Limited - Australia
- Cement Manufacturers Association - India
- Rashtriya Ispat Nigam Limited - India
- IHS Mccloskey Coal Group - USA
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