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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, 05 July 13
THE DRY BULK MARKET IS GOING FROM STRENGTH TO STRENGTH - INTERMODAL
The Capesize sector has been one that has gone through a wild rollercoaster of emotions this past decade, ranging from the exuberance witnessed duri ...
Thursday, 04 July 13
CHALLENGER SIGNS FORMAL EXCLUSIVE MINING AND MARKETING AGREEMENT FOR ABBR PROJECT IN CENTRAL KALIMANTAN
COALspot.com - Challenger Deep Resources Corp., through its subsidiary PT Bestindo Energy has signed the formal exclusive Mining and Marketing agree ...
Thursday, 04 July 13
ASX LISTED QBL TO ACQUIRE INTERESTS IN MOZAMBIQUE COAL EXPLORATION LICENSES
- QBL to acquire interests in two Mozambique exploration licences prospective for coal
- Licenses located in the highly prospective Zambezi basin, ...
Thursday, 04 July 13
HANDY : INDO/CHINA, CHARTERERS RATING AROUND US$ 10,000 - FEARNLEYS AS
Handy
The Feast market firmed slightly up as mid-July cargos entered the market, but charterers seems not in hurry to cover them and looking for ch ...
Wednesday, 03 July 13
NEWCASTLE COAL EXPORTS DIP 24.79 PER CENT WOW
COALspot.com - Newcastle Coal exports fell 24.79% to 2.33 million tons WoW.
Newcastle port in Australia has loaded 2,332,513 tons of coal for the ...
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- Timah Investasi Mineral - Indoneisa
- South Luzon Thermal Energy Corporation
- Uttam Galva Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- New Zealand Coal & Carbon
- Dalmia Cement Bharat India
- Karbindo Abesyapradhi - Indoneisa
- Electricity Authority, New Zealand
- Australian Commodity Traders Exchange
- Simpson Spence & Young - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Tamil Nadu electricity Board
- Bhatia International Limited - India
- Bhoruka Overseas - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Oldendorff Carriers - Singapore
- Siam City Cement PLC, Thailand
- Formosa Plastics Group - Taiwan
- Mercator Lines Limited - India
- Samtan Co., Ltd - South Korea
- Savvy Resources Ltd - HongKong
- Indika Energy - Indonesia
- Romanian Commodities Exchange
- Directorate General of MIneral and Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Kartika Selabumi Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Independent Power Producers Association of India
- Bhushan Steel Limited - India
- International Coal Ventures Pvt Ltd - India
- Coal and Oil Company - UAE
- Mercuria Energy - Indonesia
- Agrawal Coal Company - India
- Kideco Jaya Agung - Indonesia
- White Energy Company Limited
- Ind-Barath Power Infra Limited - India
- Banpu Public Company Limited - Thailand
- Cigading International Bulk Terminal - Indonesia
- Indogreen Group - Indonesia
- Rio Tinto Coal - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Port Waratah Coal Services - Australia
- Jaiprakash Power Ventures ltd
- Vizag Seaport Private Limited - India
- Videocon Industries ltd - India
- Chamber of Mines of South Africa
- Cement Manufacturers Association - India
- LBH Netherlands Bv - Netherlands
- Indian Oil Corporation Limited
- Sojitz Corporation - Japan
- Standard Chartered Bank - UAE
- GMR Energy Limited - India
- Eastern Coal Council - USA
- Planning Commission, India
- Posco Energy - South Korea
- Thai Mozambique Logistica
- Indo Tambangraya Megah - Indonesia
- Attock Cement Pakistan Limited
- Alfred C Toepfer International GmbH - Germany
- Meralco Power Generation, Philippines
- Australian Coal Association
- Wilmar Investment Holdings
- Therma Luzon, Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Xindia Steels Limited - India
- SMG Consultants - Indonesia
- Wood Mackenzie - Singapore
- Interocean Group of Companies - India
- ICICI Bank Limited - India
- SMC Global Power, Philippines
- Maheswari Brothers Coal Limited - India
- Riau Bara Harum - Indonesia
- Central Electricity Authority - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sree Jayajothi Cements Limited - India
- Bayan Resources Tbk. - Indonesia
- Africa Commodities Group - South Africa
- Meenaskhi Energy Private Limited - India
- Trasteel International SA, Italy
- The Treasury - Australian Government
- Barasentosa Lestari - Indonesia
- Anglo American - United Kingdom
- Ministry of Mines - Canada
- Petron Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Grasim Industreis Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Merrill Lynch Commodities Europe
- Renaissance Capital - South Africa
- Maharashtra Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Star Paper Mills Limited - India
- Antam Resourcindo - Indonesia
- Vedanta Resources Plc - India
- Kobexindo Tractors - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- CIMB Investment Bank - Malaysia
- Bangladesh Power Developement Board
- Tata Chemicals Ltd - India
- Mintek Dendrill Indonesia
- Kumho Petrochemical, South Korea
- TNB Fuel Sdn Bhd - Malaysia
- European Bulk Services B.V. - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indonesian Coal Mining Association
- GVK Power & Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Madhucon Powers Ltd - India
- Bukit Makmur.PT - Indonesia
- Marubeni Corporation - India
- Lanco Infratech Ltd - India
- PTC India Limited - India
- IEA Clean Coal Centre - UK
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Minerals Council of Australia
- Electricity Generating Authority of Thailand
- VISA Power Limited - India
- Straits Asia Resources Limited - Singapore
- Directorate Of Revenue Intelligence - India
- Iligan Light & Power Inc, Philippines
- MS Steel International - UAE
- Commonwealth Bank - Australia
- ASAPP Information Group - India
- PNOC Exploration Corporation - Philippines
- Parry Sugars Refinery, India
- Ministry of Finance - Indonesia
- Sarangani Energy Corporation, Philippines
- Siam City Cement - Thailand
- TeaM Sual Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Energy Link Ltd, New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Sidhee Cement - India
- Vijayanagar Sugar Pvt Ltd - India
- McConnell Dowell - Australia
- Ambuja Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- San Jose City I Power Corp, Philippines
- Baramulti Group, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Aboitiz Power Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- Borneo Indobara - Indonesia
- Malabar Cements Ltd - India
- Georgia Ports Authority, United States
- Parliament of New Zealand
- CNBM International Corporation - China
- Latin American Coal - Colombia
- Goldman Sachs - Singapore
- Jindal Steel & Power Ltd - India
- Power Finance Corporation Ltd., India
- Sakthi Sugars Limited - India
- Metalloyd Limited - United Kingdom
- Economic Council, Georgia
- Heidelberg Cement - Germany
- Bharathi Cement Corporation - India
- Altura Mining Limited, Indonesia
- Sinarmas Energy and Mining - Indonesia
- The State Trading Corporation of India Ltd
- Medco Energi Mining Internasional
- Larsen & Toubro Limited - India
- Edison Trading Spa - Italy
- The University of Queensland
- Gujarat Mineral Development Corp Ltd - India
- PowerSource Philippines DevCo
- Kalimantan Lumbung Energi - Indonesia
- Orica Australia Pty. Ltd.
- Semirara Mining and Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- OPG Power Generation Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Aditya Birla Group - India
- GAC Shipping (India) Pvt Ltd
- London Commodity Brokers - England
- Thiess Contractors Indonesia
- Central Java Power - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Global Coal Blending Company Limited - Australia
- Holcim Trading Pte Ltd - Singapore
- Kepco SPC Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Eastern Energy - Thailand
- Singapore Mercantile Exchange
- Intertek Mineral Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- Makarim & Taira - Indonesia
- Deloitte Consulting - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Salva Resources Pvt Ltd - India
- Ministry of Transport, Egypt
- IHS Mccloskey Coal Group - USA
- India Bulls Power Limited - India
- Semirara Mining Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Coalindo Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jorong Barutama Greston.PT - Indonesia
- Indian Energy Exchange, India
- Gujarat Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- Mjunction Services Limited - India
- Rashtriya Ispat Nigam Limited - India
- Global Business Power Corporation, Philippines
- Sical Logistics Limited - India
- Orica Mining Services - Indonesia
- Energy Development Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Carbofer General Trading SA - India
- Kapuas Tunggal Persada - Indonesia
- Price Waterhouse Coopers - Russia
- Karaikal Port Pvt Ltd - India
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