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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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Thursday, 27 June 13
US COAL EXPORTS BEATS CHINESE COAL IMPORTS AS THE MOST INFLUENTIAL COAL TRADE - BIMCO
The influence of American coal exports on seaborne transportation has grown significantly over the past decade. In 2002, the US exported 20.1 millio ...
Thursday, 27 June 13
HANDY : USD 12000 FOR SPOT COAL INDO/CHINA AND AROUND USD 13000 INDO/ECI - FEARNLEYS
Handy
Atlantic rates hold well. Continent to Far East is worth more than USD 14k daily whilst USG to Far East pay 23/24k a day. On the route from B ...
Thursday, 27 June 13
DRY BULK CARRIERS DOMINATE NEWBUILDING ORDERS AS SHIP OWNERS ARE ENCOURAGED BY LATEST FREIGHT RATE RALLY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Newbuilding orders for dry bulk carriers were already high, compared to last year, prior to the latest rally of the Baltic Dry Index (BDI), which ha ...
Tuesday, 25 June 13
CAPESIZE MARKET TO REMAIN BULLISH SAYS ANALYST - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has been experiencing its long-awaited rally, with the Baltic Dry Index, the industry's benchmark rising to healthier levels fo ...
Tuesday, 25 June 13
NEWCASTLE PORT SHIPPED OUT MORE COAL W-O-W
COALspot.com - Newcastle port in Australia has loaded 3,101,378 tons of coal for the week ended 0700 hours 24 June 2013, Newcastle Port Corp. ...
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- Baramulti Group, Indonesia
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- Economic Council, Georgia
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- Trasteel International SA, Italy
- Chettinad Cement Corporation Ltd - India
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- Ministry of Finance - Indonesia
- OPG Power Generation Pvt Ltd - India
- Energy Development Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement PLC, Thailand
- Videocon Industries ltd - India
- Parliament of New Zealand
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- Coalindo Energy - Indonesia
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- Banpu Public Company Limited - Thailand
- Aboitiz Power Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Eastern Coal Council - USA
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- Miang Besar Coal Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
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- Electricity Authority, New Zealand
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- Kapuas Tunggal Persada - Indonesia
- Bhoruka Overseas - Indonesia
- TeaM Sual Corporation - Philippines
- Rio Tinto Coal - Australia
- Gujarat Sidhee Cement - India
- Mercuria Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- CNBM International Corporation - China
- Mjunction Services Limited - India
- LBH Netherlands Bv - Netherlands
- Aditya Birla Group - India
- Formosa Plastics Group - Taiwan
- Energy Link Ltd, New Zealand
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- Parry Sugars Refinery, India
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- PowerSource Philippines DevCo
- Karbindo Abesyapradhi - Indoneisa
- Merrill Lynch Commodities Europe
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- Independent Power Producers Association of India
- Bukit Asam (Persero) Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- Marubeni Corporation - India
- Orica Australia Pty. Ltd.
- The University of Queensland
- Indogreen Group - Indonesia
- Billiton Holdings Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- Pendopo Energi Batubara - Indonesia
- Sakthi Sugars Limited - India
- Edison Trading Spa - Italy
- Price Waterhouse Coopers - Russia
- Siam City Cement - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Goldman Sachs - Singapore
- Renaissance Capital - South Africa
- Borneo Indobara - Indonesia
- San Jose City I Power Corp, Philippines
- Cement Manufacturers Association - India
- Electricity Generating Authority of Thailand
- Commonwealth Bank - Australia
- GVK Power & Infra Limited - India
- MS Steel International - UAE
- Georgia Ports Authority, United States
- Chamber of Mines of South Africa
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- AsiaOL BioFuels Corp., Philippines
- Anglo American - United Kingdom
- Kideco Jaya Agung - Indonesia
- Altura Mining Limited, Indonesia
- Kumho Petrochemical, South Korea
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- Power Finance Corporation Ltd., India
- Barasentosa Lestari - Indonesia
- Indian Oil Corporation Limited
- Thiess Contractors Indonesia
- Sojitz Corporation - Japan
- Bukit Makmur.PT - Indonesia
- McConnell Dowell - Australia
- Binh Thuan Hamico - Vietnam
- Mercator Lines Limited - India
- Posco Energy - South Korea
- Africa Commodities Group - South Africa
- Tata Chemicals Ltd - India
- VISA Power Limited - India
- Vizag Seaport Private Limited - India
- Bukit Baiduri Energy - Indonesia
- Wilmar Investment Holdings
- Toyota Tsusho Corporation, Japan
- Sree Jayajothi Cements Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Grasim Industreis Ltd - India
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- Thai Mozambique Logistica
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- Romanian Commodities Exchange
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- European Bulk Services B.V. - Netherlands
- Sinarmas Energy and Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Oldendorff Carriers - Singapore
- Global Green Power PLC Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- SMC Global Power, Philippines
- Singapore Mercantile Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Star Paper Mills Limited - India
- Dalmia Cement Bharat India
- Savvy Resources Ltd - HongKong
- Globalindo Alam Lestari - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Heidelberg Cement - Germany
- Maheswari Brothers Coal Limited - India
- Central Java Power - Indonesia
- Sical Logistics Limited - India
- Ambuja Cements Ltd - India
- Australian Commodity Traders Exchange
- Makarim & Taira - Indonesia
- Minerals Council of Australia
- ASAPP Information Group - India
- Deloitte Consulting - India
- South Luzon Thermal Energy Corporation
- Asmin Koalindo Tuhup - Indonesia
- Ceylon Electricity Board - Sri Lanka
- India Bulls Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Petron Corporation, Philippines
- New Zealand Coal & Carbon
- Indika Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Bulk Trading Sa - Switzerland
- Port Waratah Coal Services - Australia
- PetroVietnam Power Coal Import and Supply Company
- Krishnapatnam Port Company Ltd. - India
- Lanco Infratech Ltd - India
- PTC India Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Iligan Light & Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Straits Asia Resources Limited - Singapore
- Ministry of Transport, Egypt
- Planning Commission, India
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- Standard Chartered Bank - UAE
- GMR Energy Limited - India
- Wood Mackenzie - Singapore
- London Commodity Brokers - England
- Central Electricity Authority - India
- Indonesian Coal Mining Association
- Alfred C Toepfer International GmbH - Germany
- Xindia Steels Limited - India
- Global Business Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Riau Bara Harum - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bhatia International Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Coal and Oil Company - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Kobexindo Tractors - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The Treasury - Australian Government
- Eastern Energy - Thailand
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- Indian Energy Exchange, India
- IEA Clean Coal Centre - UK
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