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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, 13 June 13
HANDY: SHORT PERIOD WERE FIXED AT AROUND USD 9000 LEVEL
Handy
Despite falling rates for bigger sizes, the Supras in Atlantic are seeing some improvements with fresh biz. US Gulf positions fetching tick a ...
Thursday, 13 June 13
BIMCO EXPECTS SUBDUED CAPESIZE EARNINGS FOR THE COMING WEEKS - HELLENIC SHIPPING NEWS
Bulk is not only about China even though it is a key driver. In this section, we have taken a closer look at the European seaborne coal markets, whi ...
Thursday, 13 June 13
RIO TINTO AGREES SALE OF EAGLE PROJECT FOR AN ESTIMATED US$325 MILLION IN CASH
COALspot.com - Rio Tinto has reached a binding agreement to sell its Eagle project to Lundin Mining Corporation for an estimated US$325 million in c ...
Thursday, 13 June 13
HARD COAL IMPORTS RISE SHARPLY IN GERMANY IN Q1 2013 - COAL IMPORTERS ASSOCIATION
Coal-fired Power Plants in Germany: Pillars of the Grid and the Energy Turnaround; Hard Coal Consumption and Hard Coal Imports Rise Sharply in Germa ...
Wednesday, 12 June 13
INDONESIAN COAL PRICE REFERENCE SLIDES TO 2013 LOW
COALspot.com - Indonesian Coal Price Reference continues to take its lumps this month, dropping about 0.54 % and hitting a 2013 low. The Indonesian ...
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- Attock Cement Pakistan Limited
- Singapore Mercantile Exchange
- Alfred C Toepfer International GmbH - Germany
- Antam Resourcindo - Indonesia
- Bangladesh Power Developement Board
- MS Steel International - UAE
- Port Waratah Coal Services - Australia
- Maharashtra Electricity Regulatory Commission - India
- Metalloyd Limited - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Larsen & Toubro Limited - India
- Miang Besar Coal Terminal - Indonesia
- Grasim Industreis Ltd - India
- Medco Energi Mining Internasional
- Coal and Oil Company - UAE
- Cigading International Bulk Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Marubeni Corporation - India
- Star Paper Mills Limited - India
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- Chamber of Mines of South Africa
- Mercator Lines Limited - India
- Kideco Jaya Agung - Indonesia
- Bharathi Cement Corporation - India
- VISA Power Limited - India
- Wood Mackenzie - Singapore
- San Jose City I Power Corp, Philippines
- GVK Power & Infra Limited - India
- Electricity Authority, New Zealand
- CIMB Investment Bank - Malaysia
- Simpson Spence & Young - Indonesia
- ASAPP Information Group - India
- Rashtriya Ispat Nigam Limited - India
- The University of Queensland
- Tamil Nadu electricity Board
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- South Luzon Thermal Energy Corporation
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- Australian Coal Association
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- Neyveli Lignite Corporation Ltd, - India
- Makarim & Taira - Indonesia
- Economic Council, Georgia
- Aditya Birla Group - India
- Savvy Resources Ltd - HongKong
- Global Coal Blending Company Limited - Australia
- Billiton Holdings Pty Ltd - Australia
- GMR Energy Limited - India
- Indo Tambangraya Megah - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Mercuria Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Meralco Power Generation, Philippines
- European Bulk Services B.V. - Netherlands
- Orica Australia Pty. Ltd.
- Essar Steel Hazira Ltd - India
- Baramulti Group, Indonesia
- Deloitte Consulting - India
- Indian Oil Corporation Limited
- Globalindo Alam Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- Manunggal Multi Energi - Indonesia
- Madhucon Powers Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- Australian Commodity Traders Exchange
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- Lanco Infratech Ltd - India
- Videocon Industries ltd - India
- Sinarmas Energy and Mining - Indonesia
- Standard Chartered Bank - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- LBH Netherlands Bv - Netherlands
- Toyota Tsusho Corporation, Japan
- Straits Asia Resources Limited - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Sidhee Cement - India
- Agrawal Coal Company - India
- Thai Mozambique Logistica
- Kumho Petrochemical, South Korea
- Energy Development Corp, Philippines
- Banpu Public Company Limited - Thailand
- Wilmar Investment Holdings
- The Treasury - Australian Government
- Eastern Coal Council - USA
- Bhatia International Limited - India
- Krishnapatnam Port Company Ltd. - India
- Romanian Commodities Exchange
- Sarangani Energy Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Posco Energy - South Korea
- Holcim Trading Pte Ltd - Singapore
- CNBM International Corporation - China
- Bulk Trading Sa - Switzerland
- Riau Bara Harum - Indonesia
- Bayan Resources Tbk. - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Kartika Selabumi Mining - Indonesia
- Vizag Seaport Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Energy Exchange, India
- PTC India Limited - India
- Minerals Council of Australia
- Semirara Mining Corp, Philippines
- Electricity Generating Authority of Thailand
- Price Waterhouse Coopers - Russia
- Vedanta Resources Plc - India
- Barasentosa Lestari - Indonesia
- Anglo American - United Kingdom
- Sojitz Corporation - Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Latin American Coal - Colombia
- Meenaskhi Energy Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Samtan Co., Ltd - South Korea
- Karaikal Port Pvt Ltd - India
- Petron Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Timah Investasi Mineral - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Malabar Cements Ltd - India
- Commonwealth Bank - Australia
- Formosa Plastics Group - Taiwan
- Jaiprakash Power Ventures ltd
- Ceylon Electricity Board - Sri Lanka
- PetroVietnam Power Coal Import and Supply Company
- Bhoruka Overseas - Indonesia
- Ministry of Transport, Egypt
- Global Green Power PLC Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- SMC Global Power, Philippines
- ICICI Bank Limited - India
- Bukit Baiduri Energy - Indonesia
- Ministry of Finance - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Sakthi Sugars Limited - India
- Mjunction Services Limited - India
- Central Electricity Authority - India
- Salva Resources Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Trasteel International SA, Italy
- Edison Trading Spa - Italy
- Ministry of Mines - Canada
- Pendopo Energi Batubara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- OPG Power Generation Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indika Energy - Indonesia
- Borneo Indobara - Indonesia
- Maheswari Brothers Coal Limited - India
- SMG Consultants - Indonesia
- The State Trading Corporation of India Ltd
- GN Power Mariveles Coal Plant, Philippines
- London Commodity Brokers - England
- Goldman Sachs - Singapore
- Heidelberg Cement - Germany
- Renaissance Capital - South Africa
- Parliament of New Zealand
- Ambuja Cements Ltd - India
- Kobexindo Tractors - Indoneisa
- Interocean Group of Companies - India
- Central Java Power - Indonesia
- Mintek Dendrill Indonesia
- Ind-Barath Power Infra Limited - India
- Intertek Mineral Services - Indonesia
- Georgia Ports Authority, United States
- Rio Tinto Coal - Australia
- Planning Commission, India
- Semirara Mining and Power Corporation, Philippines
- Tata Chemicals Ltd - India
- India Bulls Power Limited - India
- White Energy Company Limited
- Siam City Cement - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Sree Jayajothi Cements Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Kepco SPC Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Power Finance Corporation Ltd., India
- PowerSource Philippines DevCo
- Coastal Gujarat Power Limited - India
- SN Aboitiz Power Inc, Philippines
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- AsiaOL BioFuels Corp., Philippines
- Asmin Koalindo Tuhup - Indonesia
- Global Business Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Coalindo Energy - Indonesia
- Sical Logistics Limited - India
- Independent Power Producers Association of India
- Xindia Steels Limited - India
- Indogreen Group - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Merrill Lynch Commodities Europe
- Bhushan Steel Limited - India
- Parry Sugars Refinery, India
- Aboitiz Power Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Orica Mining Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- Eastern Energy - Thailand
- Bukit Makmur.PT - Indonesia
- New Zealand Coal & Carbon
- McConnell Dowell - Australia
- Thiess Contractors Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Altura Mining Limited, Indonesia
- Africa Commodities Group - South Africa
- Cement Manufacturers Association - India
- Siam City Cement PLC, Thailand
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