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Thursday, 29 January 15
CHINA ENERGY DEMAND MUST BE REVIEWED DUE TO FUNDAMENTAL ECONOMIC CHANGES - WOOD MACKENZIE
 New patterns emerging as energy demand growth decoupled significantly from GDP growth for the first time in 2014
Wood Mackenzie says 2014 was a significant year for China as economic rebalancing led demand growth - for a range of major energy commodities - and GDP growth decoupled significantly for the first time. Over the past two decades, commodity demand growth had maintained relatively proportionate annual increases to GDP growth. In 2014 however the pace of power, gas, coal and diesel demand increase fell more drastically than the slight GDP moderation, beyond expectations. Wood Mackenzie expects gas demand will recover in one to two years as the key drivers of slower growth are mainly cyclical but power, coal and diesel demand will see their outlook change notably over the long-term due to major structural changes in the economy and policy. Global energy sector will need to identify which changes are structural or cyclical in to determine future demand patterns and opportunities.
China's GDP grew by 7.4% in 2014 compared to 7.7% in 2013, a modest decline. Meanwhile, compared to 2013 power demand growth fell by almost half; Gas demand growth fell by more than 8%-point; Coal demand barely grew; and Diesel demand actually contracted for the first time in more than a decade. (refer to chart). Ms Cynthia Lim, Principal Asia Economist for Wood Mackenzie says, "7.4% is still a large year-on-year GDP increase for any economy so this fall in commodity demand is counter-intuitive and we have only seen the tip of the iceberg. The Chinese government is moving away from the post-2008 investment binge and gradually moving towards a more moderate but sustainable consumption-led economic growth. There are two aspects of rebalancing: one, away from investment towards consumption, particularly in the developed coastal region; and two, a shift in economic gravity away from the coast and towards the inland region. Both trends will have significant implications on commodity demand shifts. An important indicator for the energy industry to watch will be the weakness of industry versus the strength of the consumer in China."
The research company expects Industrial recovery and related investment will remain subdued in 2015-2016 but should see robust growth through the medium-term supported by urbanisation. Key sectors such as coal and steel are weighed down by overcapacity, tighter environmental regulations and the property market slowdown. While the government has relaxed both house purchase restrictions and credit conditions through 2014, recovery in real estate will be slow as inventory levels remain high and potential buyers stay on the side line due to market uncertainty.
Wood Mackenzie analyses which sectors will be most affected in the near-term (one to two years), medium term (two to seven years) and long-term (over eight years):
Power - Sustained change due to economic rebalancing
The short-term weakness in the industrial sector will continue to subdue power demand growth, especially as high inventory levels are reduced. Mr Gavin Thompson, Principal Analyst for APAC Gas & Power research says, "Industrial output will eventually recover from overcapacity and weak demand but China's rebalancing away from industry to the service sector will have a longer-term structural impact. In tandem with the geographic rebalancing of China's economy, regional power patterns will also change with higher demand growth concentrated in the western provinces where industrialisation processes are focused, compared to coastal markets." Wood Mackenzie forecasts that power demand year-on-year in the western regions will rise at around twice the pace of coastal markets through the medium term of 2-7 years, with significant implications for capacity and fuel choices.
Coal - Remains king but impacted by structural lower power demand growth
The pace of annual coal demand growth slowed to 4-5% in 2012 and 2013 from (what the previous year), particularly in coastal markets with near-zero growth in demand for power generation. However, Mr Thompson asserts, "Coal remains king in China but growth has been severely reduced, due to industrial weakness as well as cyclical weather patterns that saw higher rainfall boost hydro output. Through the short-term, coal-fired generation will likely be muted by lower power demand, environmental policies and a rise in non-coal generation including hydro. Longer-term , coal demand pace and patterns will be impacted by structural changes, with demand rising fastest from inland provinces and the acceleration of ultra high voltage (UHV) transmission lines to export power to the coast."
Gas - demand growth will rebound but cyclical low oil prices and weather will cause near-term pain
Over the past decade gas demand in China increased by 16% a year on average between 2004-2013. Last year however, gas demand growth slowed notably from over 13% in 2013 to around 8% in 2014. Mr Thompson explains, "This was influenced more by cyclical factors. In addition to slowing GDP growth, evolving environmental policies, higher hydro output, mild winter weather in northern China and high domestic gas prices relative to oil were key factors that saw gas demand growth fall sharply. In 2015, the government's decision on domestic gas price reform will be a key influence on demand. While we expect domestic demand growth over the next few years to return to historic levels, a swift return to double-digit growth may not be achievable without lower city gate gas prices."
Oil products - weaker diesel demand outlook to stay
2014 was the fourth straight year of a decoupling relationship between China's GDP and oil demand growth as the effects of the 2009 stimulus began to fade. However, growth in oil demand has varied by oil product since then given each product's distinct drivers: Diesel demand is estimated to have contracted 0.7% in 2014 as commercial transportation demand reduced. Mr Thompson explains, "We believe we are now witnessing a structural change in China's diesel demand as the economy rebalances away from heavy industry. In contrast, gasoline demand, which reflects personal car ownership, maintained a robust growth of 8% in 2014. Healthy growth momentum for gasoline demand will likely be sustained as the economy shifts further towards consumption."
Ms Lim concludes, "The rebalancing of China's economy will play an important role in shaping the energy demand outlook for 2015 and beyond. We believe a recovery in demand for power, coal and diesel in particular is closely tied to the industrial demand outlook. While these commodities will experience a moderate recovery in the medium term as over-capacity is reduced, the on-going transition of China's economy away from an industry-led model suggests their relationship with GDP growth will weaken permanently in the longer-run. As a result, the energy sector must keep attuned to both China's underlying changes and also shorter-term developments to position it for the changing opportunities the market offers."
About Wood Mackenzie
Wood Mackenzie is a global leader in commercial intelligence for the energy, metals and mining industries. We provide objective analysis and advice on assets, companies and markets, giving clients the insights they need to make better strategic decisions. For more information visit: www.woodmac.com
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Friday, 05 January 24
BANGLADESH’S 2023 COAL-FIRED POWER OUTPUT TRIPLED, EASING SHORTAGES - REUTERS
Bangladesh nearly tripled its coal-fired power output in 2023, a Reuters analysis of government data showed, helping it tide over the worst power s ...
Tuesday, 02 January 24
COAL TRADE CONTINUES TO HEAD EAST - BALTIC EXCHANGE
The global coal trade, once concentrated in the Pacific and Atlantic basins, is undergoing a significant transformation, as highlighted in the Inte ...
Tuesday, 02 January 24
COAL CARGOES: AVOIDING EXPLOSION AND SELF-HEATING - GARD
KNOWLEDGE TO ELEVATE
Despite its contribution to greenhouse gas emissions, global coal consumption climbed to an all-time high in 2022 and is ...
Tuesday, 02 January 24
SINOPEC FORECASTS CHINA’S COAL CONSUMPTION TO PEAK AROUND 2025 - REUTERS
China Petrochemical Corp, or Sinopec, expects coal consumption to peak around 2025 at 4.37 billion metric tons, the state energy group said in an o ...
Thursday, 07 December 23
CHINA TO SET UP COAL PRODUCTION RESERVE TO STABILISE PRICES - REUTERS
China will establish a back-up coal production system by 2027 to stabilise prices and secure coal supply, the state planner said on Wednesday, even ...
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Showing 61 to 65 news of total 6871 |
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- The Treasury - Australian Government
- Bulk Trading Sa - Switzerland
- Minerals Council of Australia
- Madhucon Powers Ltd - India
- Ind-Barath Power Infra Limited - India
- Sakthi Sugars Limited - India
- Interocean Group of Companies - India
- Cement Manufacturers Association - India
- IHS Mccloskey Coal Group - USA
- Global Green Power PLC Corporation, Philippines
- Ministry of Mines - Canada
- Vizag Seaport Private Limited - India
- Kumho Petrochemical, South Korea
- Alfred C Toepfer International GmbH - Germany
- New Zealand Coal & Carbon
- GN Power Mariveles Coal Plant, Philippines
- GAC Shipping (India) Pvt Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maharashtra Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- Commonwealth Bank - Australia
- Samtan Co., Ltd - South Korea
- Toyota Tsusho Corporation, Japan
- Renaissance Capital - South Africa
- Neyveli Lignite Corporation Ltd, - India
- SMC Global Power, Philippines
- Parry Sugars Refinery, India
- Savvy Resources Ltd - HongKong
- Posco Energy - South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coal and Oil Company - UAE
- Anglo American - United Kingdom
- Dalmia Cement Bharat India
- McConnell Dowell - Australia
- Sical Logistics Limited - India
- Rio Tinto Coal - Australia
- PetroVietnam Power Coal Import and Supply Company
- Vijayanagar Sugar Pvt Ltd - India
- MS Steel International - UAE
- ASAPP Information Group - India
- Baramulti Group, Indonesia
- Power Finance Corporation Ltd., India
- Petrochimia International Co. Ltd.- Taiwan
- Kideco Jaya Agung - Indonesia
- Electricity Generating Authority of Thailand
- Kalimantan Lumbung Energi - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Antam Resourcindo - Indonesia
- Bayan Resources Tbk. - Indonesia
- Wood Mackenzie - Singapore
- Jaiprakash Power Ventures ltd
- Essar Steel Hazira Ltd - India
- Tata Chemicals Ltd - India
- Deloitte Consulting - India
- Kartika Selabumi Mining - Indonesia
- Grasim Industreis Ltd - India
- Star Paper Mills Limited - India
- GVK Power & Infra Limited - India
- Xindia Steels Limited - India
- Gujarat Sidhee Cement - India
- Mjunction Services Limited - India
- Australian Coal Association
- Kapuas Tunggal Persada - Indonesia
- San Jose City I Power Corp, Philippines
- Aditya Birla Group - India
- Globalindo Alam Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- Central Java Power - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Energy Development Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Attock Cement Pakistan Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Independent Power Producers Association of India
- Coastal Gujarat Power Limited - India
- Karaikal Port Pvt Ltd - India
- Georgia Ports Authority, United States
- Binh Thuan Hamico - Vietnam
- Bukit Makmur.PT - Indonesia
- Central Electricity Authority - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Medco Energi Mining Internasional
- Iligan Light & Power Inc, Philippines
- Siam City Cement PLC, Thailand
- Bhoruka Overseas - Indonesia
- Uttam Galva Steels Limited - India
- Bharathi Cement Corporation - India
- CNBM International Corporation - China
- TNB Fuel Sdn Bhd - Malaysia
- Kaltim Prima Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- PowerSource Philippines DevCo
- Meenaskhi Energy Private Limited - India
- Eastern Coal Council - USA
- Singapore Mercantile Exchange
- Edison Trading Spa - Italy
- IEA Clean Coal Centre - UK
- Rashtriya Ispat Nigam Limited - India
- PNOC Exploration Corporation - Philippines
- Sojitz Corporation - Japan
- Bukit Baiduri Energy - Indonesia
- Heidelberg Cement - Germany
- Sarangani Energy Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Price Waterhouse Coopers - Russia
- Krishnapatnam Port Company Ltd. - India
- Oldendorff Carriers - Singapore
- Formosa Plastics Group - Taiwan
- Directorate Of Revenue Intelligence - India
- Thiess Contractors Indonesia
- Orica Australia Pty. Ltd.
- Videocon Industries ltd - India
- Global Business Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Tamil Nadu electricity Board
- Riau Bara Harum - Indonesia
- LBH Netherlands Bv - Netherlands
- Mercuria Energy - Indonesia
- Eastern Energy - Thailand
- Standard Chartered Bank - UAE
- Energy Link Ltd, New Zealand
- Indian Oil Corporation Limited
- Holcim Trading Pte Ltd - Singapore
- Parliament of New Zealand
- Bangladesh Power Developement Board
- Sree Jayajothi Cements Limited - India
- Port Waratah Coal Services - Australia
- Africa Commodities Group - South Africa
- Goldman Sachs - Singapore
- Barasentosa Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- ICICI Bank Limited - India
- Petron Corporation, Philippines
- SMG Consultants - Indonesia
- Pendopo Energi Batubara - Indonesia
- Indian Energy Exchange, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maheswari Brothers Coal Limited - India
- Chamber of Mines of South Africa
- Gujarat Electricity Regulatory Commission - India
- Electricity Authority, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Marubeni Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- Intertek Mineral Services - Indonesia
- Trasteel International SA, Italy
- Jorong Barutama Greston.PT - Indonesia
- CIMB Investment Bank - Malaysia
- Ministry of Finance - Indonesia
- Semirara Mining Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Carbofer General Trading SA - India
- Chettinad Cement Corporation Ltd - India
- Miang Besar Coal Terminal - Indonesia
- PTC India Limited - India
- Siam City Cement - Thailand
- GMR Energy Limited - India
- Bhatia International Limited - India
- VISA Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Australian Commodity Traders Exchange
- Kobexindo Tractors - Indoneisa
- Orica Mining Services - Indonesia
- Indogreen Group - Indonesia
- Meralco Power Generation, Philippines
- Indonesian Coal Mining Association
- Malabar Cements Ltd - India
- Planning Commission, India
- Bukit Asam (Persero) Tbk - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- White Energy Company Limited
- Manunggal Multi Energi - Indonesia
- European Bulk Services B.V. - Netherlands
- Romanian Commodities Exchange
- Directorate General of MIneral and Coal - Indonesia
- Bhushan Steel Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Salva Resources Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- The State Trading Corporation of India Ltd
- Larsen & Toubro Limited - India
- Coalindo Energy - Indonesia
- Ministry of Transport, Egypt
- Global Coal Blending Company Limited - Australia
- Kohat Cement Company Ltd. - Pakistan
- South Luzon Thermal Energy Corporation
- Merrill Lynch Commodities Europe
- Altura Mining Limited, Indonesia
- Thai Mozambique Logistica
- Karbindo Abesyapradhi - Indoneisa
- Banpu Public Company Limited - Thailand
- Wilmar Investment Holdings
- TeaM Sual Corporation - Philippines
- Lanco Infratech Ltd - India
- SN Aboitiz Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Ambuja Cements Ltd - India
- Agrawal Coal Company - India
- The University of Queensland
- Mercator Lines Limited - India
- Vedanta Resources Plc - India
- Economic Council, Georgia
- Indika Energy - Indonesia
- Borneo Indobara - Indonesia
- India Bulls Power Limited - India
- Latin American Coal - Colombia
- London Commodity Brokers - England
- Mintek Dendrill Indonesia
- Timah Investasi Mineral - Indoneisa
- International Coal Ventures Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
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