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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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Wednesday, 12 June 24
CHINA ACCOUNTS FOR 16.3% OF AUSTRALIA'S COAL EXPORTS, FOLLOWED BY INDIA 14.4% - BANCHERO COSTA
Global coal trade has really picked up pace in recent months, and is now fully back to pre-Covid levels says Banchero Costa in its latest report.
...
Wednesday, 12 June 24
LNG NEWBUILDING VALUES AT RECORD HIGH: 78 NEWBUILD ORDERS PLACED IN 2024, DOUBLING 2023 - VESON NAUTICAL
The number of LNG newbuilding orders have more than doubled from the same period last year where 34 orders were placed, compared to 78 in the first ...
Monday, 10 June 24
CHINA'S MAY COAL IMPORTS RISE 11% ON LOWER DOMESTIC OUTPUT - REUTERS
China’s imports of coal rose 11% in May from a year earlier, customs data and Reuters records showed on Friday, as lower domestic output this ...
Tuesday, 04 June 24
HOW DO WESTERN SANCTIONS ON RUSSIA IMPACT THE GLOBAL METALS, MINING AND COAL MARKETS - WOOD MACKENZIE
The geopolitical landscape for Russia, as a major supplier of various commodities, has undergone a dramatic transformation since the invasion of Uk ...
Friday, 22 March 24
CASE STUDY: DANGERS OF COAL CARGO - SKULD
Recently, a bulk cargo vessel carrying coal from South Africa to Singapore suffered a fatal accident, resulting in the deaths of three crew members ...
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Showing 21 to 25 news of total 6871 |
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- Petron Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Kartika Selabumi Mining - Indonesia
- India Bulls Power Limited - India
- Eastern Coal Council - USA
- Malabar Cements Ltd - India
- Wilmar Investment Holdings
- Siam City Cement - Thailand
- Central Electricity Authority - India
- Bukit Baiduri Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Jindal Steel & Power Ltd - India
- Thai Mozambique Logistica
- Kumho Petrochemical, South Korea
- Electricity Generating Authority of Thailand
- San Jose City I Power Corp, Philippines
- Wood Mackenzie - Singapore
- GVK Power & Infra Limited - India
- Parliament of New Zealand
- Videocon Industries ltd - India
- Miang Besar Coal Terminal - Indonesia
- SMC Global Power, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Oldendorff Carriers - Singapore
- Riau Bara Harum - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- Sree Jayajothi Cements Limited - India
- Meralco Power Generation, Philippines
- PNOC Exploration Corporation - Philippines
- Singapore Mercantile Exchange
- Leighton Contractors Pty Ltd - Australia
- Lanco Infratech Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- GAC Shipping (India) Pvt Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Sojitz Corporation - Japan
- Kideco Jaya Agung - Indonesia
- Anglo American - United Kingdom
- Uttam Galva Steels Limited - India
- Gujarat Sidhee Cement - India
- Baramulti Group, Indonesia
- Indo Tambangraya Megah - Indonesia
- Global Green Power PLC Corporation, Philippines
- Energy Link Ltd, New Zealand
- Standard Chartered Bank - UAE
- Madhucon Powers Ltd - India
- Sical Logistics Limited - India
- Ceylon Electricity Board - Sri Lanka
- Economic Council, Georgia
- Directorate Of Revenue Intelligence - India
- Essar Steel Hazira Ltd - India
- SMG Consultants - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Attock Cement Pakistan Limited
- Pendopo Energi Batubara - Indonesia
- Altura Mining Limited, Indonesia
- Edison Trading Spa - Italy
- Samtan Co., Ltd - South Korea
- Parry Sugars Refinery, India
- Bhushan Steel Limited - India
- Carbofer General Trading SA - India
- Marubeni Corporation - India
- Independent Power Producers Association of India
- London Commodity Brokers - England
- Bulk Trading Sa - Switzerland
- Offshore Bulk Terminal Pte Ltd, Singapore
- CIMB Investment Bank - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- European Bulk Services B.V. - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Vedanta Resources Plc - India
- Electricity Authority, New Zealand
- Tamil Nadu electricity Board
- Cigading International Bulk Terminal - Indonesia
- Barasentosa Lestari - Indonesia
- South Luzon Thermal Energy Corporation
- Indika Energy - Indonesia
- Africa Commodities Group - South Africa
- CNBM International Corporation - China
- PTC India Limited - India
- Karbindo Abesyapradhi - Indoneisa
- GMR Energy Limited - India
- Bhoruka Overseas - Indonesia
- Ind-Barath Power Infra Limited - India
- Planning Commission, India
- Ministry of Finance - Indonesia
- Xindia Steels Limited - India
- International Coal Ventures Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Coastal Gujarat Power Limited - India
- Savvy Resources Ltd - HongKong
- Billiton Holdings Pty Ltd - Australia
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Electricity Regulatory Commission - India
- VISA Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Coalindo Energy - Indonesia
- Grasim Industreis Ltd - India
- Ambuja Cements Ltd - India
- Tata Chemicals Ltd - India
- IEA Clean Coal Centre - UK
- Star Paper Mills Limited - India
- Bharathi Cement Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- PetroVietnam Power Coal Import and Supply Company
- Agrawal Coal Company - India
- The State Trading Corporation of India Ltd
- Trasteel International SA, Italy
- Orica Australia Pty. Ltd.
- Georgia Ports Authority, United States
- White Energy Company Limited
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bhatia International Limited - India
- Posco Energy - South Korea
- Indonesian Coal Mining Association
- Medco Energi Mining Internasional
- Cement Manufacturers Association - India
- Renaissance Capital - South Africa
- New Zealand Coal & Carbon
- Orica Mining Services - Indonesia
- Interocean Group of Companies - India
- Bahari Cakrawala Sebuku - Indonesia
- Bangladesh Power Developement Board
- McConnell Dowell - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Merrill Lynch Commodities Europe
- Port Waratah Coal Services - Australia
- Indogreen Group - Indonesia
- The University of Queensland
- Timah Investasi Mineral - Indoneisa
- Heidelberg Cement - Germany
- Romanian Commodities Exchange
- Holcim Trading Pte Ltd - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- ICICI Bank Limited - India
- Thiess Contractors Indonesia
- Price Waterhouse Coopers - Russia
- SN Aboitiz Power Inc, Philippines
- Mercuria Energy - Indonesia
- Larsen & Toubro Limited - India
- Australian Commodity Traders Exchange
- MS Steel International - UAE
- Sinarmas Energy and Mining - Indonesia
- Power Finance Corporation Ltd., India
- Dalmia Cement Bharat India
- IHS Mccloskey Coal Group - USA
- Metalloyd Limited - United Kingdom
- Bayan Resources Tbk. - Indonesia
- Indian Oil Corporation Limited
- Goldman Sachs - Singapore
- Therma Luzon, Inc, Philippines
- Salva Resources Pvt Ltd - India
- Energy Development Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Maheswari Brothers Coal Limited - India
- Alfred C Toepfer International GmbH - Germany
- Global Business Power Corporation, Philippines
- Indian Energy Exchange, India
- PowerSource Philippines DevCo
- The Treasury - Australian Government
- Borneo Indobara - Indonesia
- Sakthi Sugars Limited - India
- Latin American Coal - Colombia
- Sarangani Energy Corporation, Philippines
- Aditya Birla Group - India
- Bukit Makmur.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Krishnapatnam Port Company Ltd. - India
- Aboitiz Power Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Antam Resourcindo - Indonesia
- Iligan Light & Power Inc, Philippines
- ASAPP Information Group - India
- Kapuas Tunggal Persada - Indonesia
- Minerals Council of Australia
- LBH Netherlands Bv - Netherlands
- Mintek Dendrill Indonesia
- Rio Tinto Coal - Australia
- AsiaOL BioFuels Corp., Philippines
- Makarim & Taira - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Transport, Egypt
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Coal Association
- Meenaskhi Energy Private Limited - India
- Straits Asia Resources Limited - Singapore
- Semirara Mining Corp, Philippines
- Eastern Energy - Thailand
- Ministry of Mines - Canada
- GN Power Mariveles Coal Plant, Philippines
- Chamber of Mines of South Africa
- Mercator Lines Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Mjunction Services Limited - India
- Deloitte Consulting - India
- Binh Thuan Hamico - Vietnam
- Siam City Cement PLC, Thailand
- Central Java Power - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Intertek Mineral Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Karaikal Port Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Jaiprakash Power Ventures ltd
- Commonwealth Bank - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Manunggal Multi Energi - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Vizag Seaport Private Limited - India
- TeaM Sual Corporation - Philippines
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