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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, 22 March 24
INDONESIA APPROVES 922.14 MLN T COAL PRODUCTION QUOTA FOR 2024, ABOVE TARGET - REUTERS
Indonesia has approved coal production quotas totalling 922.14 million metric tons for 2024, Bambang Suswantono, a senior official at the mining mi ...
Friday, 22 March 24
CHINA COAL INDUSTRY GROUP EXPECTS OUTPUT GROWTH TO SLOW IN 2024 - REUTERS
China’s coal output is expected to increase 36 million metric tons, or 0.8%, to about 4.7 billion tonnes in 2024, a Chinese coal industry gro ...
Monday, 18 March 24
THREE KEY TAKEAWAYS FROM OUR EUROPE GAS MARKETS SHORT-TERM OUTLOOK Q1 2024 - WOOD MACKENZIE
European gas prices are currently back to pre-crisis levels, but with a complex series of factors affecting future supply and demand, are they set ...
Wednesday, 06 March 24
INDONESIA AIMS TO FINISH MINING OUTPUT QUOTAS APPROVAL BY END-MARCH, OFFICIAL SAYS - REUTERS
Indonesia’s has approved the mining production quotarequests from more than 120mineral companies and aims to complete the approval process th ...
Monday, 04 March 24
IS YOUR GUARANTEE A GUARANTEE? NOTE TO SHIPOWNERS - GARD
KNOWLEDGE TO ELEVATE
The law of guarantees is not always obvious or easy to understand without proper guidance. This article clarifies the dif ...
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Showing 26 to 30 news of total 6871 |
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- Jindal Steel & Power Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Bukit Baiduri Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Rio Tinto Coal - Australia
- GN Power Mariveles Coal Plant, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Thai Mozambique Logistica
- Gujarat Sidhee Cement - India
- IEA Clean Coal Centre - UK
- Dalmia Cement Bharat India
- Lanco Infratech Ltd - India
- Heidelberg Cement - Germany
- Billiton Holdings Pty Ltd - Australia
- Malabar Cements Ltd - India
- Larsen & Toubro Limited - India
- Timah Investasi Mineral - Indoneisa
- Mercator Lines Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Miang Besar Coal Terminal - Indonesia
- Ministry of Finance - Indonesia
- Merrill Lynch Commodities Europe
- SMC Global Power, Philippines
- Formosa Plastics Group - Taiwan
- Interocean Group of Companies - India
- Romanian Commodities Exchange
- Bhoruka Overseas - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Intertek Mineral Services - Indonesia
- Vizag Seaport Private Limited - India
- LBH Netherlands Bv - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Trasteel International SA, Italy
- Semirara Mining Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- Wilmar Investment Holdings
- Energy Link Ltd, New Zealand
- Central Electricity Authority - India
- Coalindo Energy - Indonesia
- Altura Mining Limited, Indonesia
- Binh Thuan Hamico - Vietnam
- ICICI Bank Limited - India
- Ministry of Mines - Canada
- Edison Trading Spa - Italy
- AsiaOL BioFuels Corp., Philippines
- Price Waterhouse Coopers - Russia
- White Energy Company Limited
- Borneo Indobara - Indonesia
- PNOC Exploration Corporation - Philippines
- Global Business Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Straits Asia Resources Limited - Singapore
- Renaissance Capital - South Africa
- Siam City Cement - Thailand
- Ceylon Electricity Board - Sri Lanka
- Parry Sugars Refinery, India
- Bayan Resources Tbk. - Indonesia
- Samtan Co., Ltd - South Korea
- Pendopo Energi Batubara - Indonesia
- Indian Energy Exchange, India
- Coal and Oil Company - UAE
- Coastal Gujarat Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Savvy Resources Ltd - HongKong
- Globalindo Alam Lestari - Indonesia
- Cement Manufacturers Association - India
- Indogreen Group - Indonesia
- Singapore Mercantile Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Attock Cement Pakistan Limited
- Global Green Power PLC Corporation, Philippines
- Sojitz Corporation - Japan
- Xindia Steels Limited - India
- Kaltim Prima Coal - Indonesia
- The State Trading Corporation of India Ltd
- Bangladesh Power Developement Board
- Port Waratah Coal Services - Australia
- Holcim Trading Pte Ltd - Singapore
- New Zealand Coal & Carbon
- Orica Australia Pty. Ltd.
- MS Steel International - UAE
- Australian Commodity Traders Exchange
- Australian Coal Association
- Sinarmas Energy and Mining - Indonesia
- Madhucon Powers Ltd - India
- Mintek Dendrill Indonesia
- Kepco SPC Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Independent Power Producers Association of India
- Oldendorff Carriers - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Simpson Spence & Young - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Siam City Cement PLC, Thailand
- Videocon Industries ltd - India
- Alfred C Toepfer International GmbH - Germany
- Mercuria Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Baramulti Group, Indonesia
- Georgia Ports Authority, United States
- Vedanta Resources Plc - India
- Indonesian Coal Mining Association
- Grasim Industreis Ltd - India
- Aditya Birla Group - India
- Bharathi Cement Corporation - India
- Energy Development Corp, Philippines
- Planning Commission, India
- Eastern Energy - Thailand
- Meenaskhi Energy Private Limited - India
- Standard Chartered Bank - UAE
- Electricity Generating Authority of Thailand
- Bulk Trading Sa - Switzerland
- Mjunction Services Limited - India
- Minerals Council of Australia
- The Treasury - Australian Government
- Riau Bara Harum - Indonesia
- Star Paper Mills Limited - India
- Sree Jayajothi Cements Limited - India
- Cigading International Bulk Terminal - Indonesia
- Bhushan Steel Limited - India
- Agrawal Coal Company - India
- Latin American Coal - Colombia
- Anglo American - United Kingdom
- Makarim & Taira - Indonesia
- Carbofer General Trading SA - India
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Authority, New Zealand
- McConnell Dowell - Australia
- Rashtriya Ispat Nigam Limited - India
- India Bulls Power Limited - India
- Marubeni Corporation - India
- Metalloyd Limited - United Kingdom
- IHS Mccloskey Coal Group - USA
- Sindya Power Generating Company Private Ltd
- Central Java Power - Indonesia
- International Coal Ventures Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Indika Energy - Indonesia
- PowerSource Philippines DevCo
- Leighton Contractors Pty Ltd - Australia
- South Luzon Thermal Energy Corporation
- Thiess Contractors Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Therma Luzon, Inc, Philippines
- Economic Council, Georgia
- London Commodity Brokers - England
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Transport, Egypt
- Ind-Barath Power Infra Limited - India
- Posco Energy - South Korea
- Barasentosa Lestari - Indonesia
- The University of Queensland
- ASAPP Information Group - India
- Chettinad Cement Corporation Ltd - India
- GVK Power & Infra Limited - India
- Sarangani Energy Corporation, Philippines
- Goldman Sachs - Singapore
- Kobexindo Tractors - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Commonwealth Bank - Australia
- Jorong Barutama Greston.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Salva Resources Pvt Ltd - India
- Bhatia International Limited - India
- Indian Oil Corporation Limited
- CIMB Investment Bank - Malaysia
- SMG Consultants - Indonesia
- Chamber of Mines of South Africa
- TeaM Sual Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Deloitte Consulting - India
- Asmin Koalindo Tuhup - Indonesia
- Wood Mackenzie - Singapore
- GMR Energy Limited - India
- Eastern Coal Council - USA
- Orica Mining Services - Indonesia
- Jaiprakash Power Ventures ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- GAC Shipping (India) Pvt Ltd
- Kideco Jaya Agung - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- Sical Logistics Limited - India
- Toyota Tsusho Corporation, Japan
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate Of Revenue Intelligence - India
- Global Coal Blending Company Limited - Australia
- CNBM International Corporation - China
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Essar Steel Hazira Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Tamil Nadu electricity Board
- Manunggal Multi Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- Petron Corporation, Philippines
- VISA Power Limited - India
- Tata Chemicals Ltd - India
- Antam Resourcindo - Indonesia
- European Bulk Services B.V. - Netherlands
- Sakthi Sugars Limited - India
- Parliament of New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Kumho Petrochemical, South Korea
- Maheswari Brothers Coal Limited - India
- Meralco Power Generation, Philippines
- Uttam Galva Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PTC India Limited - India
- Medco Energi Mining Internasional
- Bahari Cakrawala Sebuku - Indonesia
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