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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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Tuesday, 13 February 24
WHAT IS THE OUTLOOK FOR THE NATURAL GAS SPOT PRICE IN 2024 AND 2025? EIA
We expect the U.S. benchmark Henry Hub natural gas spot price to average higher in 2024 and 2025 than in 2023, but to remain lower than $3.00 per m ...
Monday, 12 February 24
US THERMAL COAL EXPORTS HIT 5-YEAR HIGHS AND TOP $5 BLN IN 2023 - REUTERS
United States exporters of thermal coal earned more than $5 billion in 2023 as they shipped out more than 32.5 million metric tons of the high-poll ...
Tuesday, 06 February 24
NEW E-FUELS PROJECT TO MAKE INTERNATIONAL SHIPPING CLIMATE-NEUTRAL - RINA
Transport and trade on the ocean blue must be made much greener. This is the goal of the new €17 million European GAMMA project, where compani ...
Tuesday, 06 February 24
INDIA SEES ANNUAL COAL OUTPUT UP 10.9% IN 2024/25 - REUTERS
India expects domestic coal output to increase by 10.9% to 1.13 billion metric tons in the fiscal year ending March 2025, a senior government offic ...
Tuesday, 06 February 24
INDIA'S COAL PRODUCTION INCREASES BY 10.3% TO 99.73 MILLION TONNE IN JANUARY - PTI
The country’s coal output rose 10.3 per cent to 99.73 Million Tonne (MT) in January, over the same month in the previous fiscal.
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Showing 36 to 40 news of total 6871 |
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- Bhushan Steel Limited - India
- Latin American Coal - Colombia
- Price Waterhouse Coopers - Russia
- IHS Mccloskey Coal Group - USA
- VISA Power Limited - India
- Karaikal Port Pvt Ltd - India
- Indian Energy Exchange, India
- Aboitiz Power Corporation - Philippines
- Uttam Galva Steels Limited - India
- MS Steel International - UAE
- Global Business Power Corporation, Philippines
- Coal and Oil Company - UAE
- Cigading International Bulk Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Meenaskhi Energy Private Limited - India
- The Treasury - Australian Government
- Agrawal Coal Company - India
- Goldman Sachs - Singapore
- Madhucon Powers Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement - Thailand
- Toyota Tsusho Corporation, Japan
- Heidelberg Cement - Germany
- Ambuja Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Kumho Petrochemical, South Korea
- Economic Council, Georgia
- Maharashtra Electricity Regulatory Commission - India
- Anglo American - United Kingdom
- Straits Asia Resources Limited - Singapore
- Directorate General of MIneral and Coal - Indonesia
- IEA Clean Coal Centre - UK
- Power Finance Corporation Ltd., India
- Edison Trading Spa - Italy
- Interocean Group of Companies - India
- Electricity Authority, New Zealand
- Thai Mozambique Logistica
- Asmin Koalindo Tuhup - Indonesia
- Kepco SPC Power Corporation, Philippines
- Romanian Commodities Exchange
- Indian Oil Corporation Limited
- Ceylon Electricity Board - Sri Lanka
- Gujarat Electricity Regulatory Commission - India
- Singapore Mercantile Exchange
- Chamber of Mines of South Africa
- PNOC Exploration Corporation - Philippines
- Sakthi Sugars Limited - India
- Salva Resources Pvt Ltd - India
- Medco Energi Mining Internasional
- Star Paper Mills Limited - India
- Malabar Cements Ltd - India
- Carbofer General Trading SA - India
- Mercator Lines Limited - India
- Georgia Ports Authority, United States
- Energy Link Ltd, New Zealand
- Essar Steel Hazira Ltd - India
- Riau Bara Harum - Indonesia
- Formosa Plastics Group - Taiwan
- White Energy Company Limited
- Commonwealth Bank - Australia
- Indo Tambangraya Megah - Indonesia
- Siam City Cement PLC, Thailand
- PetroVietnam Power Coal Import and Supply Company
- Alfred C Toepfer International GmbH - Germany
- SMG Consultants - Indonesia
- Kapuas Tunggal Persada - Indonesia
- GAC Shipping (India) Pvt Ltd
- Makarim & Taira - Indonesia
- Savvy Resources Ltd - HongKong
- Jindal Steel & Power Ltd - India
- The University of Queensland
- Global Green Power PLC Corporation, Philippines
- Tamil Nadu electricity Board
- GMR Energy Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Cement Manufacturers Association - India
- Bukit Makmur.PT - Indonesia
- Parliament of New Zealand
- Iligan Light & Power Inc, Philippines
- Oldendorff Carriers - Singapore
- Mintek Dendrill Indonesia
- GVK Power & Infra Limited - India
- Australian Commodity Traders Exchange
- TeaM Sual Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- European Bulk Services B.V. - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
- Deloitte Consulting - India
- Larsen & Toubro Limited - India
- Samtan Co., Ltd - South Korea
- Meralco Power Generation, Philippines
- Pendopo Energi Batubara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- OPG Power Generation Pvt Ltd - India
- Lanco Infratech Ltd - India
- Globalindo Alam Lestari - Indonesia
- New Zealand Coal & Carbon
- Central Java Power - Indonesia
- Renaissance Capital - South Africa
- Bulk Trading Sa - Switzerland
- International Coal Ventures Pvt Ltd - India
- Mercuria Energy - Indonesia
- Bhatia International Limited - India
- Bayan Resources Tbk. - Indonesia
- Posco Energy - South Korea
- Metalloyd Limited - United Kingdom
- London Commodity Brokers - England
- Central Electricity Authority - India
- Kalimantan Lumbung Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- CNBM International Corporation - China
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Petron Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Intertek Mineral Services - Indonesia
- Indonesian Coal Mining Association
- Sojitz Corporation - Japan
- Sical Logistics Limited - India
- Attock Cement Pakistan Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Thiess Contractors Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vedanta Resources Plc - India
- Ind-Barath Power Infra Limited - India
- Binh Thuan Hamico - Vietnam
- Simpson Spence & Young - Indonesia
- Indika Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Eastern Energy - Thailand
- CIMB Investment Bank - Malaysia
- Eastern Coal Council - USA
- GN Power Mariveles Coal Plant, Philippines
- ICICI Bank Limited - India
- Kartika Selabumi Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Baramulti Group, Indonesia
- Planning Commission, India
- Merrill Lynch Commodities Europe
- LBH Netherlands Bv - Netherlands
- Barasentosa Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Sidhee Cement - India
- Ministry of Transport, Egypt
- Australian Coal Association
- Bukit Baiduri Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jaiprakash Power Ventures ltd
- Xindia Steels Limited - India
- Altura Mining Limited, Indonesia
- Grasim Industreis Ltd - India
- Port Waratah Coal Services - Australia
- The State Trading Corporation of India Ltd
- ASAPP Information Group - India
- Africa Commodities Group - South Africa
- South Luzon Thermal Energy Corporation
- TNB Fuel Sdn Bhd - Malaysia
- Videocon Industries ltd - India
- Bharathi Cement Corporation - India
- Semirara Mining Corp, Philippines
- Trasteel International SA, Italy
- Kaltim Prima Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Global Coal Blending Company Limited - Australia
- Rashtriya Ispat Nigam Limited - India
- PowerSource Philippines DevCo
- San Jose City I Power Corp, Philippines
- Orica Mining Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Miang Besar Coal Terminal - Indonesia
- India Bulls Power Limited - India
- Energy Development Corp, Philippines
- Marubeni Corporation - India
- Sarangani Energy Corporation, Philippines
- Ministry of Mines - Canada
- Rio Tinto Coal - Australia
- Holcim Trading Pte Ltd - Singapore
- Minerals Council of Australia
- Aditya Birla Group - India
- Chettinad Cement Corporation Ltd - India
- Wilmar Investment Holdings
- Neyveli Lignite Corporation Ltd, - India
- Kideco Jaya Agung - Indonesia
- Parry Sugars Refinery, India
- Bangladesh Power Developement Board
- SMC Global Power, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jorong Barutama Greston.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Vizag Seaport Private Limited - India
- Tata Chemicals Ltd - India
- Indogreen Group - Indonesia
- Electricity Generating Authority of Thailand
- Mjunction Services Limited - India
- Banpu Public Company Limited - Thailand
- Dalmia Cement Bharat India
- McConnell Dowell - Australia
- Ministry of Finance - Indonesia
- PTC India Limited - India
- AsiaOL BioFuels Corp., Philippines
- Therma Luzon, Inc, Philippines
- Independent Power Producers Association of India
- Standard Chartered Bank - UAE
- Sindya Power Generating Company Private Ltd
- Wood Mackenzie - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Borneo Indobara - Indonesia
- Antam Resourcindo - Indonesia
- Coalindo Energy - Indonesia
- Orica Australia Pty. Ltd.
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