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Thursday, 16 April 15
NEW COMMODITY SUPERHIGHWAY WILL EMERGE IN CHINA, ALTERING ENERGY TRADE FLOWS - WOOD MACKENZIE
 Wood Mackenzie says that China’s Go West strategy – encouraging coastal to inland flow of capital and people - will result in the formation of a new commodity superhighway. This new superhighway will impact the energy trade flows within China and externally via the new Silk Road routes; which acts to link the country's east to west, onwards to Central Asia and beyond. This represents significant business and investment opportunities in China's west.
Wood Mackenzie’s Principal Asia Economist, Ms Cynthia Lim, explains China’s Go West policy, “The plan is already underway and is often touted as China’s silver bullet to ensure long-term GDP growth as the economically dominant coastal region approaches maturity. The coastal provinces will have to upgrade their industries to higher value-add sectors, such as services while industries will relocate inland westwards. This is shifting the regional distribution of demand centres and power generation; and the impact will become more apparent in the next two decades. This will form an impressive commodity superhighway.”
The commodity superhighway will have three main implications: "The first implication," says Mr Frank Yu, Senior Asia Power Consultant, “Is that power generation in the central and western regions will almost triple from around 3,200 Terrawatt hours (TWh) in 2015 to almost 9,600TWh in 2035. This far outpaces the coastal region’s generation growth in the same period, which is only set to increase from under 3,000TWh to 6,000TWh.”
The second implication is the emergence of new energy trade flows within China, from the inland west to coastal regions of China. Mr Yu explains, “Coastal regions will become further reliant on China’s west to meet its energy demand. The west has an abundant supply of energy, accounting for more than 65% of China’s marketable coal and gas reserves. As coal remains the dominant fuel, coal-fired power plants in central and western province areas will generate more power to feed demand-heavy coastal centres through long-distance power transmission grids. Additionally, the coastal region’s generation growth in the same period, which is only set to increase from under 3,000TWh to 6,000TWh.”
The second implication is the emergence of new energy trade flows within China, from the inland west to coastal regions of China. Mr Yu explains, “Coastal regions will become further reliant on China’s west to meet its energy demand. The west has an abundant supply of energy, accounting for more than 65% of China’s marketable coal and gas reserves. As coal remains the dominant fuel, coal-fired power plants in central and western province areas will generate more power to feed demand-heavy coastal centres through long-distance power transmission grids. Additionally, the west holds the majority of renewable energy potential – hydropower, wind and solar. We also expect shale gas production in the west to ramp up, particularly from Sichuan, Shaanxi and Xinjiang, to around 140 billion cubic metres (bcm) by 2035. ”
Wood Mackenzie says the third implication is that planned transport infrastructure build will open up new markets in Central Asia and facilitate energy imports into China via its western border. China is planning two main routes – the new land-borne ‘Silk Road Economic Belt’ and the ‘21st Century Maritime Silk Road’, from southeast China to west Asia, via the South China sea. Infrastructure development will make Xinjiang a key gateway for commodity trade between China, Central Asia and Russia. Ms Lim says, “Xinjiang is strategically important because of its rich energy resources and as a transport hub with oil and gas supplies from Central Asia and Russia converging before being distributed for use in the east.
“For China’s west to fulfil its growth potential, significant investment is needed in energy production and transport infrastructure. We estimate that investment in new power generation capacity and coal mines in Xinjiang, for example, will total US$140billion (bn) and US$120bn respectively in the next 20 years. However, there are also key risks to the success of this commodity superhighway that investors will have to watch for.”
Wood Mackenzie's analysis says the risks are: Firstly, the pace and scale of economic and energy reforms - slow progress in restructuring provincial government debt and introducing market pricing for gas and power could subdue western development. Secondly, the rate of building infrastructure for power transmission as this is key for the success of trade routes with coastal China and Central Asia. Thirdly, water scarcity as it could mean coal mining and power plants that already face cost pressure from extra raw material preparation requirements like coal washing could face higher costs. Lastly, political risks must be managed – this includes diplomatic relationships with China’s Central Asian neighbours in building the new trade routes as well as potential domestic unrest in Xinjiang.
Ms Lim concludes, “Many of the risks can be mitigated through government support and finance but the geopolitical and social risks are far less predictable. China’s west has the energy resources, cost advantages and policy support to become a new energy and commodity superhighway, re-defining the flow of trade for decades to come. It could drive robust GDP growth for China through the longer-term and strengthen China’s economic and political influence with its neighbours. Given the high stakes of this commodity superhighway, success of the Go West strategy is a major Chinese government priority.”
About Wood Mackenzie:
Wood Mackenzie is a global leader in commercial intelligence for the energy, chemicals, metals and mining industries, providing objective analysis and advice on assets, companies, and markets to leading international and national energy and metals companies as well as financial institutions and governments.
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Friday, 08 May 15
COAL PRODUCTION IN U.S. UP 3.2% THIS PAST WEEK - EIA
COALspot.com – United States the second largest coal producer in the world has produced approximately totaled an estimated 17.4 million short ...
Wednesday, 06 May 15
COMBINATION OF HOLIDAYS AND A SHAKY MARKET PUT ADDITIONAL PRESSURE ON RATES
COALspot.com: The combination of holidays and a shaky market is always a recipe for additional pressure on rates and last week was no exception. Wi ...
Wednesday, 06 May 15
SHIPPING MARKET INSIGHT - GEORGE ILIOPOULOS
The first four months of 2015 are now behind us and they make up for a decent amount of time to look back and assess how the year is evolving so fa ...
Tuesday, 05 May 15
MIFA BERSAUDARA UNIT OF ABM INVESTAMA STARTS OPERATING $200M COAL MINE IN ACEH
Reswara Minergi Hartama, a coal mining unit of coal miner ABM Investama known as known as Reswara, inaugurated a $200 million integrated coal minin ...
Tuesday, 05 May 15
FREIGHT DERIVATIVE VOLUMES REACHED TOTALED 14,154 CONTRACTS IN APRIL - SGX
COALspot.com: “Our unique suite of freight and bulk commodity products provides market participants with a wide range of trading strategies a ...
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- Therma Luzon, Inc, Philippines
- Bulk Trading Sa - Switzerland
- Directorate General of MIneral and Coal - Indonesia
- The Treasury - Australian Government
- Makarim & Taira - Indonesia
- LBH Netherlands Bv - Netherlands
- Eastern Energy - Thailand
- Altura Mining Limited, Indonesia
- Independent Power Producers Association of India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The University of Queensland
- Minerals Council of Australia
- Power Finance Corporation Ltd., India
- Electricity Authority, New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Jaiprakash Power Ventures ltd
- Holcim Trading Pte Ltd - Singapore
- Wilmar Investment Holdings
- Standard Chartered Bank - UAE
- McConnell Dowell - Australia
- Thai Mozambique Logistica
- Sakthi Sugars Limited - India
- Port Waratah Coal Services - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Malabar Cements Ltd - India
- Coalindo Energy - Indonesia
- Heidelberg Cement - Germany
- Kaltim Prima Coal - Indonesia
- Baramulti Group, Indonesia
- Energy Link Ltd, New Zealand
- Sree Jayajothi Cements Limited - India
- Oldendorff Carriers - Singapore
- Planning Commission, India
- Sinarmas Energy and Mining - Indonesia
- ASAPP Information Group - India
- Latin American Coal - Colombia
- Chettinad Cement Corporation Ltd - India
- Lanco Infratech Ltd - India
- Trasteel International SA, Italy
- Bank of Tokyo Mitsubishi UFJ Ltd
- Toyota Tsusho Corporation, Japan
- Dalmia Cement Bharat India
- Vijayanagar Sugar Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Eastern Coal Council - USA
- Riau Bara Harum - Indonesia
- Aditya Birla Group - India
- Kalimantan Lumbung Energi - Indonesia
- Singapore Mercantile Exchange
- Coastal Gujarat Power Limited - India
- Meralco Power Generation, Philippines
- Barasentosa Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Indonesian Coal Mining Association
- Renaissance Capital - South Africa
- Salva Resources Pvt Ltd - India
- Ministry of Transport, Egypt
- ICICI Bank Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhatia International Limited - India
- Meenaskhi Energy Private Limited - India
- Ministry of Mines - Canada
- Siam City Cement PLC, Thailand
- Deloitte Consulting - India
- Cement Manufacturers Association - India
- Alfred C Toepfer International GmbH - Germany
- Neyveli Lignite Corporation Ltd, - India
- The State Trading Corporation of India Ltd
- Parliament of New Zealand
- Karaikal Port Pvt Ltd - India
- Central Electricity Authority - India
- Jindal Steel & Power Ltd - India
- Directorate Of Revenue Intelligence - India
- GN Power Mariveles Coal Plant, Philippines
- Rio Tinto Coal - Australia
- SMG Consultants - Indonesia
- Mercuria Energy - Indonesia
- Indian Energy Exchange, India
- Economic Council, Georgia
- Uttam Galva Steels Limited - India
- Orica Mining Services - Indonesia
- Metalloyd Limited - United Kingdom
- Indian Oil Corporation Limited
- Orica Australia Pty. Ltd.
- OPG Power Generation Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Tamil Nadu electricity Board
- Ambuja Cements Ltd - India
- Commonwealth Bank - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Videocon Industries ltd - India
- Mintek Dendrill Indonesia
- Semirara Mining Corp, Philippines
- Central Java Power - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Formosa Plastics Group - Taiwan
- South Luzon Thermal Energy Corporation
- Sical Logistics Limited - India
- Electricity Generating Authority of Thailand
- Parry Sugars Refinery, India
- Ind-Barath Power Infra Limited - India
- Romanian Commodities Exchange
- Kumho Petrochemical, South Korea
- Asmin Koalindo Tuhup - Indonesia
- IHS Mccloskey Coal Group - USA
- Vedanta Resources Plc - India
- Billiton Holdings Pty Ltd - Australia
- Goldman Sachs - Singapore
- Edison Trading Spa - Italy
- GMR Energy Limited - India
- Bukit Baiduri Energy - Indonesia
- Larsen & Toubro Limited - India
- Anglo American - United Kingdom
- Timah Investasi Mineral - Indoneisa
- Gujarat Sidhee Cement - India
- Kepco SPC Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Carbofer General Trading SA - India
- Kideco Jaya Agung - Indonesia
- Borneo Indobara - Indonesia
- VISA Power Limited - India
- Vizag Seaport Private Limited - India
- Kartika Selabumi Mining - Indonesia
- Georgia Ports Authority, United States
- TNB Fuel Sdn Bhd - Malaysia
- TeaM Sual Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- PowerSource Philippines DevCo
- Chamber of Mines of South Africa
- International Coal Ventures Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- AsiaOL BioFuels Corp., Philippines
- Ministry of Finance - Indonesia
- Price Waterhouse Coopers - Russia
- Mercator Lines Limited - India
- IEA Clean Coal Centre - UK
- New Zealand Coal & Carbon
- Straits Asia Resources Limited - Singapore
- CNBM International Corporation - China
- PNOC Exploration Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Essar Steel Hazira Ltd - India
- CIMB Investment Bank - Malaysia
- Bayan Resources Tbk. - Indonesia
- Maheswari Brothers Coal Limited - India
- MS Steel International - UAE
- Thiess Contractors Indonesia
- Grasim Industreis Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- PTC India Limited - India
- Australian Commodity Traders Exchange
- Aboitiz Power Corporation - Philippines
- Bhushan Steel Limited - India
- Semirara Mining and Power Corporation, Philippines
- Australian Coal Association
- GVK Power & Infra Limited - India
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- Kobexindo Tractors - Indoneisa
- Xindia Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Marubeni Corporation - India
- Bharathi Cement Corporation - India
- Merrill Lynch Commodities Europe
- Antam Resourcindo - Indonesia
- Wood Mackenzie - Singapore
- India Bulls Power Limited - India
- Sojitz Corporation - Japan
- Krishnapatnam Port Company Ltd. - India
- Global Green Power PLC Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- White Energy Company Limited
- PetroVietnam Power Coal Import and Supply Company
- Attock Cement Pakistan Limited
- Cigading International Bulk Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- London Commodity Brokers - England
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- Manunggal Multi Energi - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Indogreen Group - Indonesia
- Savvy Resources Ltd - HongKong
- Energy Development Corp, Philippines
- Bhoruka Overseas - Indonesia
- Medco Energi Mining Internasional
- San Jose City I Power Corp, Philippines
- Mjunction Services Limited - India
- European Bulk Services B.V. - Netherlands
- GAC Shipping (India) Pvt Ltd
- Indika Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Global Business Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Simpson Spence & Young - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Interocean Group of Companies - India
- SN Aboitiz Power Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Samtan Co., Ltd - South Korea
- SMC Global Power, Philippines
- Posco Energy - South Korea
- Petron Corporation, Philippines
- Bangladesh Power Developement Board
- Tata Chemicals Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Star Paper Mills Limited - India
- Globalindo Alam Lestari - Indonesia
- Coal and Oil Company - UAE
- Binh Thuan Hamico - Vietnam
- Madhucon Powers Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Agrawal Coal Company - India
- Indo Tambangraya Megah - Indonesia
- Sindya Power Generating Company Private Ltd
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