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Thursday, 19 November 15
CHINA STEEL PRODUCTION CAPACITY TO PEAK IN 2016 - FITCH RATINGS
 COALspot.com: Fitch Ratings today says that China's steel production capacity is likely to peak in 2016, with capacity elimination over the next five years likely to outpace additions.
In the Q&A below, Hong Kong-based Laura Zhai and Shanghai-based Charles Li of Fitch's Industrial Team, discuss the factors driving their forecasts for China's steel production, exports and consumption.
Q. Chinese steel production capacity continues to increase despite weak demand; when will capacity peak?
Fitch expects Chinese steel production capacity to increase to about 1.17 billion tonnes in 2015 from 1.15 billion in 2014. The increase in 2015 includes about 30 million tonnes of new capacity, which is partly offset by estimated capacity shutdown of 10 million tonnes. Fitch expects annual new capacity of around 16 million tonnes to be added in 2016 and 2017, although this will be offset by shutdowns of plants with total capacity of 75 million-85 million tonnes over the next five years. This will result in capacity peaking in 2016.
Fitch believes that future capacity elimination in China will mainly be driven by market forces rather regulations. Most of the regulatory measures implemented have already forced out smaller players and the plants that remain in operation are larger in comparison and comply with existing policies. Stricter environment standards could also cause financially weak steel producers to shut down because they will not be able to afford the required investments.
Q. China's apparent steel consumption declined in 2014 for the first time in 20 years, and the decrease has extended into 2015. What is Fitch's expectation for steel consumption for 2016 and after?
The decline in China's apparent steel consumption (sum of production and imports, less exports) was mostly due to slower fixed-asset investment (FAI) growth and de-stocking in the steel industry.
China's FAI rose by 10.2% in 10M15, slower than the 15.9% in 10M14, due to deceleration in activity in the manufacturing and property sectors, which accounted for 33% and 23%, respectively of FAI in China in 10M15. The slowdown in construction activity led to a collapse in steel prices. At the same time, steelmakers stepped up sales of their stocks. De-stocking is not captured in apparent consumption, contributing to an understatement of the apparent consumption figure.
Fitch expects FAI growth to pick up slightly in 2Q-3Q16, driven by real-estate construction activities, before reverting to a lower level of normalised growth 12-18 months later. Fitch believes that Chinese apparent consumption of steel will remain flat in the next few years now that de-stocking has ended, at about 760 million tonnes a year. Any substantial negative or positive surprises in growth rates are likely to be driven by swings in real-estate construction activities.
Q. What is Fitch's expectation for Chinese steel exports in the long term?
Exports of steel reached 93.8 million tonnes in 2014, but are likely to return to around 70 million-80 million tonnes a year in the long term. China's exports comprise product sales overseas and the transfer of production capacity overseas, which is known as capacity export in China, to alleviate overcapacity in China.
In the short term, Fitch expects Chinese steel producers to continue to enjoy cost advantages stemming from further depreciation in the Chinese yuan and lower material prices, which will help drive exports.
Over the long term, exports will be mainly driven by China's One Belt One Road plan, where Chinese funding for the construction of a network of transport, energy, and telecommunications infrastructure extending across Asia to Europe and East Africa will create demand for either Chinese steel products or Chinese-constructed production capacities abroad, as a means to alleviate current overcapacity issues in China. The implementation of this policy, though, will depend on domestic government funding and more concrete policy guidelines.
Q. What are the key challenges for Chinese steel producers amid oversupply and slack demand in the market?
Fitch believes that Chinese producers will need to invest in R&D to facilitate manufacturing of higher-value-added products. They will also be faced with more stringent environmental regulations, such as lower limits on sulphur dioxide emission (a major by-product of steel making). Meeting these new standards would require substantial investment with no significant benefit to EBITDA, which may reduce profitability for some steel manufacturers.
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Thursday, 25 January 24
THE RED SEA ESCALATION IMPLICATIONS ON GLOBAL SEABORNE TRADE - MARIA BERTZELETOU
In recent days, discussions have intensified about the potential impact on the seaborne trade and ton-miles due to the evolving dynamics of market ...
Thursday, 25 January 24
RED SEA SHIPPING DISRUPTIONS KEEP GEOPOLITICAL PREMIUM FOR COMMODITIES - FITCH RATINGS
Shipping disruptions and re-routing away from the Red Sea will maintain the geopolitical premium in the main commodity markets, including for oil a ...
Friday, 19 January 24
INDONESIA TARGETS 710 MLN METRIC TONS COAL OUTPUT IN 2024 AFTER RECORD 2023 - REUTERS
Indonesia, a major thermal coal exporter, aims to produce 710 million metric tons of coal in 2024, its mining minister said on Monday, after postin ...
Friday, 19 January 24
DRUMMOND COLOMBIA COAL OUTPUT ROSE 7.1% IN 2023 - REUTERS
Coal production from miner Drummond’s Colombia operations rose 7.1% in 2023 to 29.5 million metric tons, while exports declined by 2.6% to 27 ...
Friday, 19 January 24
CHINA'S 2023 COAL OUTPUT HITS RECORD HIGH - REUTERS
China’s coal output reached a record high in 2023, data from the statistics bureau showed on Wednesday, amid an ongoing focus on energy secur ...
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- Bukit Makmur.PT - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Aditya Birla Group - India
- Jorong Barutama Greston.PT - Indonesia
- PowerSource Philippines DevCo
- Kepco SPC Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Independent Power Producers Association of India
- Sakthi Sugars Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Australian Commodity Traders Exchange
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- Commonwealth Bank - Australia
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- LBH Netherlands Bv - Netherlands
- GAC Shipping (India) Pvt Ltd
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- Pipit Mutiara Jaya. PT, Indonesia
- Electricity Authority, New Zealand
- Toyota Tsusho Corporation, Japan
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- Ministry of Finance - Indonesia
- Makarim & Taira - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Romanian Commodities Exchange
- Global Green Power PLC Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Kaltim Prima Coal - Indonesia
- GVK Power & Infra Limited - India
- Borneo Indobara - Indonesia
- New Zealand Coal & Carbon
- Sical Logistics Limited - India
- Semirara Mining Corp, Philippines
- Intertek Mineral Services - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Indonesian Coal Mining Association
- Barasentosa Lestari - Indonesia
- Wilmar Investment Holdings
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement PLC, Thailand
- TNB Fuel Sdn Bhd - Malaysia
- McConnell Dowell - Australia
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- Billiton Holdings Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Aboitiz Power Corporation - Philippines
- Star Paper Mills Limited - India
- Coal and Oil Company - UAE
- Larsen & Toubro Limited - India
- Miang Besar Coal Terminal - Indonesia
- Georgia Ports Authority, United States
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement - Thailand
- Coalindo Energy - Indonesia
- Chamber of Mines of South Africa
- GMR Energy Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The Treasury - Australian Government
- Ministry of Transport, Egypt
- Carbofer General Trading SA - India
- Wood Mackenzie - Singapore
- Madhucon Powers Ltd - India
- ASAPP Information Group - India
- Posco Energy - South Korea
- Banpu Public Company Limited - Thailand
- Indian Oil Corporation Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Indo Tambangraya Megah - Indonesia
- Central Electricity Authority - India
- ICICI Bank Limited - India
- Medco Energi Mining Internasional
- Uttam Galva Steels Limited - India
- Videocon Industries ltd - India
- Bangladesh Power Developement Board
- Global Business Power Corporation, Philippines
- Edison Trading Spa - Italy
- Ambuja Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- PetroVietnam Power Coal Import and Supply Company
- Tata Chemicals Ltd - India
- Samtan Co., Ltd - South Korea
- Trasteel International SA, Italy
- Electricity Generating Authority of Thailand
- Iligan Light & Power Inc, Philippines
- South Luzon Thermal Energy Corporation
- Rio Tinto Coal - Australia
- Chettinad Cement Corporation Ltd - India
- Orica Mining Services - Indonesia
- Baramulti Group, Indonesia
- Central Java Power - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Tamil Nadu electricity Board
- Ministry of Mines - Canada
- Maharashtra Electricity Regulatory Commission - India
- Standard Chartered Bank - UAE
- Cigading International Bulk Terminal - Indonesia
- Kumho Petrochemical, South Korea
- GN Power Mariveles Coal Plant, Philippines
- Planning Commission, India
- Price Waterhouse Coopers - Russia
- Salva Resources Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Singapore Mercantile Exchange
- Deloitte Consulting - India
- Bahari Cakrawala Sebuku - Indonesia
- Meralco Power Generation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Ind-Barath Power Infra Limited - India
- Africa Commodities Group - South Africa
- Dalmia Cement Bharat India
- PTC India Limited - India
- Interocean Group of Companies - India
- VISA Power Limited - India
- Savvy Resources Ltd - HongKong
- Australian Coal Association
- Eastern Coal Council - USA
- Attock Cement Pakistan Limited
- Bhoruka Overseas - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Indika Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Latin American Coal - Colombia
- Energy Link Ltd, New Zealand
- Agrawal Coal Company - India
- Leighton Contractors Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- Heidelberg Cement - Germany
- The State Trading Corporation of India Ltd
- Marubeni Corporation - India
- Jindal Steel & Power Ltd - India
- Cement Manufacturers Association - India
- Eastern Energy - Thailand
- IEA Clean Coal Centre - UK
- Petron Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Energy Development Corp, Philippines
- Bhatia International Limited - India
- The University of Queensland
- Orica Australia Pty. Ltd.
- OPG Power Generation Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Altura Mining Limited, Indonesia
- Parry Sugars Refinery, India
- European Bulk Services B.V. - Netherlands
- Bukit Baiduri Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Parliament of New Zealand
- CNBM International Corporation - China
- Sarangani Energy Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Meenaskhi Energy Private Limited - India
- PNOC Exploration Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- London Commodity Brokers - England
- Jaiprakash Power Ventures ltd
- Merrill Lynch Commodities Europe
- Neyveli Lignite Corporation Ltd, - India
- Global Coal Blending Company Limited - Australia
- Lanco Infratech Ltd - India
- Anglo American - United Kingdom
- Mercator Lines Limited - India
- Mjunction Services Limited - India
- Alfred C Toepfer International GmbH - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sree Jayajothi Cements Limited - India
- Power Finance Corporation Ltd., India
- Mercuria Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- SMG Consultants - Indonesia
- Riau Bara Harum - Indonesia
- Gujarat Sidhee Cement - India
- Minerals Council of Australia
- Bukit Asam (Persero) Tbk - Indonesia
- White Energy Company Limited
- Karaikal Port Pvt Ltd - India
- Goldman Sachs - Singapore
- Binh Thuan Hamico - Vietnam
- Indian Energy Exchange, India
- Bulk Trading Sa - Switzerland
- Manunggal Multi Energi - Indonesia
- Thai Mozambique Logistica
- Bharathi Cement Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IHS Mccloskey Coal Group - USA
- MS Steel International - UAE
- Grasim Industreis Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Maheswari Brothers Coal Limited - India
- Port Waratah Coal Services - Australia
- India Bulls Power Limited - India
- SMC Global Power, Philippines
- San Jose City I Power Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Essar Steel Hazira Ltd - India
- Straits Asia Resources Limited - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Bhushan Steel Limited - India
- Semirara Mining and Power Corporation, Philippines
- Malabar Cements Ltd - India
- Renaissance Capital - South Africa
- Mintek Dendrill Indonesia
- Xindia Steels Limited - India
- TeaM Sual Corporation - Philippines
- Indogreen Group - Indonesia
- Economic Council, Georgia
- Coastal Gujarat Power Limited - India
- Sojitz Corporation - Japan
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