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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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Friday, 02 August 24
COAL MARKET DEVELOPMENTS: FALLING PRICES AMID RECORD-HIGH OUTPUT - WORLD BANK
Coal prices inched up in May (m/m) following an 8 percent decline in 2024Q1. The Australian and South African benchmarks have plummeted more ...
Friday, 26 July 24
FUELEU MARITME IS COMING. IS YOUR CHARTERPARTY READY? - GARD
With less than six months to implementation of FuelEU Maritime in EU and EEA trades, there has been little published advice regarding how to alloca ...
Thursday, 04 July 24
INDIA'S COAL PRODUCTION RISES 14% IN JUNE - PTI
The country’s coal production rose by 14.49% to 84.63 million tonne (MT) in June. The country’s coal output was 73.92 MT in June last f ...
Tuesday, 02 July 24
NTPC CAPTIVE COAL OUTPUT GROWS 15% IN Q1; DESPATCH RISES 17%
State-owned NTPC on Monday reported a 15 per cent year-on-year increase in the production of coal from captives mines to 9.862 metric million tonne ...
Friday, 28 June 24
KOSPO INVITED BIDS FOR 400,000 MT OF MINIMUM 4000 NCV COAL FOR FIVE YEARS
Korea Southern Power Co., Ltd. (KOSPO), is inviting bids for total 400,000 MT of Low Calorific Value Coal for 5 years starting from July 2024 until ...
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- Jorong Barutama Greston.PT - Indonesia
- Borneo Indobara - Indonesia
- Malabar Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Ceylon Electricity Board - Sri Lanka
- PNOC Exploration Corporation - Philippines
- Madhucon Powers Ltd - India
- Kideco Jaya Agung - Indonesia
- Tamil Nadu electricity Board
- Global Green Power PLC Corporation, Philippines
- GVK Power & Infra Limited - India
- Posco Energy - South Korea
- Bhoruka Overseas - Indonesia
- Jindal Steel & Power Ltd - India
- PTC India Limited - India
- Carbofer General Trading SA - India
- South Luzon Thermal Energy Corporation
- OPG Power Generation Pvt Ltd - India
- Commonwealth Bank - Australia
- Samtan Co., Ltd - South Korea
- Gujarat Electricity Regulatory Commission - India
- CNBM International Corporation - China
- PowerSource Philippines DevCo
- Savvy Resources Ltd - HongKong
- Minerals Council of Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dalmia Cement Bharat India
- Bayan Resources Tbk. - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- The University of Queensland
- New Zealand Coal & Carbon
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMG Consultants - Indonesia
- ICICI Bank Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Anglo American - United Kingdom
- Mintek Dendrill Indonesia
- Eastern Energy - Thailand
- Kumho Petrochemical, South Korea
- Globalindo Alam Lestari - Indonesia
- Attock Cement Pakistan Limited
- Bulk Trading Sa - Switzerland
- Altura Mining Limited, Indonesia
- Interocean Group of Companies - India
- Planning Commission, India
- Sarangani Energy Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Transport, Egypt
- Heidelberg Cement - Germany
- Vizag Seaport Private Limited - India
- CIMB Investment Bank - Malaysia
- ASAPP Information Group - India
- Salva Resources Pvt Ltd - India
- Xindia Steels Limited - India
- Deloitte Consulting - India
- Formosa Plastics Group - Taiwan
- Indonesian Coal Mining Association
- Medco Energi Mining Internasional
- Central Java Power - Indonesia
- Binh Thuan Hamico - Vietnam
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Generating Authority of Thailand
- Alfred C Toepfer International GmbH - Germany
- Bhushan Steel Limited - India
- Sojitz Corporation - Japan
- Indika Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Meenaskhi Energy Private Limited - India
- GMR Energy Limited - India
- Power Finance Corporation Ltd., India
- Sree Jayajothi Cements Limited - India
- Sakthi Sugars Limited - India
- Siam City Cement PLC, Thailand
- Essar Steel Hazira Ltd - India
- SN Aboitiz Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Eastern Coal Council - USA
- Bhatia International Limited - India
- Semirara Mining and Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- VISA Power Limited - India
- Chamber of Mines of South Africa
- Larsen & Toubro Limited - India
- Sinarmas Energy and Mining - Indonesia
- Mjunction Services Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Port Waratah Coal Services - Australia
- Miang Besar Coal Terminal - Indonesia
- Electricity Authority, New Zealand
- Independent Power Producers Association of India
- Asmin Koalindo Tuhup - Indonesia
- Sical Logistics Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- AsiaOL BioFuels Corp., Philippines
- San Jose City I Power Corp, Philippines
- Global Business Power Corporation, Philippines
- Indian Energy Exchange, India
- Iligan Light & Power Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Energy Link Ltd, New Zealand
- Wilmar Investment Holdings
- Merrill Lynch Commodities Europe
- GAC Shipping (India) Pvt Ltd
- Romanian Commodities Exchange
- Simpson Spence & Young - Indonesia
- Central Electricity Authority - India
- Lanco Infratech Ltd - India
- Ind-Barath Power Infra Limited - India
- Energy Development Corp, Philippines
- Parry Sugars Refinery, India
- Videocon Industries ltd - India
- Bukit Makmur.PT - Indonesia
- Parliament of New Zealand
- IEA Clean Coal Centre - UK
- Kepco SPC Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Petron Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Rio Tinto Coal - Australia
- IHS Mccloskey Coal Group - USA
- Gujarat Mineral Development Corp Ltd - India
- European Bulk Services B.V. - Netherlands
- Kapuas Tunggal Persada - Indonesia
- Bukit Baiduri Energy - Indonesia
- Indogreen Group - Indonesia
- Timah Investasi Mineral - Indoneisa
- Bangladesh Power Developement Board
- Petrochimia International Co. Ltd.- Taiwan
- Australian Coal Association
- Manunggal Multi Energi - Indonesia
- Semirara Mining Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Africa Commodities Group - South Africa
- Price Waterhouse Coopers - Russia
- Barasentosa Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- MS Steel International - UAE
- Baramulti Group, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Commodity Traders Exchange
- Directorate General of MIneral and Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- PetroVietnam Power Coal Import and Supply Company
- Georgia Ports Authority, United States
- Orica Mining Services - Indonesia
- Jaiprakash Power Ventures ltd
- Cement Manufacturers Association - India
- White Energy Company Limited
- Trasteel International SA, Italy
- Ministry of Mines - Canada
- Kartika Selabumi Mining - Indonesia
- Indian Oil Corporation Limited
- Vedanta Resources Plc - India
- Therma Luzon, Inc, Philippines
- Aditya Birla Group - India
- Billiton Holdings Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- SMC Global Power, Philippines
- Mercator Lines Limited - India
- Orica Australia Pty. Ltd.
- Marubeni Corporation - India
- Coal and Oil Company - UAE
- London Commodity Brokers - England
- Rashtriya Ispat Nigam Limited - India
- Edison Trading Spa - Italy
- Pipit Mutiara Jaya. PT, Indonesia
- India Bulls Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement - Thailand
- Meralco Power Generation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Renaissance Capital - South Africa
- Singapore Mercantile Exchange
- Latin American Coal - Colombia
- The Treasury - Australian Government
- McConnell Dowell - Australia
- Antam Resourcindo - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bharathi Cement Corporation - India
- Makarim & Taira - Indonesia
- Wood Mackenzie - Singapore
- Oldendorff Carriers - Singapore
- Agrawal Coal Company - India
- Bukit Asam (Persero) Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Intertek Mineral Services - Indonesia
- Coalindo Energy - Indonesia
- Grasim Industreis Ltd - India
- Kobexindo Tractors - Indoneisa
- Thai Mozambique Logistica
- Thiess Contractors Indonesia
- Pendopo Energi Batubara - Indonesia
- Mercuria Energy - Indonesia
- Ministry of Finance - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Star Paper Mills Limited - India
- Standard Chartered Bank - UAE
- Krishnapatnam Port Company Ltd. - India
- Goldman Sachs - Singapore
- Global Coal Blending Company Limited - Australia
- The State Trading Corporation of India Ltd
- Holcim Trading Pte Ltd - Singapore
- TeaM Sual Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Tata Chemicals Ltd - India
- Economic Council, Georgia
- Banpu Public Company Limited - Thailand
- Toyota Tsusho Corporation, Japan
- Coastal Gujarat Power Limited - India
- Gujarat Sidhee Cement - India
- Kaltim Prima Coal - Indonesia
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