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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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Monday, 24 June 24
PHILIPPINES COAL SUPPLY ENOUGH UNTIL 2030 - PHILSTAR GLOBAL
The country’s existing coal-fired power plants are sufficient to ensure enough base load capacity in the next six years, Energy Secretary Rap ...
Friday, 14 June 24
NEXTDECADE, SAUDI ARAMCO SIGN 20-YEAR LNG SUPPLY DEAL - REUTERS
U.S. liquefied natural gas (LNG) provider NextDecade has signed a non-binding agreement with Saudi Aramco 2222.SE to supply 1.2 million tonnes per ...
Friday, 14 June 24
NEWBUILDING PRICES CLIMB 3% TO HIGHEST LEVEL IN 16 YEARS - NIELS RASMUSSEN
“Since the start of the year, newbuilding prices have risen 3% to their highest level since 2008. Compared to their most recent low in late 2 ...
Friday, 14 June 24
INDIA TARGETS HIGHER DOMESTIC COAL PRODUCTION, REDUCED IMPORTS: GOVT - REUTERS
India wants to reduce coal imports and increase domestic production, federal coal minister G. Kishan Reddy said on Thursday.
The cou ...
Thursday, 13 June 24
US LNG TO ASIA FOR POWER GENERATION EXPECTED TO CUT EMISSIONS VERSUS COAL - RYSTAD ENERGY
The value-chain emissions of liquified natural gas (LNG) are lower on average than for coal-fired power generation, even when the fuel is shipp ...
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- Australian Coal Association
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- MS Steel International - UAE
- Medco Energi Mining Internasional
- Directorate General of MIneral and Coal - Indonesia
- Mjunction Services Limited - India
- Larsen & Toubro Limited - India
- Altura Mining Limited, Indonesia
- Banpu Public Company Limited - Thailand
- Latin American Coal - Colombia
- Thai Mozambique Logistica
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- Thiess Contractors Indonesia
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- Oldendorff Carriers - Singapore
- Bulk Trading Sa - Switzerland
- ASAPP Information Group - India
- Tamil Nadu electricity Board
- Dalmia Cement Bharat India
- TNB Fuel Sdn Bhd - Malaysia
- White Energy Company Limited
- Ministry of Mines - Canada
- Directorate Of Revenue Intelligence - India
- SMG Consultants - Indonesia
- Goldman Sachs - Singapore
- GAC Shipping (India) Pvt Ltd
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- Billiton Holdings Pty Ltd - Australia
- Vizag Seaport Private Limited - India
- Parliament of New Zealand
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- Antam Resourcindo - Indonesia
- Sojitz Corporation - Japan
- Cigading International Bulk Terminal - Indonesia
- GMR Energy Limited - India
- The Treasury - Australian Government
- Global Coal Blending Company Limited - Australia
- Riau Bara Harum - Indonesia
- IHS Mccloskey Coal Group - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Petron Corporation, Philippines
- Global Business Power Corporation, Philippines
- Indian Oil Corporation Limited
- Videocon Industries ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Offshore Bulk Terminal Pte Ltd, Singapore
- Intertek Mineral Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bhushan Steel Limited - India
- Vedanta Resources Plc - India
- Leighton Contractors Pty Ltd - Australia
- Trasteel International SA, Italy
- Electricity Generating Authority of Thailand
- Timah Investasi Mineral - Indoneisa
- Jaiprakash Power Ventures ltd
- Borneo Indobara - Indonesia
- Parry Sugars Refinery, India
- Formosa Plastics Group - Taiwan
- SMC Global Power, Philippines
- Agrawal Coal Company - India
- Baramulti Group, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Wilmar Investment Holdings
- Rio Tinto Coal - Australia
- Central Java Power - Indonesia
- Indian Energy Exchange, India
- GN Power Mariveles Coal Plant, Philippines
- Kapuas Tunggal Persada - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Indo Tambangraya Megah - Indonesia
- Siam City Cement - Thailand
- Kideco Jaya Agung - Indonesia
- Miang Besar Coal Terminal - Indonesia
- VISA Power Limited - India
- Standard Chartered Bank - UAE
- Kobexindo Tractors - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Chettinad Cement Corporation Ltd - India
- Star Paper Mills Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Mining Services - Indonesia
- Wood Mackenzie - Singapore
- San Jose City I Power Corp, Philippines
- Planning Commission, India
- CNBM International Corporation - China
- Alfred C Toepfer International GmbH - Germany
- Ministry of Transport, Egypt
- Global Green Power PLC Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Attock Cement Pakistan Limited
- Central Electricity Authority - India
- South Luzon Thermal Energy Corporation
- McConnell Dowell - Australia
- Anglo American - United Kingdom
- Price Waterhouse Coopers - Russia
- Lanco Infratech Ltd - India
- Kartika Selabumi Mining - Indonesia
- Edison Trading Spa - Italy
- Bank of Tokyo Mitsubishi UFJ Ltd
- Semirara Mining and Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement PLC, Thailand
- Bhatia International Limited - India
- Singapore Mercantile Exchange
- PowerSource Philippines DevCo
- Minerals Council of Australia
- Carbofer General Trading SA - India
- Ambuja Cements Ltd - India
- International Coal Ventures Pvt Ltd - India
- Georgia Ports Authority, United States
- ICICI Bank Limited - India
- Renaissance Capital - South Africa
- India Bulls Power Limited - India
- PNOC Exploration Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Heidelberg Cement - Germany
- Barasentosa Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Gujarat Sidhee Cement - India
- Sakthi Sugars Limited - India
- Deloitte Consulting - India
- London Commodity Brokers - England
- Petrochimia International Co. Ltd.- Taiwan
- Mercuria Energy - Indonesia
- Electricity Authority, New Zealand
- CIMB Investment Bank - Malaysia
- Metalloyd Limited - United Kingdom
- Rashtriya Ispat Nigam Limited - India
- Aditya Birla Group - India
- Chamber of Mines of South Africa
- Cement Manufacturers Association - India
- Toyota Tsusho Corporation, Japan
- Power Finance Corporation Ltd., India
- Globalindo Alam Lestari - Indonesia
- Energy Link Ltd, New Zealand
- Tata Chemicals Ltd - India
- Bukit Baiduri Energy - Indonesia
- Africa Commodities Group - South Africa
- Merrill Lynch Commodities Europe
- Indika Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Energy Development Corp, Philippines
- Mintek Dendrill Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- Bangladesh Power Developement Board
- Ministry of Finance - Indonesia
- Uttam Galva Steels Limited - India
- Kumho Petrochemical, South Korea
- Bukit Makmur.PT - Indonesia
- The State Trading Corporation of India Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Economic Council, Georgia
- Indonesian Coal Mining Association
- Australian Commodity Traders Exchange
- Coastal Gujarat Power Limited - India
- Mercator Lines Limited - India
- Sree Jayajothi Cements Limited - India
- Bharathi Cement Corporation - India
- Coal and Oil Company - UAE
- Essar Steel Hazira Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Aboitiz Power Corporation - Philippines
- Eastern Coal Council - USA
- Sindya Power Generating Company Private Ltd
- TeaM Sual Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- Simpson Spence & Young - Indonesia
- The University of Queensland
- Manunggal Multi Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Port Waratah Coal Services - Australia
- Gujarat Mineral Development Corp Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Madhucon Powers Ltd - India
- Indogreen Group - Indonesia
- Iligan Light & Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Grasim Industreis Ltd - India
- Straits Asia Resources Limited - Singapore
- Ceylon Electricity Board - Sri Lanka
- PTC India Limited - India
- GVK Power & Infra Limited - India
- Kaltim Prima Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- Semirara Mining Corp, Philippines
- Malabar Cements Ltd - India
- Commonwealth Bank - Australia
- LBH Netherlands Bv - Netherlands
- Samtan Co., Ltd - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karaikal Port Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meenaskhi Energy Private Limited - India
- Savvy Resources Ltd - HongKong
- IEA Clean Coal Centre - UK
- Romanian Commodities Exchange
- Eastern Energy - Thailand
- Makarim & Taira - Indonesia
- Independent Power Producers Association of India
- Xindia Steels Limited - India
- Sical Logistics Limited - India
- Interocean Group of Companies - India
- Maharashtra Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- Marubeni Corporation - India
- New Zealand Coal & Carbon
- Meralco Power Generation, Philippines
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