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Wednesday, 07 December 22
MARKET INSIGHT - INTERMODAL
 China’s coal imports from January to October were 230.1m mt, a decrease of around 10.7% y-o-y (2021 totalled 323.2m mt). The question is if this negative momentum will remain in 2023, pressuring the Dry Baltic index. While the easing of Chinese Covid strict policies which coupled with the 70% coal reliance of North China for its heating boiler amidst the upcoming colder winter can trigger a demand boost for coal, we will focus on some adverse fundamentals which point to pessimistic expectations for its 2023 seaborne coal imports.
Domestic coal output on a rise.
Chinese total coal output of 4.12 billion mt in 2021 contributed around 92% of its total consumptions with 2021 imports standing at 323 million mt. In 2022, domestic production during the first three quarters stood 3.32 billion mt, an increase of +14% compared to 2021 first 3 quarters while the 2022 October output of 370m mt is up by +13m mt compared to October 2021 output. While coal represents almost 55% of China’s energy consumption and half of coal plant expansions (+197GW) are attributed to China, a growth of around 27% of its domestic coal mining capacity could cover this increase in demand. Indeed, 559m mt of coal mines are under construction and proposed as of January 2022 in China, representing 29% of the global share followed by Australia, India, and Russia. In the short-term, a shift in local production is strengthened by policymakers' decision to support national foreign reserves while the appreciation of US$ is leading to higher coal prices for Chinese power plants thus diminishing their profit margin. In addition to that, amidst the current geopolitical tension and its effect on global trade with increases materializing across all the energy commodities globally, we believe that China will keep focusing on its national power security by keeping its inventory levels high through its local production. Indeed, current levels standing at 326.7 million mt as of the end of September which is +45% above the historical average of 225m mt and +217m mt compared to the same period last year. Covid-zero Policy will determine the growth of coal demand which however remains subdued. While Covid-19 policy relaxation has begun we do not expect that a full re-opening will take place no earlier than the end of Q12023 further trimming its coal demand.
New trade patterns in question.
China's main source of coal is Indonesia with 133 million mt (98% thermal coal) being delivered so far in 2022, followed by Russia and Mongolia with 54.01m mt (68% thermal coal) and 22.38m mt (85% metallurgical coal) respectively. While Indonesia will remain the largest supplier of coal to China yet with a fall of -16.19% so far in the first ten months of 2022 compared to the same period in 2021, the rest two nations have significantly increased their market share with Mongolia and Russia posting an increase of +60% and +12.8% respectively. While ton-mile demand is benefited from cheaper Russian coal due to European sanctions and the need to alter its trade partners, an increase in Mongolian exports could absorb a share of Russian coking coal exports especially given the recent Russian transport infrastructure limitation which leads to delays in loading and arrivals. Having said that, the new Mongolian 233km Tavan Tolgoi rail line which is estimated to cut transport costs to around US$8 per tonne compared to truck transport costs, could point towards this shift. According to the president of Mongolia, this new rail line could increase coal exports to China to 50m tonnes compared to 22.38 million so far in 2022 and its record 36.24 million tonnes in 2018. In addition to this shift, other seaborne sources of metallurgical coal namely the US, Indonesia, and Canada could see their exports further decreasing from Mongolian ones. As far as the Mongolian thermal coal exports are concerned, an increase of 61% (+1.23 million mt) has materialized during the first ten months of 2022 compared to the whole of 2021. With rail infrastructure expansions, Mongolian thermal coal exports could also increase further. The real question is, does China needs all this coal? If not, based on this year's demand, decisions will be made based on costs and transport delays and in that scenario, Mongolian exports could benefit further.
By Yiannis Parganas,
Head of Research Department
Compiled by:
Intermodal Research & Valuations
Analysts:
Yiannis Parganas
Tamara Apostolou
Disclaimer and legal disclosure: For any further queries please do not hesitate to contact our Research & Valuations Department. The information contained in this report has been obtained from various sources, as reported in the market. Intermodal Shipbrokers Co. believes such information to be factual and reliable without making guarantees regarding its accuracy or completeness. Whilst every care has been taken in the production of the above review, no liability can be accepted for any loss or damage incurred in any way whatsoever by any person who may seek to rely on the information and views contained in this material. This report is being produced for the internal use of the intended recipients only and no reproducing is allowed, without the prior written authorization of Intermodal Shipbrokers Co.
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Tuesday, 15 November 22
CHINA SEES RISING COAL STORAGE AMID SUPPLY PUSH - XINHUA
Coal stockpiles at China’s power plants have seen considerable increases, ensuring energy supply for the winter, the country’s energy r ...
Tuesday, 15 November 22
SEABORNE THERMAL COAL PRICES START TO EASE, BUT PROCESS IS UNEVEN - REUTERS
Prices for seaborne thermal coal have started to drop as fears of a winter energy crunch ease, but the rate of decline has varied across the differ ...
Thursday, 10 November 22
INDIA: THERMAL PLANTS HAVE ADEQUATE COAL STOCKS AT 25.6 MILLION TONNES, SAYS GOVT - IANS
The coal stock with domestic dry fuel-based power plants, as on October 31, was 25.6 million tonnes, the government said, adding that the availabil ...
Tuesday, 08 November 22
OUTLOOK ON CHINA’S WEAKENED BASIC MATERIALS SECTOR CLOUDED BY POLICY SWINGS - FITCH RATINGS
Fitch Ratings expects basic materials demand in China to improve qoq in 4Q22, driven by seasonally higher construction activity, solid infrastructu ...
Friday, 04 November 22
CHINA EXPANDS COAL TERM CONTRACTS TO ALL MINES TO STABILIZE MARKET - REUTERS
China has expanded long-term thermal coal supply contracts for 2023 to all coal mines and asked power utilities to source more of their demand thro ...
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- Global Coal Blending Company Limited - Australia
- London Commodity Brokers - England
- New Zealand Coal & Carbon
- Antam Resourcindo - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Cement Manufacturers Association - India
- Essar Steel Hazira Ltd - India
- Attock Cement Pakistan Limited
- Medco Energi Mining Internasional
- Vijayanagar Sugar Pvt Ltd - India
- Standard Chartered Bank - UAE
- LBH Netherlands Bv - Netherlands
- Kapuas Tunggal Persada - Indonesia
- Port Waratah Coal Services - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Edison Trading Spa - Italy
- Bharathi Cement Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Cigading International Bulk Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- South Luzon Thermal Energy Corporation
- Chamber of Mines of South Africa
- Siam City Cement - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Tata Chemicals Ltd - India
- Formosa Plastics Group - Taiwan
- PowerSource Philippines DevCo
- Global Green Power PLC Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Latin American Coal - Colombia
- Electricity Authority, New Zealand
- Globalindo Alam Lestari - Indonesia
- ICICI Bank Limited - India
- PetroVietnam Power Coal Import and Supply Company
- India Bulls Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bukit Makmur.PT - Indonesia
- Therma Luzon, Inc, Philippines
- Vedanta Resources Plc - India
- Sarangani Energy Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Tamil Nadu electricity Board
- McConnell Dowell - Australia
- Baramulti Group, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Power Finance Corporation Ltd., India
- Georgia Ports Authority, United States
- The Treasury - Australian Government
- Orica Mining Services - Indonesia
- European Bulk Services B.V. - Netherlands
- Heidelberg Cement - Germany
- Kalimantan Lumbung Energi - Indonesia
- Singapore Mercantile Exchange
- Videocon Industries ltd - India
- Planning Commission, India
- Xindia Steels Limited - India
- TeaM Sual Corporation - Philippines
- Mercuria Energy - Indonesia
- Eastern Energy - Thailand
- Kartika Selabumi Mining - Indonesia
- Parliament of New Zealand
- Chettinad Cement Corporation Ltd - India
- Salva Resources Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Thai Mozambique Logistica
- Deloitte Consulting - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Independent Power Producers Association of India
- Bhatia International Limited - India
- Kumho Petrochemical, South Korea
- Energy Link Ltd, New Zealand
- Grasim Industreis Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Pendopo Energi Batubara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- The University of Queensland
- GVK Power & Infra Limited - India
- ASAPP Information Group - India
- Bhoruka Overseas - Indonesia
- Indian Energy Exchange, India
- Commonwealth Bank - Australia
- Krishnapatnam Port Company Ltd. - India
- Straits Asia Resources Limited - Singapore
- Carbofer General Trading SA - India
- Eastern Coal Council - USA
- Meralco Power Generation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Sree Jayajothi Cements Limited - India
- Alfred C Toepfer International GmbH - Germany
- Ministry of Mines - Canada
- Metalloyd Limited - United Kingdom
- Goldman Sachs - Singapore
- Coastal Gujarat Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Agrawal Coal Company - India
- AsiaOL BioFuels Corp., Philippines
- Africa Commodities Group - South Africa
- Binh Thuan Hamico - Vietnam
- MS Steel International - UAE
- Jaiprakash Power Ventures ltd
- Mercator Lines Limited - India
- Parry Sugars Refinery, India
- San Jose City I Power Corp, Philippines
- Thiess Contractors Indonesia
- Barasentosa Lestari - Indonesia
- GMR Energy Limited - India
- Billiton Holdings Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- Rio Tinto Coal - Australia
- Orica Australia Pty. Ltd.
- Star Paper Mills Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sakthi Sugars Limited - India
- Dalmia Cement Bharat India
- Aboitiz Power Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Australian Coal Association
- Kepco SPC Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- IEA Clean Coal Centre - UK
- IHS Mccloskey Coal Group - USA
- Vizag Seaport Private Limited - India
- Larsen & Toubro Limited - India
- Mintek Dendrill Indonesia
- Siam City Cement PLC, Thailand
- Economic Council, Georgia
- Directorate General of MIneral and Coal - Indonesia
- Posco Energy - South Korea
- Sojitz Corporation - Japan
- Petron Corporation, Philippines
- Wood Mackenzie - Singapore
- Maheswari Brothers Coal Limited - India
- Samtan Co., Ltd - South Korea
- Indogreen Group - Indonesia
- Global Business Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Sical Logistics Limited - India
- Price Waterhouse Coopers - Russia
- Aditya Birla Group - India
- White Energy Company Limited
- Leighton Contractors Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- Minerals Council of Australia
- VISA Power Limited - India
- CIMB Investment Bank - Malaysia
- Toyota Tsusho Corporation, Japan
- Riau Bara Harum - Indonesia
- Malabar Cements Ltd - India
- Makarim & Taira - Indonesia
- Indonesian Coal Mining Association
- Directorate Of Revenue Intelligence - India
- Kaltim Prima Coal - Indonesia
- Energy Development Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Iligan Light & Power Inc, Philippines
- Australian Commodity Traders Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Manunggal Multi Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Simpson Spence & Young - Indonesia
- Central Java Power - Indonesia
- Marubeni Corporation - India
- OPG Power Generation Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Romanian Commodities Exchange
- GAC Shipping (India) Pvt Ltd
- Mjunction Services Limited - India
- SMC Global Power, Philippines
- Oldendorff Carriers - Singapore
- Central Electricity Authority - India
- Altura Mining Limited, Indonesia
- Coalindo Energy - Indonesia
- Semirara Mining Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Merrill Lynch Commodities Europe
- Bangladesh Power Developement Board
- Maharashtra Electricity Regulatory Commission - India
- Bukit Baiduri Energy - Indonesia
- Borneo Indobara - Indonesia
- Indika Energy - Indonesia
- Ministry of Transport, Egypt
- Gujarat Sidhee Cement - India
- Interocean Group of Companies - India
- Banpu Public Company Limited - Thailand
- Ministry of Finance - Indonesia
- Intertek Mineral Services - Indonesia
- Uttam Galva Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- PNOC Exploration Corporation - Philippines
- Ambuja Cements Ltd - India
- Lanco Infratech Ltd - India
- PTC India Limited - India
- Wilmar Investment Holdings
- Coal and Oil Company - UAE
- GN Power Mariveles Coal Plant, Philippines
- Indian Oil Corporation Limited
- International Coal Ventures Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Trasteel International SA, Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sindya Power Generating Company Private Ltd
- CNBM International Corporation - China
- SMG Consultants - Indonesia
- Renaissance Capital - South Africa
- Anglo American - United Kingdom
- Bhushan Steel Limited - India
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