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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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Wednesday, 19 October 22
MARKET INSIGHT - INTERMODAL
The LNG market remains extremely tight, and as a result adding further pressure on the vessel charter market, which is already stretched due to the ...
Sunday, 16 October 22
COULD A RETURN TO SHALE EXPLORATION BE PART OF THE SOLUTION TO EUROPE'S GAS SUPPLY PROBLEM? - WOOD MACKENZIE
The European gas market is in turmoil. Russia’s invasion of Ukraine has shaken things up, triggering a complete rethink of European energy st ...
Thursday, 13 October 22
THERMAL COAL PRICES RETREAT AS WINTER SUPPLY FEARS EASE - REUTERS
The prices of key thermal seaborne coal grades are retreating amid signs that supplies will be sufficient to meet winter demand in both Europe and ...
Thursday, 13 October 22
SPOT COAL BIDDING: CHINESE FIRM WANTS REVISED MECHANISM - BUSINESS RECORDER
Chinese company M/s Huaneng Shandong Ruyi (Pakistan) Energy Limited (HSR) has cautioned National Electric Power Regulatory Authority (Nepra) that i ...
Thursday, 13 October 22
OPEC DOWNGRADES CRUDE OIL DEMAND, AS WORLD ECONOMY ENTERS SLOWDOWN
Crude Oil Price Movements
The OPEC Reference Basket (ORB) declined m-o-m by $6.58 in September, or 6.5%, to average $95.32/b. Pressure from equ ...
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- Bulk Trading Sa - Switzerland
- Salva Resources Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Sree Jayajothi Cements Limited - India
- Standard Chartered Bank - UAE
- Trasteel International SA, Italy
- Kobexindo Tractors - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vizag Seaport Private Limited - India
- Global Coal Blending Company Limited - Australia
- Chettinad Cement Corporation Ltd - India
- Mercuria Energy - Indonesia
- Videocon Industries ltd - India
- Minerals Council of Australia
- Bharathi Cement Corporation - India
- Indian Oil Corporation Limited
- Kideco Jaya Agung - Indonesia
- Sarangani Energy Corporation, Philippines
- SMG Consultants - Indonesia
- Parry Sugars Refinery, India
- Savvy Resources Ltd - HongKong
- CNBM International Corporation - China
- Baramulti Group, Indonesia
- Petron Corporation, Philippines
- The Treasury - Australian Government
- Aditya Birla Group - India
- Orica Australia Pty. Ltd.
- Jindal Steel & Power Ltd - India
- McConnell Dowell - Australia
- Directorate General of MIneral and Coal - Indonesia
- Borneo Indobara - Indonesia
- SN Aboitiz Power Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Central Java Power - Indonesia
- MS Steel International - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meenaskhi Energy Private Limited - India
- Toyota Tsusho Corporation, Japan
- Sinarmas Energy and Mining - Indonesia
- Tamil Nadu electricity Board
- PTC India Limited - India
- Global Green Power PLC Corporation, Philippines
- Altura Mining Limited, Indonesia
- Tata Chemicals Ltd - India
- Metalloyd Limited - United Kingdom
- Sindya Power Generating Company Private Ltd
- Carbofer General Trading SA - India
- GVK Power & Infra Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Latin American Coal - Colombia
- Gujarat Sidhee Cement - India
- Wilmar Investment Holdings
- Electricity Authority, New Zealand
- Bhatia International Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Energy - Thailand
- Bangladesh Power Developement Board
- Oldendorff Carriers - Singapore
- Star Paper Mills Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Indonesian Coal Mining Association
- Thai Mozambique Logistica
- Ambuja Cements Ltd - India
- Merrill Lynch Commodities Europe
- Dalmia Cement Bharat India
- GAC Shipping (India) Pvt Ltd
- Anglo American - United Kingdom
- Simpson Spence & Young - Indonesia
- European Bulk Services B.V. - Netherlands
- India Bulls Power Limited - India
- IEA Clean Coal Centre - UK
- Siam City Cement - Thailand
- Leighton Contractors Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Global Business Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Coal and Oil Company - UAE
- OPG Power Generation Pvt Ltd - India
- Attock Cement Pakistan Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Indo Tambangraya Megah - Indonesia
- Coastal Gujarat Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Commonwealth Bank - Australia
- Pendopo Energi Batubara - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Maharashtra Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- Deloitte Consulting - India
- Independent Power Producers Association of India
- Alfred C Toepfer International GmbH - Germany
- PNOC Exploration Corporation - Philippines
- Sical Logistics Limited - India
- Binh Thuan Hamico - Vietnam
- Economic Council, Georgia
- VISA Power Limited - India
- Australian Coal Association
- Indogreen Group - Indonesia
- Iligan Light & Power Inc, Philippines
- The State Trading Corporation of India Ltd
- Edison Trading Spa - Italy
- Karbindo Abesyapradhi - Indoneisa
- Medco Energi Mining Internasional
- Barasentosa Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- IHS Mccloskey Coal Group - USA
- Globalindo Alam Lestari - Indonesia
- Kartika Selabumi Mining - Indonesia
- Jaiprakash Power Ventures ltd
- Heidelberg Cement - Germany
- The University of Queensland
- Agrawal Coal Company - India
- Planning Commission, India
- TeaM Sual Corporation - Philippines
- PowerSource Philippines DevCo
- Madhucon Powers Ltd - India
- Kepco SPC Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Ind-Barath Power Infra Limited - India
- Orica Mining Services - Indonesia
- Romanian Commodities Exchange
- Holcim Trading Pte Ltd - Singapore
- Australian Commodity Traders Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wood Mackenzie - Singapore
- Semirara Mining Corp, Philippines
- Larsen & Toubro Limited - India
- Timah Investasi Mineral - Indoneisa
- London Commodity Brokers - England
- Bukit Baiduri Energy - Indonesia
- White Energy Company Limited
- South Luzon Thermal Energy Corporation
- TNB Fuel Sdn Bhd - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Therma Luzon, Inc, Philippines
- Electricity Generating Authority of Thailand
- Mintek Dendrill Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Lanco Infratech Ltd - India
- Cement Manufacturers Association - India
- Sojitz Corporation - Japan
- AsiaOL BioFuels Corp., Philippines
- Makarim & Taira - Indonesia
- Singapore Mercantile Exchange
- Energy Link Ltd, New Zealand
- Kaltim Prima Coal - Indonesia
- Grasim Industreis Ltd - India
- GMR Energy Limited - India
- Mercator Lines Limited - India
- Siam City Cement PLC, Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Intertek Mineral Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Meralco Power Generation, Philippines
- Samtan Co., Ltd - South Korea
- Rio Tinto Coal - Australia
- Port Waratah Coal Services - Australia
- Ministry of Transport, Egypt
- Asmin Koalindo Tuhup - Indonesia
- Directorate Of Revenue Intelligence - India
- International Coal Ventures Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Posco Energy - South Korea
- Ceylon Electricity Board - Sri Lanka
- GN Power Mariveles Coal Plant, Philippines
- Africa Commodities Group - South Africa
- Marubeni Corporation - India
- Bukit Makmur.PT - Indonesia
- Chamber of Mines of South Africa
- ASAPP Information Group - India
- Ministry of Finance - Indonesia
- Power Finance Corporation Ltd., India
- Thiess Contractors Indonesia
- Kapuas Tunggal Persada - Indonesia
- Parliament of New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Electricity Regulatory Commission - India
- Maheswari Brothers Coal Limited - India
- Rashtriya Ispat Nigam Limited - India
- Georgia Ports Authority, United States
- Formosa Plastics Group - Taiwan
- Cigading International Bulk Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Central Electricity Authority - India
- Essar Steel Hazira Ltd - India
- Indika Energy - Indonesia
- Renaissance Capital - South Africa
- Ministry of Mines - Canada
- Riau Bara Harum - Indonesia
- Kumho Petrochemical, South Korea
- New Zealand Coal & Carbon
- ICICI Bank Limited - India
- Eastern Coal Council - USA
- Xindia Steels Limited - India
- Interocean Group of Companies - India
- Energy Development Corp, Philippines
- Bhoruka Overseas - Indonesia
- Manunggal Multi Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Uttam Galva Steels Limited - India
- Goldman Sachs - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhushan Steel Limited - India
- Malabar Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Sakthi Sugars Limited - India
- Vedanta Resources Plc - India
- Indian Energy Exchange, India
- Karaikal Port Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Mjunction Services Limited - India
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