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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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Thursday, 30 June 22
WHY ARE LNG SHIPPING STOCKS RESILIENT? - DREWRY
LNG shipping stocks are proving resilient despite uncertainties about growth in global GDP, high inflation and the ongoing geopolitical crisis caus ...
Thursday, 30 June 22
SPOT AUSTRALIAN THERMAL COAL HAS SURGED, BUT CONTRACT PRICE IS KEY - REUTERS
The spot price of Australian thermal coal is higher than that of coking coal, an unprecedented situation that highlights just how the global market ...
Thursday, 30 June 22
SHANXI PROVINCE RAISES ANNUAL COAL OUTPUT TO 1.3 BILLION TONS TO ENSURE CHINA’S ENERGY SUPPLY - GLOBAL TIMES
North China’s Shanxi Province, a major coal-producing region, recently announced a move to increase its annual coal production output by 107 ...
Thursday, 30 June 22
DIVERGENCE BETWEEN HIGH- AND LOW-GRADE THERMAL COAL PRICES IN APAC TO NARROW - FITCH RATINGS
Prices between high- and low-grade thermal coal in Asia-Pacific (APAC) have diverged since late March 2022, but Fitch Ratings expects the gap to na ...
Thursday, 30 June 22
INVESTMENT IN GLOBAL COAL SUPPLY CHAIN TO HIT $115 BN IN 2022, LED BY CHINA AND INDIA - BUSINESS LINE
At over $80 billion, China and India are anticipated to make up the bulk of global coal investment in 2022, says IEA.
The investment ...
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- Orica Mining Services - Indonesia
- Medco Energi Mining Internasional
- Kobexindo Tractors - Indoneisa
- Bukit Makmur.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CIMB Investment Bank - Malaysia
- Kapuas Tunggal Persada - Indonesia
- SN Aboitiz Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Development Corp, Philippines
- Coal and Oil Company - UAE
- GMR Energy Limited - India
- Latin American Coal - Colombia
- Goldman Sachs - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Kumho Petrochemical, South Korea
- TeaM Sual Corporation - Philippines
- Indonesian Coal Mining Association
- Carbofer General Trading SA - India
- Indo Tambangraya Megah - Indonesia
- Georgia Ports Authority, United States
- Orica Australia Pty. Ltd.
- Edison Trading Spa - Italy
- Savvy Resources Ltd - HongKong
- Madhucon Powers Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Videocon Industries ltd - India
- Metalloyd Limited - United Kingdom
- Sical Logistics Limited - India
- Coalindo Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Wood Mackenzie - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Larsen & Toubro Limited - India
- Meralco Power Generation, Philippines
- Chettinad Cement Corporation Ltd - India
- Anglo American - United Kingdom
- Thai Mozambique Logistica
- Ind-Barath Power Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- Price Waterhouse Coopers - Russia
- GAC Shipping (India) Pvt Ltd
- Tata Chemicals Ltd - India
- Bhushan Steel Limited - India
- Borneo Indobara - Indonesia
- Singapore Mercantile Exchange
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- Kaltim Prima Coal - Indonesia
- Bhoruka Overseas - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Economic Council, Georgia
- Energy Link Ltd, New Zealand
- Ministry of Finance - Indonesia
- Sakthi Sugars Limited - India
- Baramulti Group, Indonesia
- Electricity Generating Authority of Thailand
- Parliament of New Zealand
- Heidelberg Cement - Germany
- Deloitte Consulting - India
- Kideco Jaya Agung - Indonesia
- Star Paper Mills Limited - India
- Indogreen Group - Indonesia
- India Bulls Power Limited - India
- Toyota Tsusho Corporation, Japan
- Posco Energy - South Korea
- The State Trading Corporation of India Ltd
- IEA Clean Coal Centre - UK
- GVK Power & Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Mintek Dendrill Indonesia
- Bhatia International Limited - India
- Ministry of Mines - Canada
- Romanian Commodities Exchange
- Karaikal Port Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Minerals Council of Australia
- Billiton Holdings Pty Ltd - Australia
- Kohat Cement Company Ltd. - Pakistan
- Mercuria Energy - Indonesia
- Vedanta Resources Plc - India
- MS Steel International - UAE
- Sarangani Energy Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Tamil Nadu electricity Board
- Iligan Light & Power Inc, Philippines
- Sojitz Corporation - Japan
- Essar Steel Hazira Ltd - India
- Barasentosa Lestari - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Independent Power Producers Association of India
- Interocean Group of Companies - India
- Power Finance Corporation Ltd., India
- Samtan Co., Ltd - South Korea
- Straits Asia Resources Limited - Singapore
- VISA Power Limited - India
- Australian Commodity Traders Exchange
- Altura Mining Limited, Indonesia
- Semirara Mining Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Wilmar Investment Holdings
- SMG Consultants - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Mercator Lines Limited - India
- Ceylon Electricity Board - Sri Lanka
- Commonwealth Bank - Australia
- Maharashtra Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- Mjunction Services Limited - India
- Salva Resources Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Vijayanagar Sugar Pvt Ltd - India
- McConnell Dowell - Australia
- Alfred C Toepfer International GmbH - Germany
- Agrawal Coal Company - India
- Indika Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- New Zealand Coal & Carbon
- Aditya Birla Group - India
- Thiess Contractors Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- Jaiprakash Power Ventures ltd
- Attock Cement Pakistan Limited
- Semirara Mining and Power Corporation, Philippines
- PTC India Limited - India
- SMC Global Power, Philippines
- ASAPP Information Group - India
- Indian Oil Corporation Limited
- Merrill Lynch Commodities Europe
- Bulk Trading Sa - Switzerland
- Rashtriya Ispat Nigam Limited - India
- Coastal Gujarat Power Limited - India
- Africa Commodities Group - South Africa
- London Commodity Brokers - England
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Ministry of Transport, Egypt
- Uttam Galva Steels Limited - India
- Jindal Steel & Power Ltd - India
- Global Business Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Cement Manufacturers Association - India
- Timah Investasi Mineral - Indoneisa
- Makarim & Taira - Indonesia
- Siam City Cement PLC, Thailand
- The Treasury - Australian Government
- Sindya Power Generating Company Private Ltd
- European Bulk Services B.V. - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Standard Chartered Bank - UAE
- Cigading International Bulk Terminal - Indonesia
- Trasteel International SA, Italy
- Renaissance Capital - South Africa
- Ambuja Cements Ltd - India
- Intertek Mineral Services - Indonesia
- Therma Luzon, Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Dalmia Cement Bharat India
- Marubeni Corporation - India
- Meenaskhi Energy Private Limited - India
- Central Java Power - Indonesia
- PNOC Exploration Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- CNBM International Corporation - China
- Global Green Power PLC Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- PowerSource Philippines DevCo
- Oldendorff Carriers - Singapore
- Eastern Energy - Thailand
- San Jose City I Power Corp, Philippines
- Riau Bara Harum - Indonesia
- Indian Energy Exchange, India
- Asmin Koalindo Tuhup - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Pipit Mutiara Jaya. PT, Indonesia
- Xindia Steels Limited - India
- Bangladesh Power Developement Board
- Grasim Industreis Ltd - India
- Formosa Plastics Group - Taiwan
- Bharathi Cement Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Rio Tinto Coal - Australia
- Kartika Selabumi Mining - Indonesia
- Petron Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Planning Commission, India
- Vizag Seaport Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- Sree Jayajothi Cements Limited - India
- Global Coal Blending Company Limited - Australia
- Chamber of Mines of South Africa
- PetroVietnam Power Coal Import and Supply Company
- White Energy Company Limited
- Sinarmas Energy and Mining - Indonesia
- Australian Coal Association
- Bayan Resources Tbk. - Indonesia
- IHS Mccloskey Coal Group - USA
- ICICI Bank Limited - India
- Electricity Authority, New Zealand
- Lanco Infratech Ltd - India
- Parry Sugars Refinery, India
- Central Electricity Authority - India
- Simpson Spence & Young - Indonesia
- Eastern Coal Council - USA
- The University of Queensland
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