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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, 08 March 22
THE HIGH COST OF INDONESIA’S DOWNSTREAM COAL PROJECTS IS UNDERESTIMATED - IEEFA
Three Indonesian ministries have come up with a DME purchase price of US$378/tonne fixed for 20 years compared to IEEFA’s US$601/tonne estima ...
Wednesday, 02 March 22
SHIPPING MARKET INSIGHT - INTERMODAL
The escalating confrontation between Russia and Ukraine has the potential to disrupt global order and set the world back a few decades. While count ...
Tuesday, 22 February 22
THE DRY BULK MARKET HAS MOVED ON A POSITIVE TRACK - ALLIED
The dry bulk market has moved on a positive track as of the past couple of weeks or so. Following the typical softening in freight conditions durin ...
Tuesday, 22 February 22
CHINA'S DAILY OUTPUT OF COAL REBOUNDS TO OVER 12 MLN TONNES - REUTERS
China’s coal output returned to more than 12 million tonnes per day as of Feb. 20, the country’s state planner said on Monday, a level ...
Thursday, 17 February 22
MAJOR INSTITUTIONS PROVIDED OVER $1.5 TRLN TO COAL SECTOR IN 2019-2021, SAYS NGO GROUP - REUTERS
Financial institutions channelled more than $1.5 trillion into the coal industry in loans and underwriting from January 2019 to November 2021, even ...
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- Energy Link Ltd, New Zealand
- Bhoruka Overseas - Indonesia
- Gujarat Sidhee Cement - India
- ASAPP Information Group - India
- Gujarat Electricity Regulatory Commission - India
- Antam Resourcindo - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Metalloyd Limited - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Vizag Seaport Private Limited - India
- Intertek Mineral Services - Indonesia
- Oldendorff Carriers - Singapore
- Indo Tambangraya Megah - Indonesia
- Central Java Power - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Manunggal Multi Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Power Finance Corporation Ltd., India
- Malabar Cements Ltd - India
- Bukit Baiduri Energy - Indonesia
- Tata Chemicals Ltd - India
- Anglo American - United Kingdom
- Wood Mackenzie - Singapore
- ICICI Bank Limited - India
- Petron Corporation, Philippines
- Australian Coal Association
- Sakthi Sugars Limited - India
- Altura Mining Limited, Indonesia
- Standard Chartered Bank - UAE
- Sojitz Corporation - Japan
- Essar Steel Hazira Ltd - India
- Bhushan Steel Limited - India
- Binh Thuan Hamico - Vietnam
- Global Business Power Corporation, Philippines
- Siam City Cement - Thailand
- Eastern Coal Council - USA
- Offshore Bulk Terminal Pte Ltd, Singapore
- The University of Queensland
- Siam City Cement PLC, Thailand
- Africa Commodities Group - South Africa
- Merrill Lynch Commodities Europe
- GVK Power & Infra Limited - India
- Savvy Resources Ltd - HongKong
- Kideco Jaya Agung - Indonesia
- Mercuria Energy - Indonesia
- SMG Consultants - Indonesia
- Coastal Gujarat Power Limited - India
- Chamber of Mines of South Africa
- Directorate General of MIneral and Coal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Rio Tinto Coal - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- The State Trading Corporation of India Ltd
- Energy Development Corp, Philippines
- Eastern Energy - Thailand
- Iligan Light & Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- GMR Energy Limited - India
- Indogreen Group - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Jorong Barutama Greston.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Sree Jayajothi Cements Limited - India
- Star Paper Mills Limited - India
- Miang Besar Coal Terminal - Indonesia
- Riau Bara Harum - Indonesia
- Interocean Group of Companies - India
- Wilmar Investment Holdings
- Aditya Birla Group - India
- Semirara Mining and Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Makarim & Taira - Indonesia
- Aboitiz Power Corporation - Philippines
- Dalmia Cement Bharat India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CIMB Investment Bank - Malaysia
- PetroVietnam Power Coal Import and Supply Company
- SN Aboitiz Power Inc, Philippines
- Electricity Authority, New Zealand
- Independent Power Producers Association of India
- Bayan Resources Tbk. - Indonesia
- Timah Investasi Mineral - Indoneisa
- Renaissance Capital - South Africa
- Commonwealth Bank - Australia
- Leighton Contractors Pty Ltd - Australia
- CNBM International Corporation - China
- Thiess Contractors Indonesia
- Sinarmas Energy and Mining - Indonesia
- Indonesian Coal Mining Association
- Economic Council, Georgia
- Vijayanagar Sugar Pvt Ltd - India
- Deloitte Consulting - India
- IEA Clean Coal Centre - UK
- AsiaOL BioFuels Corp., Philippines
- Grasim Industreis Ltd - India
- Medco Energi Mining Internasional
- Carbofer General Trading SA - India
- Goldman Sachs - Singapore
- India Bulls Power Limited - India
- SMC Global Power, Philippines
- Georgia Ports Authority, United States
- Kepco SPC Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Attock Cement Pakistan Limited
- Latin American Coal - Colombia
- Global Green Power PLC Corporation, Philippines
- The Treasury - Australian Government
- Vedanta Resources Plc - India
- Indian Oil Corporation Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kapuas Tunggal Persada - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- McConnell Dowell - Australia
- Meenaskhi Energy Private Limited - India
- South Luzon Thermal Energy Corporation
- White Energy Company Limited
- Semirara Mining Corp, Philippines
- Australian Commodity Traders Exchange
- Maheswari Brothers Coal Limited - India
- Xindia Steels Limited - India
- Minerals Council of Australia
- Marubeni Corporation - India
- Karaikal Port Pvt Ltd - India
- Ministry of Mines - Canada
- Banpu Public Company Limited - Thailand
- Therma Luzon, Inc, Philippines
- Simpson Spence & Young - Indonesia
- Sical Logistics Limited - India
- PNOC Exploration Corporation - Philippines
- Bharathi Cement Corporation - India
- PTC India Limited - India
- Jaiprakash Power Ventures ltd
- Uttam Galva Steels Limited - India
- New Zealand Coal & Carbon
- Ind-Barath Power Infra Limited - India
- Parry Sugars Refinery, India
- Central Electricity Authority - India
- Sarangani Energy Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Formosa Plastics Group - Taiwan
- Asmin Koalindo Tuhup - Indonesia
- Videocon Industries ltd - India
- Krishnapatnam Port Company Ltd. - India
- PowerSource Philippines DevCo
- Kaltim Prima Coal - Indonesia
- Orica Australia Pty. Ltd.
- Ceylon Electricity Board - Sri Lanka
- Ministry of Transport, Egypt
- Directorate Of Revenue Intelligence - India
- LBH Netherlands Bv - Netherlands
- Mjunction Services Limited - India
- Trasteel International SA, Italy
- Jindal Steel & Power Ltd - India
- Bangladesh Power Developement Board
- Larsen & Toubro Limited - India
- Indika Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- European Bulk Services B.V. - Netherlands
- Port Waratah Coal Services - Australia
- Cement Manufacturers Association - India
- Coal and Oil Company - UAE
- San Jose City I Power Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Samtan Co., Ltd - South Korea
- Madhucon Powers Ltd - India
- Chettinad Cement Corporation Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- Coalindo Energy - Indonesia
- Mintek Dendrill Indonesia
- Orica Mining Services - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Edison Trading Spa - Italy
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- VISA Power Limited - India
- Tamil Nadu electricity Board
- Indian Energy Exchange, India
- Heidelberg Cement - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ambuja Cements Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Agrawal Coal Company - India
- Singapore Mercantile Exchange
- Gujarat Mineral Development Corp Ltd - India
- Pendopo Energi Batubara - Indonesia
- Baramulti Group, Indonesia
- International Coal Ventures Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Planning Commission, India
- Thai Mozambique Logistica
- Salva Resources Pvt Ltd - India
- Mercator Lines Limited - India
- IHS Mccloskey Coal Group - USA
- Electricity Generating Authority of Thailand
- Romanian Commodities Exchange
- Posco Energy - South Korea
- Toyota Tsusho Corporation, Japan
- TeaM Sual Corporation - Philippines
- London Commodity Brokers - England
- Cigading International Bulk Terminal - Indonesia
- Borneo Indobara - Indonesia
- Kartika Selabumi Mining - Indonesia
- Bulk Trading Sa - Switzerland
- Parliament of New Zealand
- MS Steel International - UAE
- Ministry of Finance - Indonesia
- Kumho Petrochemical, South Korea
- Bhatia International Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Straits Asia Resources Limited - Singapore
- OPG Power Generation Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Lanco Infratech Ltd - India
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