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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, 26 January 22
MARKET INSIGHT - INTERMODAL
While it is logical that most of the S&P reports of the first weeks of the year are linked to very limited activity as reflected in the weekly ...
Wednesday, 26 January 22
INDONESIA: DME PROJECT IS ECONOMICALLY VIABLE AS STUDY DEMONSTRATES
The government is encouraging downstream coal processing or increase in coal added value, for example by turning coal into Dimethyl Ether (DME) to ...
Wednesday, 26 January 22
COMMODITY PRICES COULD SOAR IF THE RUSSIA-UKRAINE CRISIS ESCALATES - ING
It appears that a number of commodity markets are starting to at least price in some geopolitical risk around the growing tension between Russia an ...
Wednesday, 26 January 22
INDONESIA'S COAL BAN SENDS PRICES SOARING, OTHER EXPORTERS FAIL TO STEP UP - REUTERS
Indonesia’s short-lived ban on exporting coal has sent ructions through the seaborne market for the fuel in Asia, with the fallout likely to ...
Friday, 21 January 22
CHINA'S POWER TRADING TARIFFS TO RISE IN 2022 - FITCH RATINGS
Rising trading volume and higher-than-benchmark tariffs in the 2022 bilateral contracts signed between Chinese power generation companies (gencos) ...
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- Thai Mozambique Logistica
- Bharathi Cement Corporation - India
- IHS Mccloskey Coal Group - USA
- Mercator Lines Limited - India
- Ceylon Electricity Board - Sri Lanka
- Karaikal Port Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Petron Corporation, Philippines
- Planning Commission, India
- Rio Tinto Coal - Australia
- Energy Link Ltd, New Zealand
- Intertek Mineral Services - Indonesia
- Price Waterhouse Coopers - Russia
- Rashtriya Ispat Nigam Limited - India
- Barasentosa Lestari - Indonesia
- Kobexindo Tractors - Indoneisa
- GAC Shipping (India) Pvt Ltd
- PetroVietnam Power Coal Import and Supply Company
- Jaiprakash Power Ventures ltd
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Cement Manufacturers Association - India
- Pendopo Energi Batubara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Trasteel International SA, Italy
- Baramulti Group, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Power Finance Corporation Ltd., India
- Edison Trading Spa - Italy
- Xindia Steels Limited - India
- Africa Commodities Group - South Africa
- Deloitte Consulting - India
- Timah Investasi Mineral - Indoneisa
- Grasim Industreis Ltd - India
- Iligan Light & Power Inc, Philippines
- Coalindo Energy - Indonesia
- Economic Council, Georgia
- Heidelberg Cement - Germany
- SMC Global Power, Philippines
- Metalloyd Limited - United Kingdom
- Banpu Public Company Limited - Thailand
- Aditya Birla Group - India
- Therma Luzon, Inc, Philippines
- Coal and Oil Company - UAE
- Merrill Lynch Commodities Europe
- Leighton Contractors Pty Ltd - Australia
- TNB Fuel Sdn Bhd - Malaysia
- PowerSource Philippines DevCo
- Toyota Tsusho Corporation, Japan
- GN Power Mariveles Coal Plant, Philippines
- Agrawal Coal Company - India
- Bukit Makmur.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Mercuria Energy - Indonesia
- Vizag Seaport Private Limited - India
- Krishnapatnam Port Company Ltd. - India
- Singapore Mercantile Exchange
- Orica Mining Services - Indonesia
- South Luzon Thermal Energy Corporation
- Indonesian Coal Mining Association
- Maheswari Brothers Coal Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Georgia Ports Authority, United States
- Global Green Power PLC Corporation, Philippines
- Wood Mackenzie - Singapore
- Bhushan Steel Limited - India
- Simpson Spence & Young - Indonesia
- Meralco Power Generation, Philippines
- SN Aboitiz Power Inc, Philippines
- Eastern Coal Council - USA
- India Bulls Power Limited - India
- Global Coal Blending Company Limited - Australia
- Ministry of Transport, Egypt
- Wilmar Investment Holdings
- Holcim Trading Pte Ltd - Singapore
- PNOC Exploration Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Minerals Council of Australia
- VISA Power Limited - India
- Meenaskhi Energy Private Limited - India
- Central Java Power - Indonesia
- Kepco SPC Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Anglo American - United Kingdom
- Sree Jayajothi Cements Limited - India
- Mintek Dendrill Indonesia
- Siam City Cement - Thailand
- Interocean Group of Companies - India
- Borneo Indobara - Indonesia
- Sojitz Corporation - Japan
- Semirara Mining Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Indogreen Group - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Kumho Petrochemical, South Korea
- Jorong Barutama Greston.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- New Zealand Coal & Carbon
- Energy Development Corp, Philippines
- Vedanta Resources Plc - India
- Essar Steel Hazira Ltd - India
- Star Paper Mills Limited - India
- Antam Resourcindo - Indonesia
- Samtan Co., Ltd - South Korea
- The State Trading Corporation of India Ltd
- San Jose City I Power Corp, Philippines
- London Commodity Brokers - England
- Makarim & Taira - Indonesia
- Dalmia Cement Bharat India
- Salva Resources Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Thiess Contractors Indonesia
- Standard Chartered Bank - UAE
- Videocon Industries ltd - India
- Directorate Of Revenue Intelligence - India
- McConnell Dowell - Australia
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement PLC, Thailand
- Bangladesh Power Developement Board
- Sinarmas Energy and Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- CNBM International Corporation - China
- Jindal Steel & Power Ltd - India
- Chettinad Cement Corporation Ltd - India
- GMR Energy Limited - India
- Medco Energi Mining Internasional
- International Coal Ventures Pvt Ltd - India
- Australian Coal Association
- Petrochimia International Co. Ltd.- Taiwan
- Kalimantan Lumbung Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Romanian Commodities Exchange
- Sakthi Sugars Limited - India
- Global Business Power Corporation, Philippines
- Indika Energy - Indonesia
- ICICI Bank Limited - India
- Larsen & Toubro Limited - India
- Ministry of Mines - Canada
- Commonwealth Bank - Australia
- TeaM Sual Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Authority, New Zealand
- Sindya Power Generating Company Private Ltd
- Mjunction Services Limited - India
- Carbofer General Trading SA - India
- PTC India Limited - India
- Ambuja Cements Ltd - India
- Ministry of Finance - Indonesia
- GVK Power & Infra Limited - India
- The Treasury - Australian Government
- Bhoruka Overseas - Indonesia
- Bayan Resources Tbk. - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Straits Asia Resources Limited - Singapore
- Altura Mining Limited, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Electricity Regulatory Commission - India
- Bhatia International Limited - India
- Orica Australia Pty. Ltd.
- OPG Power Generation Pvt Ltd - India
- Chamber of Mines of South Africa
- Attock Cement Pakistan Limited
- Tata Chemicals Ltd - India
- Malabar Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Parry Sugars Refinery, India
- Marubeni Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Indian Oil Corporation Limited
- Tamil Nadu electricity Board
- Latin American Coal - Colombia
- Lanco Infratech Ltd - India
- Sarangani Energy Corporation, Philippines
- Renaissance Capital - South Africa
- Manunggal Multi Energi - Indonesia
- Central Electricity Authority - India
- LBH Netherlands Bv - Netherlands
- Formosa Plastics Group - Taiwan
- Port Waratah Coal Services - Australia
- Eastern Energy - Thailand
- Madhucon Powers Ltd - India
- Kartika Selabumi Mining - Indonesia
- Australian Commodity Traders Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Independent Power Producers Association of India
- Gujarat Sidhee Cement - India
- European Bulk Services B.V. - Netherlands
- Parliament of New Zealand
- Kideco Jaya Agung - Indonesia
- SMG Consultants - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The University of Queensland
- Riau Bara Harum - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Indian Energy Exchange, India
- MS Steel International - UAE
- Sical Logistics Limited - India
- Goldman Sachs - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Uttam Galva Steels Limited - India
- ASAPP Information Group - India
- Asmin Koalindo Tuhup - Indonesia
- IEA Clean Coal Centre - UK
- White Energy Company Limited
- Savvy Resources Ltd - HongKong
- Posco Energy - South Korea
- Oldendorff Carriers - Singapore
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