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Tuesday, 08 October 13
CHINA: INTENSE COMPETITION AMONG DOMESTIC COAL MINERS AS 2013 IMPORT DEMAND REMAINS STRONG - WOOD MACKENZIE
 Prices will not fall under RMB500/t or risk supply availability to the coastal market
Despite China's lower economic growth, Wood Mackenzie says that import demand will still meet previous high expectations, although overall demand growth will be lower. This is due to lower seaborne coal prices compared to domestic coal prices in coastal China. As such, domestic producers are competing for market share by lowering prices in spite of negative margins. This explains the recent continuous drop in Chinese coal prices. However, Wood Mackenzie says that coastal China coal prices will be supported at *RMB500 per tonne (t) as at this price level 40% of domestic supply operates at negative margins.
China's gross domestic product (GDP) growth has slowed from 9.3% to 7.5% from 2011 to 2013. As a result, power demand growth has slowed in China and coal demand in coastal provinces has remained flat, staying at 2011 levels of 1.2 billion tonnes(Bt). In contrast, seaborne demand increased rapidly - This year, Wood Mackenzie expects China to import 235Mt of thermal and 67Mt of metallurgical coal, up from 168Mt and 31Mt respectively in 2011. This translates to a growth in share of seaborne imports into coastal China from 17% to about 25% between 2011 to 2013.
Wood Mackenzie's Senior Analyst Coal Market Research, Mr. Prakash Sharma says, "The trend of increased coal imports has been aided by weak coal prices in the international market. This means that Chinese coal import demand is almost entirely driven by the competitiveness of imported versus domestic supply. As such, large Chinese miners are adopting volume strategy by producing more to bring down operating costs and pricing lower to maintain market share."
These measures will hold market share in the short-term but may be counter-effective if prices fall too low in coastal China. Therefore we believe prices find a floor at RMB500/t. Small to medium sized domestic players will be most affected due to relatively high fixed labour costs and mine safety expenses in China. Large producers such as Shenhua and China Coal, who have resorted to aggressive pricing, contribute almost 50% of China's domestic coal production. The remainder 50% comes from the small to medium size miners.
Rohan Kendall, Senior Analyst for Coal Supply Research, says, "At RMB 500/t, we estimate that 40% of China's thermal coal production will produce at negative margins. Small to medium sized producers operating at negative margins, particularly those producing low-energy coal, face a real risk of mine closures. The situation may also trigger further consolidation of small loss-making mines in China."
Summarizing, Mr Sharma says, "The 40% of domestic production producing at negative margins equates to about 150% of the size of the current seaborne market. Full replacement volumes cannot feasibly be sourced from imports without creating a price response that will actually incentivise domestic miners to remain in production. Therefore, we believe prices will be supported above RMB 500/t, turning the tide on the current price trend."
*All prices refer to benchmark FOB Qinghuangdao Thermal coal price (5500 kcal/kg NAR basis) inclusive of 17% VAT.
Editor's notes:
Wood Mackenzie is the most comprehensive source of knowledge about the world's energy and metals industries. We analyse and advise on every stage along the value chain - from discovery to delivery, and beyond - to provide clients with the commercial insight that makes them stronger. For more information visit: www.woodmac.com
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Sunday, 10 November 13
PANAMAX COAL FREIGHT RATES REMAIN UNDER PRESSURE; SUPRAMAX BIGGEST GAINER - REDDY
COALspot.com: The freight market was up this week with all indices increased except for Panamax index.
The BDI was up by 56 points closing at 158 ...
Friday, 08 November 13
DRY BULK MARKET BOUNCES BACK ON RENEWED DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market staged a mild comeback this week, as the industry's benchmark, the Baltic Dry Index (BDI) inched forward step by step and bit b ...
Friday, 08 November 13
US'S OCTOBER COAL PRODUCTION INCREASED BY 1.78% M-M - EIA
COALspot.com – United States the world’s second largest coal producer, produced approximately 19.3 million short tons (mmst) of coal in ...
Thursday, 07 November 13
FORMOSA PLASTICS SEEKS 80K MT OF 5850 GAR COAL
COALspot.com: Taiwan's Formosa Plastics Group is inviting bids for 80,000 mt of bituminous coal for delivery in Nov - Dec'13 for its Chi ...
Thursday, 07 November 13
INDONESIAN COAL EXPORT VOLUME INCREASED; REVENUE DECREASED
COALspot.com: Indonesia, the 15th largest economy, 4th largest coal producer in the world and world's largest multi grade coal exporter shipp ...
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- GMR Energy Limited - India
- Mjunction Services Limited - India
- Trasteel International SA, Italy
- Manunggal Multi Energi - Indonesia
- The University of Queensland
- Malabar Cements Ltd - India
- Intertek Mineral Services - Indonesia
- Merrill Lynch Commodities Europe
- Gujarat Mineral Development Corp Ltd - India
- Thai Mozambique Logistica
- Uttam Galva Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Therma Luzon, Inc, Philippines
- Vizag Seaport Private Limited - India
- McConnell Dowell - Australia
- Eastern Coal Council - USA
- OPG Power Generation Pvt Ltd - India
- VISA Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- IHS Mccloskey Coal Group - USA
- Georgia Ports Authority, United States
- Bukit Makmur.PT - Indonesia
- Posco Energy - South Korea
- Ceylon Electricity Board - Sri Lanka
- Heidelberg Cement - Germany
- Mercuria Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Tamil Nadu electricity Board
- Bahari Cakrawala Sebuku - Indonesia
- SN Aboitiz Power Inc, Philippines
- The Treasury - Australian Government
- Borneo Indobara - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Transport, Egypt
- Carbofer General Trading SA - India
- ASAPP Information Group - India
- SMC Global Power, Philippines
- Siam City Cement - Thailand
- Bhushan Steel Limited - India
- Makarim & Taira - Indonesia
- Mercator Lines Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Globalindo Alam Lestari - Indonesia
- Riau Bara Harum - Indonesia
- Cement Manufacturers Association - India
- Romanian Commodities Exchange
- Maharashtra Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- Renaissance Capital - South Africa
- Indogreen Group - Indonesia
- Australian Commodity Traders Exchange
- GAC Shipping (India) Pvt Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Africa Commodities Group - South Africa
- Wood Mackenzie - Singapore
- Kapuas Tunggal Persada - Indonesia
- Price Waterhouse Coopers - Russia
- Coal and Oil Company - UAE
- Medco Energi Mining Internasional
- Power Finance Corporation Ltd., India
- Kalimantan Lumbung Energi - Indonesia
- Sical Logistics Limited - India
- Electricity Generating Authority of Thailand
- Thiess Contractors Indonesia
- Rio Tinto Coal - Australia
- Attock Cement Pakistan Limited
- Commonwealth Bank - Australia
- Central Java Power - Indonesia
- Global Business Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Chettinad Cement Corporation Ltd - India
- The State Trading Corporation of India Ltd
- Leighton Contractors Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Bhatia International Limited - India
- Madhucon Powers Ltd - India
- Bangladesh Power Developement Board
- Baramulti Group, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petron Corporation, Philippines
- Mintek Dendrill Indonesia
- Goldman Sachs - Singapore
- Aditya Birla Group - India
- MS Steel International - UAE
- PTC India Limited - India
- Singapore Mercantile Exchange
- Kaltim Prima Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Metalloyd Limited - United Kingdom
- Altura Mining Limited, Indonesia
- Essar Steel Hazira Ltd - India
- Grasim Industreis Ltd - India
- Kideco Jaya Agung - Indonesia
- CIMB Investment Bank - Malaysia
- Orica Mining Services - Indonesia
- Videocon Industries ltd - India
- ICICI Bank Limited - India
- Minerals Council of Australia
- European Bulk Services B.V. - Netherlands
- Energy Development Corp, Philippines
- Indian Oil Corporation Limited
- AsiaOL BioFuels Corp., Philippines
- Neyveli Lignite Corporation Ltd, - India
- Semirara Mining and Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Oldendorff Carriers - Singapore
- Cigading International Bulk Terminal - Indonesia
- Sindya Power Generating Company Private Ltd
- Timah Investasi Mineral - Indoneisa
- Bayan Resources Tbk. - Indonesia
- White Energy Company Limited
- Tata Chemicals Ltd - India
- CNBM International Corporation - China
- Petrochimia International Co. Ltd.- Taiwan
- Vijayanagar Sugar Pvt Ltd - India
- Economic Council, Georgia
- Jorong Barutama Greston.PT - Indonesia
- Coalindo Energy - Indonesia
- Antam Resourcindo - Indonesia
- Semirara Mining Corp, Philippines
- Salva Resources Pvt Ltd - India
- Indian Energy Exchange, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sojitz Corporation - Japan
- Sarangani Energy Corporation, Philippines
- Indika Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Billiton Holdings Pty Ltd - Australia
- Bukit Baiduri Energy - Indonesia
- Chamber of Mines of South Africa
- Parry Sugars Refinery, India
- Formosa Plastics Group - Taiwan
- Larsen & Toubro Limited - India
- Ind-Barath Power Infra Limited - India
- Ministry of Mines - Canada
- Pipit Mutiara Jaya. PT, Indonesia
- LBH Netherlands Bv - Netherlands
- Planning Commission, India
- Deloitte Consulting - India
- GN Power Mariveles Coal Plant, Philippines
- Parliament of New Zealand
- Bhoruka Overseas - Indonesia
- Interocean Group of Companies - India
- IEA Clean Coal Centre - UK
- Dalmia Cement Bharat India
- SMG Consultants - Indonesia
- Global Coal Blending Company Limited - Australia
- Xindia Steels Limited - India
- Marubeni Corporation - India
- Latin American Coal - Colombia
- Meralco Power Generation, Philippines
- PowerSource Philippines DevCo
- Bharathi Cement Corporation - India
- Indo Tambangraya Megah - Indonesia
- Kartika Selabumi Mining - Indonesia
- Star Paper Mills Limited - India
- Anglo American - United Kingdom
- International Coal Ventures Pvt Ltd - India
- Sakthi Sugars Limited - India
- India Bulls Power Limited - India
- Australian Coal Association
- Independent Power Producers Association of India
- Vedanta Resources Plc - India
- Wilmar Investment Holdings
- Directorate General of MIneral and Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Indonesian Coal Mining Association
- Samtan Co., Ltd - South Korea
- London Commodity Brokers - England
- Asmin Koalindo Tuhup - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bulk Trading Sa - Switzerland
- Toyota Tsusho Corporation, Japan
- Lanco Infratech Ltd - India
- Kobexindo Tractors - Indoneisa
- PNOC Exploration Corporation - Philippines
- Ambuja Cements Ltd - India
- Edison Trading Spa - Italy
- Kumho Petrochemical, South Korea
- Gujarat Electricity Regulatory Commission - India
- Eastern Energy - Thailand
- Ministry of Finance - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Straits Asia Resources Limited - Singapore
- Pendopo Energi Batubara - Indonesia
- Electricity Authority, New Zealand
- Rashtriya Ispat Nigam Limited - India
- Jaiprakash Power Ventures ltd
- Miang Besar Coal Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- South Luzon Thermal Energy Corporation
- Standard Chartered Bank - UAE
- Agrawal Coal Company - India
- Karbindo Abesyapradhi - Indoneisa
- Energy Link Ltd, New Zealand
- Directorate Of Revenue Intelligence - India
- Coastal Gujarat Power Limited - India
- Simpson Spence & Young - Indonesia
- Meenaskhi Energy Private Limited - India
- Karaikal Port Pvt Ltd - India
- GVK Power & Infra Limited - India
- Port Waratah Coal Services - Australia
- Central Electricity Authority - India
- New Zealand Coal & Carbon
- Binh Thuan Hamico - Vietnam
- Gujarat Sidhee Cement - India
- Siam City Cement PLC, Thailand
- Maheswari Brothers Coal Limited - India
- Holcim Trading Pte Ltd - Singapore
- Savvy Resources Ltd - HongKong
- Global Green Power PLC Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Orica Australia Pty. Ltd.
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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