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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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Friday, 25 October 13
U.S. YEAR-TO-DATE COAL PRODUCTION REACHED TOTALLED 803.1 MMST
COALspot.com – United States the world’s second largest coal producer produced approximately 19.10 million short tons (mmst) of coal in ...
Thursday, 24 October 13
PANAMAX: RATES SLIP ACROSS BOTH HEMISPHERES
Handy
We were back from holidays but still not much enquiries in the market. Overall future direction is uncertain. Currently, ships passing Singap ...
Thursday, 24 October 13
SHIP PRICES ARE INCREASING ON THE BACK OF IMPROVED MARKET SENTIMENT - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has kept on retreating from its recent highs, ending yesterday at 1,786 points, down 61 points on the day, with Capesizes leadin ...
Wednesday, 23 October 13
DRY BULK MARKET HAS SHOWN SIGNS OF STABILITY - INTERMODAL
Chartering (Wet: Stable+ / Dry: Stable-)
The Dry Bulk market has shown signs of stability this past week, with the sole exception of Capes, rates f ...
Wednesday, 23 October 13
MARKET SENTIMENT IN THE DRY BULK SECTOR REMAINS POSITIVE - YANNIS OLZIERSKY
Market sentiment in the dry bulk sector remains positive despite the latest correction in freight rates for the Capesize sector, which are sliding f ...
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- Sojitz Corporation - Japan
- Formosa Plastics Group - Taiwan
- GN Power Mariveles Coal Plant, Philippines
- Karaikal Port Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Sindya Power Generating Company Private Ltd
- Dalmia Cement Bharat India
- Port Waratah Coal Services - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- South Luzon Thermal Energy Corporation
- Trasteel International SA, Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kumho Petrochemical, South Korea
- European Bulk Services B.V. - Netherlands
- Chettinad Cement Corporation Ltd - India
- Ministry of Finance - Indonesia
- Indo Tambangraya Megah - Indonesia
- Kepco SPC Power Corporation, Philippines
- Central Java Power - Indonesia
- Australian Commodity Traders Exchange
- Xindia Steels Limited - India
- Parliament of New Zealand
- Kaltim Prima Coal - Indonesia
- Therma Luzon, Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Directorate General of MIneral and Coal - Indonesia
- Heidelberg Cement - Germany
- Malabar Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Coalindo Energy - Indonesia
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- Economic Council, Georgia
- Vedanta Resources Plc - India
- Meralco Power Generation, Philippines
- Anglo American - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Oldendorff Carriers - Singapore
- Edison Trading Spa - Italy
- White Energy Company Limited
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- Orica Mining Services - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Gujarat Mineral Development Corp Ltd - India
- San Jose City I Power Corp, Philippines
- Merrill Lynch Commodities Europe
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- Videocon Industries ltd - India
- Mjunction Services Limited - India
- Commonwealth Bank - Australia
- Jindal Steel & Power Ltd - India
- GAC Shipping (India) Pvt Ltd
- Ministry of Mines - Canada
- PetroVietnam Power Coal Import and Supply Company
- CNBM International Corporation - China
- Pendopo Energi Batubara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Metalloyd Limited - United Kingdom
- Aboitiz Power Corporation - Philippines
- ASAPP Information Group - India
- Toyota Tsusho Corporation, Japan
- Neyveli Lignite Corporation Ltd, - India
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- Sarangani Energy Corporation, Philippines
- Global Business Power Corporation, Philippines
- MS Steel International - UAE
- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- Planning Commission, India
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- Kalimantan Lumbung Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- Orica Australia Pty. Ltd.
- SMC Global Power, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PowerSource Philippines DevCo
- Coastal Gujarat Power Limited - India
- Star Paper Mills Limited - India
- Australian Coal Association
- Mercator Lines Limited - India
- Madhucon Powers Ltd - India
- Manunggal Multi Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Energy - Thailand
- Baramulti Group, Indonesia
- IEA Clean Coal Centre - UK
- LBH Netherlands Bv - Netherlands
- Electricity Generating Authority of Thailand
- Renaissance Capital - South Africa
- Kapuas Tunggal Persada - Indonesia
- Standard Chartered Bank - UAE
- Bharathi Cement Corporation - India
- Mercuria Energy - Indonesia
- India Bulls Power Limited - India
- Indonesian Coal Mining Association
- Marubeni Corporation - India
- Romanian Commodities Exchange
- Billiton Holdings Pty Ltd - Australia
- Global Coal Blending Company Limited - Australia
- Posco Energy - South Korea
- Grasim Industreis Ltd - India
- Tata Chemicals Ltd - India
- Medco Energi Mining Internasional
- Kideco Jaya Agung - Indonesia
- Chamber of Mines of South Africa
- Gujarat Sidhee Cement - India
- Larsen & Toubro Limited - India
- Ambuja Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Uttam Galva Steels Limited - India
- Africa Commodities Group - South Africa
- Indian Energy Exchange, India
- Semirara Mining and Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Electricity Authority, New Zealand
- Independent Power Producers Association of India
- Bayan Resources Tbk. - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Essar Steel Hazira Ltd - India
- GVK Power & Infra Limited - India
- Power Finance Corporation Ltd., India
- Savvy Resources Ltd - HongKong
- Indogreen Group - Indonesia
- Sical Logistics Limited - India
- Attock Cement Pakistan Limited
- Global Green Power PLC Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Mintek Dendrill Indonesia
- Gujarat Electricity Regulatory Commission - India
- Deloitte Consulting - India
- Miang Besar Coal Terminal - Indonesia
- Parry Sugars Refinery, India
- Straits Asia Resources Limited - Singapore
- Samtan Co., Ltd - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Interocean Group of Companies - India
- Bahari Cakrawala Sebuku - Indonesia
- Cement Manufacturers Association - India
- Kohat Cement Company Ltd. - Pakistan
- Vizag Seaport Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Asmin Koalindo Tuhup - Indonesia
- Aditya Birla Group - India
- VISA Power Limited - India
- Eastern Coal Council - USA
- Karbindo Abesyapradhi - Indoneisa
- Bhatia International Limited - India
- Petron Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Sakthi Sugars Limited - India
- Georgia Ports Authority, United States
- Meenaskhi Energy Private Limited - India
- ICICI Bank Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Simpson Spence & Young - Indonesia
- Ministry of Transport, Egypt
- Kobexindo Tractors - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Lanco Infratech Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Iligan Light & Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Minerals Council of Australia
- Wood Mackenzie - Singapore
- Siam City Cement - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Goldman Sachs - Singapore
- The State Trading Corporation of India Ltd
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- Bukit Makmur.PT - Indonesia
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- SN Aboitiz Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- Indian Oil Corporation Limited
- Tamil Nadu electricity Board
- SMG Consultants - Indonesia
- CIMB Investment Bank - Malaysia
- Agrawal Coal Company - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Sree Jayajothi Cements Limited - India
- Riau Bara Harum - Indonesia
- Coal and Oil Company - UAE
- Binh Thuan Hamico - Vietnam
- GMR Energy Limited - India
- Salva Resources Pvt Ltd - India
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- Energy Development Corp, Philippines
- Barasentosa Lestari - Indonesia
- Semirara Mining Corp, Philippines
- The University of Queensland
- Thiess Contractors Indonesia
- Makarim & Taira - Indonesia
- The Treasury - Australian Government
- London Commodity Brokers - England
- Rio Tinto Coal - Australia
- Central Electricity Authority - India
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- McConnell Dowell - Australia
- Carbofer General Trading SA - India
- Bhoruka Overseas - Indonesia
- Banpu Public Company Limited - Thailand
- Bangladesh Power Developement Board
- Singapore Mercantile Exchange
- Thai Mozambique Logistica
- Ceylon Electricity Board - Sri Lanka
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