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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, 18 October 13
WOOD MACKENZIE FORECASTS CHINA WILL OUTWEIGH THE REST OF THE WORLD FOR BASE METALS DEMAND BY 2017
China set to account for 52% of 117mt base metals market by 2017
China is on track to exceed rest of the World demand by 2017, becoming the singl ...
Friday, 18 October 13
DRY BULK MARKET ON "PAUSE" MODE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has been on "pause" mode over the past week, after China's return from the week long holidays. The industry's benchm ...
Friday, 18 October 13
US PRODUCED 6.7% MORE COAL W-W
COALspot.com – United States the world’s second largest coal producer produced approximately 18.9 million short tons (mmst) of coal in a ...
Thursday, 17 October 13
CAPESIZE: RATES ARE AGAIN MOVING UPWARDS - FEARNRESEARCH
Handy
Activities were obviously slowed down in the Pacific basin. There were only few coal movements which fixed around USD 15-16k for ships in Sin ...
Thursday, 17 October 13
SGX TO LAUNCH "SGX THERMAL COAL FUTURES" NEXT MONDAY
COALspot.com: SGX is to launch two thermal coal futures contracts, SGX API 8 CFR China Coal Index Futures and SGX IHS McCloskey Indonesian Sub-bit F ...
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- Global Coal Blending Company Limited - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rio Tinto Coal - Australia
- Iligan Light & Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Orica Australia Pty. Ltd.
- PTC India Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- SMG Consultants - Indonesia
- Bukit Makmur.PT - Indonesia
- San Jose City I Power Corp, Philippines
- Bhushan Steel Limited - India
- Globalindo Alam Lestari - Indonesia
- Videocon Industries ltd - India
- Anglo American - United Kingdom
- GMR Energy Limited - India
- Bayan Resources Tbk. - Indonesia
- Grasim Industreis Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Sarangani Energy Corporation, Philippines
- Petron Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Posco Energy - South Korea
- Star Paper Mills Limited - India
- Marubeni Corporation - India
- Electricity Authority, New Zealand
- Electricity Generating Authority of Thailand
- India Bulls Power Limited - India
- Jaiprakash Power Ventures ltd
- Sindya Power Generating Company Private Ltd
- Heidelberg Cement - Germany
- Siam City Cement - Thailand
- Sical Logistics Limited - India
- New Zealand Coal & Carbon
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- Oldendorff Carriers - Singapore
- Tata Chemicals Ltd - India
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- Interocean Group of Companies - India
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- PNOC Exploration Corporation - Philippines
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- Power Finance Corporation Ltd., India
- Chamber of Mines of South Africa
- Indo Tambangraya Megah - Indonesia
- Barasentosa Lestari - Indonesia
- Deloitte Consulting - India
- GAC Shipping (India) Pvt Ltd
- Central Java Power - Indonesia
- Merrill Lynch Commodities Europe
- IEA Clean Coal Centre - UK
- Offshore Bulk Terminal Pte Ltd, Singapore
- Carbofer General Trading SA - India
- Mercuria Energy - Indonesia
- Gujarat Sidhee Cement - India
- Edison Trading Spa - Italy
- SN Aboitiz Power Inc, Philippines
- Ambuja Cements Ltd - India
- Larsen & Toubro Limited - India
- Wilmar Investment Holdings
- Eastern Energy - Thailand
- Ind-Barath Power Infra Limited - India
- Borneo Indobara - Indonesia
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- Madhucon Powers Ltd - India
- Meralco Power Generation, Philippines
- Formosa Plastics Group - Taiwan
- SMC Global Power, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kartika Selabumi Mining - Indonesia
- Latin American Coal - Colombia
- Uttam Galva Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Jindal Steel & Power Ltd - India
- Simpson Spence & Young - Indonesia
- Port Waratah Coal Services - Australia
- Bukit Baiduri Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Eastern Coal Council - USA
- Attock Cement Pakistan Limited
- Bahari Cakrawala Sebuku - Indonesia
- Kumho Petrochemical, South Korea
- Bhatia International Limited - India
- Essar Steel Hazira Ltd - India
- IHS Mccloskey Coal Group - USA
- Sojitz Corporation - Japan
- Bangladesh Power Developement Board
- Parry Sugars Refinery, India
- Indogreen Group - Indonesia
- Economic Council, Georgia
- Vedanta Resources Plc - India
- Africa Commodities Group - South Africa
- Dalmia Cement Bharat India
- Coal and Oil Company - UAE
- Directorate Of Revenue Intelligence - India
- Romanian Commodities Exchange
- ICICI Bank Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Miang Besar Coal Terminal - Indonesia
- Bhoruka Overseas - Indonesia
- McConnell Dowell - Australia
- Thai Mozambique Logistica
- Aditya Birla Group - India
- Indika Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Australian Coal Association
- The State Trading Corporation of India Ltd
- Sinarmas Energy and Mining - Indonesia
- Indian Oil Corporation Limited
- GVK Power & Infra Limited - India
- Therma Luzon, Inc, Philippines
- Malabar Cements Ltd - India
- Energy Link Ltd, New Zealand
- Coalindo Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Goldman Sachs - Singapore
- Xindia Steels Limited - India
- International Coal Ventures Pvt Ltd - India
- Ministry of Mines - Canada
- European Bulk Services B.V. - Netherlands
- Baramulti Group, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Electricity Regulatory Commission - India
- Altura Mining Limited, Indonesia
- MS Steel International - UAE
- Karbindo Abesyapradhi - Indoneisa
- South Luzon Thermal Energy Corporation
- Kapuas Tunggal Persada - Indonesia
- Sakthi Sugars Limited - India
- CNBM International Corporation - China
- White Energy Company Limited
- Straits Asia Resources Limited - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Mercator Lines Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Cigading International Bulk Terminal - Indonesia
- Medco Energi Mining Internasional
- Banpu Public Company Limited - Thailand
- Standard Chartered Bank - UAE
- Vizag Seaport Private Limited - India
- Kobexindo Tractors - Indoneisa
- Indian Energy Exchange, India
- Australian Commodity Traders Exchange
- Alfred C Toepfer International GmbH - Germany
- Planning Commission, India
- Agrawal Coal Company - India
- Semirara Mining Corp, Philippines
- Commonwealth Bank - Australia
- The Treasury - Australian Government
- Global Business Power Corporation, Philippines
- Georgia Ports Authority, United States
- PetroVietnam Power Coal Import and Supply Company
- Energy Development Corp, Philippines
- Tamil Nadu electricity Board
- OPG Power Generation Pvt Ltd - India
- London Commodity Brokers - England
- Antam Resourcindo - Indonesia
- Trasteel International SA, Italy
- Riau Bara Harum - Indonesia
- PowerSource Philippines DevCo
- Neyveli Lignite Corporation Ltd, - India
- Samtan Co., Ltd - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- AsiaOL BioFuels Corp., Philippines
- Bharathi Cement Corporation - India
- TNB Fuel Sdn Bhd - Malaysia
- Wood Mackenzie - Singapore
- Lanco Infratech Ltd - India
- The University of Queensland
- TeaM Sual Corporation - Philippines
- Mintek Dendrill Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- ASAPP Information Group - India
- Siam City Cement PLC, Thailand
- CIMB Investment Bank - Malaysia
- Rashtriya Ispat Nigam Limited - India
- Aboitiz Power Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Coastal Gujarat Power Limited - India
- Central Electricity Authority - India
- Renaissance Capital - South Africa
- Billiton Holdings Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Parliament of New Zealand
- Karaikal Port Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Gujarat Mineral Development Corp Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Ministry of Finance - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Mjunction Services Limited - India
- Intertek Mineral Services - Indonesia
- LBH Netherlands Bv - Netherlands
- Krishnapatnam Port Company Ltd. - India
- Binh Thuan Hamico - Vietnam
- Ministry of Transport, Egypt
- Jorong Barutama Greston.PT - Indonesia
- Orica Mining Services - Indonesia
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- Bank of Tokyo Mitsubishi UFJ Ltd
- Sree Jayajothi Cements Limited - India
- Thiess Contractors Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Minerals Council of Australia
- Singapore Mercantile Exchange
- Price Waterhouse Coopers - Russia
- Metalloyd Limited - United Kingdom
- Kideco Jaya Agung - Indonesia
- Indonesian Coal Mining Association
- Salva Resources Pvt Ltd - India
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