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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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Thursday, 03 October 13
INDONESIA AUGUST COAL EXPORTS FALL 12.90 % FROM JULY TO 30.71 MIL MT
COALspot.com: Indonesia, the 15th largest economy in world, 4th largest coal producer in world and world's largest multi grade coal exporter ...
Thursday, 03 October 13
TOP FOUR U.S. COAL COMPANIES SUPPLIED MORE THAN HALF OF U.S. COAL PRODUCTION IN 2011 - EIA
In the past two years, more than half of U.S. coal production was attributable to the top four coal producers, the result of changes in regional pro ...
Thursday, 03 October 13
HANDY: PERIOD MARKET STAND IN GOOD POSITION - FEARNRESEARCH
Handy
Nickel ore and Bauxite was active last week but slowed down now due to Chinese holidays. Ships opened in North China fixed at US$ 11-13k leve ...
Wednesday, 02 October 13
DRY BULK MARKET IS STILL MAINTAINING ITS UPWARD DIRECTION
Chartering (Wet: Stable- / Dry: Firm+)
Despite the fact that rates for Capes didn't continue their crazy ride this past week, the Dry Bulk market ...
Wednesday, 02 October 13
HOW LONG WILL THIS LATEST CAPESIZE RALLY LAST? - TASOS PAPADOPOULOS
By Tasos Papadopoulos, SnP Broker, Intermodal
The surge in iron ore trade has translated into a massive boost in daily earnings for capes; with t ...
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- Australian Coal Association
- Sarangani Energy Corporation, Philippines
- White Energy Company Limited
- Eastern Energy - Thailand
- Georgia Ports Authority, United States
- Parliament of New Zealand
- Independent Power Producers Association of India
- Kumho Petrochemical, South Korea
- Manunggal Multi Energi - Indonesia
- Electricity Generating Authority of Thailand
- Price Waterhouse Coopers - Russia
- Pendopo Energi Batubara - Indonesia
- Latin American Coal - Colombia
- Tata Chemicals Ltd - India
- Antam Resourcindo - Indonesia
- Malabar Cements Ltd - India
- Coalindo Energy - Indonesia
- The State Trading Corporation of India Ltd
- Rashtriya Ispat Nigam Limited - India
- Miang Besar Coal Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Sindya Power Generating Company Private Ltd
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement PLC, Thailand
- Global Business Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Standard Chartered Bank - UAE
- Kartika Selabumi Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Globalindo Alam Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Larsen & Toubro Limited - India
- Bharathi Cement Corporation - India
- India Bulls Power Limited - India
- Parry Sugars Refinery, India
- Petrochimia International Co. Ltd.- Taiwan
- Dalmia Cement Bharat India
- Semirara Mining and Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- Wood Mackenzie - Singapore
- Port Waratah Coal Services - Australia
- Economic Council, Georgia
- Gujarat Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- ICICI Bank Limited - India
- Planning Commission, India
- Mjunction Services Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Straits Asia Resources Limited - Singapore
- Agrawal Coal Company - India
- SN Aboitiz Power Inc, Philippines
- Grasim Industreis Ltd - India
- Formosa Plastics Group - Taiwan
- OPG Power Generation Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kepco SPC Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Indika Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- SMC Global Power, Philippines
- Goldman Sachs - Singapore
- IHS Mccloskey Coal Group - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Heidelberg Cement - Germany
- Barasentosa Lestari - Indonesia
- GMR Energy Limited - India
- Kohat Cement Company Ltd. - Pakistan
- McConnell Dowell - Australia
- Cigading International Bulk Terminal - Indonesia
- GVK Power & Infra Limited - India
- Rio Tinto Coal - Australia
- London Commodity Brokers - England
- Ministry of Transport, Egypt
- Savvy Resources Ltd - HongKong
- Ministry of Finance - Indonesia
- Aditya Birla Group - India
- Central Java Power - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- New Zealand Coal & Carbon
- Posco Energy - South Korea
- Thiess Contractors Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Kideco Jaya Agung - Indonesia
- Coal and Oil Company - UAE
- Maheswari Brothers Coal Limited - India
- Bukit Makmur.PT - Indonesia
- GAC Shipping (India) Pvt Ltd
- European Bulk Services B.V. - Netherlands
- Lanco Infratech Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Eastern Coal Council - USA
- Timah Investasi Mineral - Indoneisa
- Jaiprakash Power Ventures ltd
- Australian Commodity Traders Exchange
- IEA Clean Coal Centre - UK
- Sical Logistics Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Simpson Spence & Young - Indonesia
- Bayan Resources Tbk. - Indonesia
- Carbofer General Trading SA - India
- Directorate General of MIneral and Coal - Indonesia
- Energy Development Corp, Philippines
- Bulk Trading Sa - Switzerland
- Africa Commodities Group - South Africa
- Salva Resources Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Directorate Of Revenue Intelligence - India
- LBH Netherlands Bv - Netherlands
- Central Electricity Authority - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meenaskhi Energy Private Limited - India
- VISA Power Limited - India
- Essar Steel Hazira Ltd - India
- Baramulti Group, Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Videocon Industries ltd - India
- Energy Link Ltd, New Zealand
- Therma Luzon, Inc, Philippines
- Indian Energy Exchange, India
- Minerals Council of Australia
- Billiton Holdings Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Merrill Lynch Commodities Europe
- Aboitiz Power Corporation - Philippines
- Renaissance Capital - South Africa
- Xindia Steels Limited - India
- Electricity Authority, New Zealand
- Indonesian Coal Mining Association
- Ind-Barath Power Infra Limited - India
- Gujarat Sidhee Cement - India
- Mercator Lines Limited - India
- Karaikal Port Pvt Ltd - India
- The University of Queensland
- Bangladesh Power Developement Board
- Bhoruka Overseas - Indonesia
- Banpu Public Company Limited - Thailand
- Sakthi Sugars Limited - India
- Trasteel International SA, Italy
- Alfred C Toepfer International GmbH - Germany
- Meralco Power Generation, Philippines
- Ambuja Cements Ltd - India
- Attock Cement Pakistan Limited
- Mintek Dendrill Indonesia
- TeaM Sual Corporation - Philippines
- Bhushan Steel Limited - India
- Madhucon Powers Ltd - India
- Oldendorff Carriers - Singapore
- Star Paper Mills Limited - India
- Toyota Tsusho Corporation, Japan
- Iligan Light & Power Inc, Philippines
- Medco Energi Mining Internasional
- Indian Oil Corporation Limited
- Indogreen Group - Indonesia
- Deloitte Consulting - India
- Binh Thuan Hamico - Vietnam
- Tamil Nadu electricity Board
- CIMB Investment Bank - Malaysia
- Interocean Group of Companies - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Petron Corporation, Philippines
- MS Steel International - UAE
- Karbindo Abesyapradhi - Indoneisa
- Romanian Commodities Exchange
- PTC India Limited - India
- Holcim Trading Pte Ltd - Singapore
- Bhatia International Limited - India
- International Coal Ventures Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Borneo Indobara - Indonesia
- South Luzon Thermal Energy Corporation
- Makarim & Taira - Indonesia
- SMG Consultants - Indonesia
- Samtan Co., Ltd - South Korea
- Orica Mining Services - Indonesia
- Commonwealth Bank - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Chamber of Mines of South Africa
- Semirara Mining Corp, Philippines
- ASAPP Information Group - India
- Mercuria Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Chettinad Cement Corporation Ltd - India
- Siam City Cement - Thailand
- Global Coal Blending Company Limited - Australia
- Wilmar Investment Holdings
- Anglo American - United Kingdom
- Vizag Seaport Private Limited - India
- PowerSource Philippines DevCo
- Power Finance Corporation Ltd., India
- Sojitz Corporation - Japan
- Kaltim Prima Coal - Indonesia
- Cement Manufacturers Association - India
- Leighton Contractors Pty Ltd - Australia
- Ministry of Mines - Canada
- Thai Mozambique Logistica
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Edison Trading Spa - Italy
- San Jose City I Power Corp, Philippines
- Orica Australia Pty. Ltd.
- Bahari Cakrawala Sebuku - Indonesia
- CNBM International Corporation - China
- TNB Fuel Sdn Bhd - Malaysia
- Vedanta Resources Plc - India
- Singapore Mercantile Exchange
- Marubeni Corporation - India
- The Treasury - Australian Government
- Altura Mining Limited, Indonesia
- Jindal Steel & Power Ltd - India
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