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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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- Africa Commodities Group - South Africa
- Jaiprakash Power Ventures ltd
- Maheswari Brothers Coal Limited - India
- Alfred C Toepfer International GmbH - Germany
- Eastern Energy - Thailand
- Price Waterhouse Coopers - Russia
- Lanco Infratech Ltd - India
- Malabar Cements Ltd - India
- Independent Power Producers Association of India
- International Coal Ventures Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- ASAPP Information Group - India
- Oldendorff Carriers - Singapore
- Port Waratah Coal Services - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Simpson Spence & Young - Indonesia
- Indonesian Coal Mining Association
- Parry Sugars Refinery, India
- Vijayanagar Sugar Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- SMC Global Power, Philippines
- Global Green Power PLC Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Latin American Coal - Colombia
- Rio Tinto Coal - Australia
- Central Electricity Authority - India
- PNOC Exploration Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Bulk Trading Sa - Switzerland
- Vedanta Resources Plc - India
- PowerSource Philippines DevCo
- Madhucon Powers Ltd - India
- Siam City Cement PLC, Thailand
- Antam Resourcindo - Indonesia
- Mercator Lines Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Coal Council - USA
- Uttam Galva Steels Limited - India
- The University of Queensland
- Kepco SPC Power Corporation, Philippines
- Star Paper Mills Limited - India
- Baramulti Group, Indonesia
- Global Coal Blending Company Limited - Australia
- Bangladesh Power Developement Board
- Ambuja Cements Ltd - India
- Makarim & Taira - Indonesia
- Sical Logistics Limited - India
- Videocon Industries ltd - India
- Bharathi Cement Corporation - India
- Australian Coal Association
- South Luzon Thermal Energy Corporation
- Grasim Industreis Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Wilmar Investment Holdings
- Indian Energy Exchange, India
- Borneo Indobara - Indonesia
- GVK Power & Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- Therma Luzon, Inc, Philippines
- Indogreen Group - Indonesia
- Mercuria Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Leighton Contractors Pty Ltd - Australia
- Central Java Power - Indonesia
- Ministry of Mines - Canada
- Bayan Resources Tbk. - Indonesia
- Interocean Group of Companies - India
- Neyveli Lignite Corporation Ltd, - India
- MS Steel International - UAE
- Ministry of Transport, Egypt
- Asmin Koalindo Tuhup - Indonesia
- Carbofer General Trading SA - India
- Coastal Gujarat Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- Singapore Mercantile Exchange
- The State Trading Corporation of India Ltd
- Savvy Resources Ltd - HongKong
- Heidelberg Cement - Germany
- McConnell Dowell - Australia
- White Energy Company Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Salva Resources Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Romanian Commodities Exchange
- Commonwealth Bank - Australia
- Barasentosa Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Formosa Plastics Group - Taiwan
- Gujarat Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- Chamber of Mines of South Africa
- Mintek Dendrill Indonesia
- Bhatia International Limited - India
- Ceylon Electricity Board - Sri Lanka
- Orica Australia Pty. Ltd.
- Timah Investasi Mineral - Indoneisa
- Tamil Nadu electricity Board
- Karaikal Port Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- CIMB Investment Bank - Malaysia
- Bhushan Steel Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Medco Energi Mining Internasional
- Semirara Mining and Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Globalindo Alam Lestari - Indonesia
- Georgia Ports Authority, United States
- Thai Mozambique Logistica
- Kumho Petrochemical, South Korea
- Larsen & Toubro Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Sidhee Cement - India
- Coal and Oil Company - UAE
- Binh Thuan Hamico - Vietnam
- Toyota Tsusho Corporation, Japan
- Cement Manufacturers Association - India
- Bhoruka Overseas - Indonesia
- Trasteel International SA, Italy
- LBH Netherlands Bv - Netherlands
- Attock Cement Pakistan Limited
- Edison Trading Spa - Italy
- Aboitiz Power Corporation - Philippines
- Parliament of New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Banpu Public Company Limited - Thailand
- Power Finance Corporation Ltd., India
- TNB Fuel Sdn Bhd - Malaysia
- TeaM Sual Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Vizag Seaport Private Limited - India
- Altura Mining Limited, Indonesia
- Petron Corporation, Philippines
- Dalmia Cement Bharat India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining Corp, Philippines
- VISA Power Limited - India
- Sakthi Sugars Limited - India
- Siam City Cement - Thailand
- Sindya Power Generating Company Private Ltd
- Indian Oil Corporation Limited
- Economic Council, Georgia
- CNBM International Corporation - China
- Energy Link Ltd, New Zealand
- Posco Energy - South Korea
- Jindal Steel & Power Ltd - India
- San Jose City I Power Corp, Philippines
- London Commodity Brokers - England
- GMR Energy Limited - India
- Aditya Birla Group - India
- Straits Asia Resources Limited - Singapore
- The Treasury - Australian Government
- Wood Mackenzie - Singapore
- Manunggal Multi Energi - Indonesia
- Deloitte Consulting - India
- Kideco Jaya Agung - Indonesia
- Standard Chartered Bank - UAE
- Iligan Light & Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Metalloyd Limited - United Kingdom
- Intertek Mineral Services - Indonesia
- Essar Steel Hazira Ltd - India
- Orica Mining Services - Indonesia
- Bukit Baiduri Energy - Indonesia
- Coalindo Energy - Indonesia
- Renaissance Capital - South Africa
- Indo Tambangraya Megah - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- SMG Consultants - Indonesia
- Meralco Power Generation, Philippines
- Kartika Selabumi Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Agrawal Coal Company - India
- Goldman Sachs - Singapore
- Sojitz Corporation - Japan
- Energy Development Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Xindia Steels Limited - India
- Indika Energy - Indonesia
- Ministry of Finance - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Makmur.PT - Indonesia
- Global Business Power Corporation, Philippines
- Mjunction Services Limited - India
- IEA Clean Coal Centre - UK
- SN Aboitiz Power Inc, Philippines
- Thiess Contractors Indonesia
- Electricity Authority, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Generating Authority of Thailand
- PTC India Limited - India
- Australian Commodity Traders Exchange
- Kaltim Prima Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- India Bulls Power Limited - India
- Merrill Lynch Commodities Europe
- OPG Power Generation Pvt Ltd - India
- ICICI Bank Limited - India
- Tata Chemicals Ltd - India
- Anglo American - United Kingdom
- Chettinad Cement Corporation Ltd - India
- Meenaskhi Energy Private Limited - India
- Sree Jayajothi Cements Limited - India
- Marubeni Corporation - India
- Planning Commission, India
- New Zealand Coal & Carbon
- Minerals Council of Australia
- Holcim Trading Pte Ltd - Singapore
- AsiaOL BioFuels Corp., Philippines
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