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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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Tuesday, 01 October 13
DRY BULK MARKET POISED FOR RETREAT ON CHINA HOLIDAY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The start of a national weeklong in China as of Tuesday is expected to put a lid in the latest rally of the dry bulk freight market, as has always b ...
Monday, 30 September 13
NEWCASTLE'S COAL EXPORT VOLUME CONTINUES TO SLIP
COALspot.com: Power plant and semi-soft coking coal shipments from Australia's Newcastle port fell 8.38 per cent week on week to 2.67 million mt fo ...
Monday, 30 September 13
PANAMAX CHARTER RATES TOUCHING US$ 18K FOR A TRIP TO NOPAC - CAPT. REDDY
COALspot.com : The freight market continued to remain firm, BDI and the Panamax index up week ended 27 September 2013.
The cape index was fell to ...
Sunday, 29 September 13
API 8 CFR SOUTH CHINA COAL Q3 2014 DELIVERY SWAP GAINED $1.19 M-O-M
COALspot.com : SGX has launched API 8 CFR South China Coal Swap on 29 April 2013 and SGX replaced the previous swap.
API 8 CFR South China Coal s ...
Sunday, 29 September 13
SUB-BIT INDONESIA COAL SWAP FELL ON MONTH AND WEEK
COALspot.com – Sub-Bit Indonesia coal swap (FOB ) for average Q4 2013 delivery fell 3.93 percept month on month on Friday 27 September 2 ...
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- GVK Power & Infra Limited - India
- Formosa Plastics Group - Taiwan
- European Bulk Services B.V. - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- ICICI Bank Limited - India
- Bulk Trading Sa - Switzerland
- Altura Mining Limited, Indonesia
- Ministry of Transport, Egypt
- Timah Investasi Mineral - Indoneisa
- Videocon Industries ltd - India
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- Tata Chemicals Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- White Energy Company Limited
- Eastern Energy - Thailand
- Indian Energy Exchange, India
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- Bharathi Cement Corporation - India
- Grasim Industreis Ltd - India
- Billiton Holdings Pty Ltd - Australia
- TeaM Sual Corporation - Philippines
- Aboitiz Power Corporation - Philippines
- Rio Tinto Coal - Australia
- CNBM International Corporation - China
- Carbofer General Trading SA - India
- Krishnapatnam Port Company Ltd. - India
- Mercator Lines Limited - India
- OPG Power Generation Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Sree Jayajothi Cements Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Parliament of New Zealand
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- Vijayanagar Sugar Pvt Ltd - India
- Bhatia International Limited - India
- Oldendorff Carriers - Singapore
- Energy Development Corp, Philippines
- McConnell Dowell - Australia
- Vizag Seaport Private Limited - India
- Cement Manufacturers Association - India
- Binh Thuan Hamico - Vietnam
- London Commodity Brokers - England
- Neyveli Lignite Corporation Ltd, - India
- IEA Clean Coal Centre - UK
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dalmia Cement Bharat India
- Orica Australia Pty. Ltd.
- Thiess Contractors Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Standard Chartered Bank - UAE
- Samtan Co., Ltd - South Korea
- Mintek Dendrill Indonesia
- Uttam Galva Steels Limited - India
- Port Waratah Coal Services - Australia
- Globalindo Alam Lestari - Indonesia
- Economic Council, Georgia
- Trasteel International SA, Italy
- Electricity Authority, New Zealand
- Merrill Lynch Commodities Europe
- Cigading International Bulk Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Ambuja Cements Ltd - India
- Bangladesh Power Developement Board
- Posco Energy - South Korea
- Aditya Birla Group - India
- AsiaOL BioFuels Corp., Philippines
- Georgia Ports Authority, United States
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Mines - Canada
- Star Paper Mills Limited - India
- Mercuria Energy - Indonesia
- Indika Energy - Indonesia
- Tamil Nadu electricity Board
- Kideco Jaya Agung - Indonesia
- Sakthi Sugars Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Mining Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- Edison Trading Spa - Italy
- Eastern Coal Council - USA
- Jaiprakash Power Ventures ltd
- Anglo American - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- Chamber of Mines of South Africa
- Kaltim Prima Coal - Indonesia
- Lanco Infratech Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Kobexindo Tractors - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Simpson Spence & Young - Indonesia
- New Zealand Coal & Carbon
- Kepco SPC Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Ministry of Finance - Indonesia
- International Coal Ventures Pvt Ltd - India
- Malabar Cements Ltd - India
- Medco Energi Mining Internasional
- Karbindo Abesyapradhi - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bayan Resources Tbk. - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Borneo Indobara - Indonesia
- Bukit Makmur.PT - Indonesia
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- Xindia Steels Limited - India
- PNOC Exploration Corporation - Philippines
- Indian Oil Corporation Limited
- Wood Mackenzie - Singapore
- Electricity Generating Authority of Thailand
- Antam Resourcindo - Indonesia
- Ceylon Electricity Board - Sri Lanka
- India Bulls Power Limited - India
- Power Finance Corporation Ltd., India
- Latin American Coal - Colombia
- TNB Fuel Sdn Bhd - Malaysia
- Vedanta Resources Plc - India
- GN Power Mariveles Coal Plant, Philippines
- Kartika Selabumi Mining - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- Coal and Oil Company - UAE
- Banpu Public Company Limited - Thailand
- Directorate Of Revenue Intelligence - India
- Independent Power Producers Association of India
- The Treasury - Australian Government
- Riau Bara Harum - Indonesia
- Bhushan Steel Limited - India
- Bhoruka Overseas - Indonesia
- Heidelberg Cement - Germany
- ASAPP Information Group - India
- Deloitte Consulting - India
- Jindal Steel & Power Ltd - India
- Commonwealth Bank - Australia
- Kumho Petrochemical, South Korea
- IHS Mccloskey Coal Group - USA
- Alfred C Toepfer International GmbH - Germany
- Australian Coal Association
- Meralco Power Generation, Philippines
- Madhucon Powers Ltd - India
- VISA Power Limited - India
- Renaissance Capital - South Africa
- Minerals Council of Australia
- Energy Link Ltd, New Zealand
- Global Green Power PLC Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Manunggal Multi Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Indogreen Group - Indonesia
- Makarim & Taira - Indonesia
- The State Trading Corporation of India Ltd
- GMR Energy Limited - India
- Singapore Mercantile Exchange
- Price Waterhouse Coopers - Russia
- LBH Netherlands Bv - Netherlands
- Essar Steel Hazira Ltd - India
- Petron Corporation, Philippines
- Marubeni Corporation - India
- Siam City Cement PLC, Thailand
- Australian Commodity Traders Exchange
- Africa Commodities Group - South Africa
- Chettinad Cement Corporation Ltd - India
- Planning Commission, India
- The University of Queensland
- Savvy Resources Ltd - HongKong
- Sical Logistics Limited - India
- Larsen & Toubro Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Iligan Light & Power Inc, Philippines
- Thai Mozambique Logistica
- Mjunction Services Limited - India
- Interocean Group of Companies - India
- Meenaskhi Energy Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- San Jose City I Power Corp, Philippines
- Siam City Cement - Thailand
- Gujarat Sidhee Cement - India
- PowerSource Philippines DevCo
- SN Aboitiz Power Inc, Philippines
- Romanian Commodities Exchange
- SMG Consultants - Indonesia
- Wilmar Investment Holdings
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- Asmin Koalindo Tuhup - Indonesia
- Metalloyd Limited - United Kingdom
- Attock Cement Pakistan Limited
- Kalimantan Lumbung Energi - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Sarangani Energy Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Therma Luzon, Inc, Philippines
- PTC India Limited - India
- Ind-Barath Power Infra Limited - India
- Goldman Sachs - Singapore
- Agrawal Coal Company - India
- Toyota Tsusho Corporation, Japan
- Global Business Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- SMC Global Power, Philippines
- Gujarat Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sojitz Corporation - Japan
- GAC Shipping (India) Pvt Ltd
- Rashtriya Ispat Nigam Limited - India
- Straits Asia Resources Limited - Singapore
- Salva Resources Pvt Ltd - India
- MS Steel International - UAE
- Indonesian Coal Mining Association
- Parry Sugars Refinery, India
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