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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, 27 September 13
TAIWAN'S FORMOSA TO IMPORT 140K MT OF BITUMINOUS COAL FOR Q4
COALspot.com : Taiwan's Formosa Plastics Group is inviting bids for 140,000 mt of bituminous coal for delivery in the Q4 for its China plant.
Ac ...
Friday, 27 September 13
CAPESIZES REGAINING PART OF THEIR FORMER GLORY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The latest dry bulk market rally has been nothing short of spectacular, with freight rates more than doubling over the past few weeks. This growth h ...
Friday, 27 September 13
US PRODUCED 19.30 MMST OF COAL IN SEVEN DAYS
COALspot.com – United States the world’s second largest coal producer produced approximately 19.30 million short tons (mmst) of coal in ...
Thursday, 26 September 13
PANAMAX MARKET CONTINUE WITH STRONG RATES IN BOTH BASINS - FEARNRESEARCH
Handy
Feast rates are still firm, some fresh stems entered the market. Vessels trading around $15k passing Singapore for coal to India, and a bit l ...
Thursday, 26 September 13
INTERCARGO PUBLISHES BENCHMARKING BULK CARRIERS 2012-13 REPORT
The International Association of Dry Cargo Shipowners (Intercargo) has today launched Benchmarking Bulk Carriers 2012-13, the latest edition of our ...
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- Australian Commodity Traders Exchange
- Grasim Industreis Ltd - India
- Directorate Of Revenue Intelligence - India
- Gujarat Mineral Development Corp Ltd - India
- The University of Queensland
- Parliament of New Zealand
- Georgia Ports Authority, United States
- VISA Power Limited - India
- Kumho Petrochemical, South Korea
- Krishnapatnam Port Company Ltd. - India
- London Commodity Brokers - England
- Global Green Power PLC Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Gujarat Sidhee Cement - India
- Star Paper Mills Limited - India
- SMC Global Power, Philippines
- Bharathi Cement Corporation - India
- Globalindo Alam Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Agrawal Coal Company - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Billiton Holdings Pty Ltd - Australia
- Eastern Energy - Thailand
- Port Waratah Coal Services - Australia
- Economic Council, Georgia
- Energy Link Ltd, New Zealand
- Kapuas Tunggal Persada - Indonesia
- Barasentosa Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- Indian Energy Exchange, India
- Sarangani Energy Corporation, Philippines
- Heidelberg Cement - Germany
- Trasteel International SA, Italy
- Baramulti Group, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Marubeni Corporation - India
- Attock Cement Pakistan Limited
- Iligan Light & Power Inc, Philippines
- The State Trading Corporation of India Ltd
- Power Finance Corporation Ltd., India
- Simpson Spence & Young - Indonesia
- Orica Australia Pty. Ltd.
- Parry Sugars Refinery, India
- TeaM Sual Corporation - Philippines
- Bhatia International Limited - India
- Madhucon Powers Ltd - India
- Coalindo Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kideco Jaya Agung - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- GVK Power & Infra Limited - India
- Jaiprakash Power Ventures ltd
- Tata Chemicals Ltd - India
- Alfred C Toepfer International GmbH - Germany
- CNBM International Corporation - China
- Interocean Group of Companies - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Transport, Egypt
- Edison Trading Spa - Italy
- Deloitte Consulting - India
- Standard Chartered Bank - UAE
- Makarim & Taira - Indonesia
- Wood Mackenzie - Singapore
- Indo Tambangraya Megah - Indonesia
- IHS Mccloskey Coal Group - USA
- Central Electricity Authority - India
- Holcim Trading Pte Ltd - Singapore
- San Jose City I Power Corp, Philippines
- Borneo Indobara - Indonesia
- Rio Tinto Coal - Australia
- Altura Mining Limited, Indonesia
- Thiess Contractors Indonesia
- Kaltim Prima Coal - Indonesia
- Independent Power Producers Association of India
- Bhushan Steel Limited - India
- Vizag Seaport Private Limited - India
- Australian Coal Association
- Meralco Power Generation, Philippines
- Africa Commodities Group - South Africa
- Global Business Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Coal and Oil Company - UAE
- PetroVietnam Power Coal Import and Supply Company
- Ind-Barath Power Infra Limited - India
- Siam City Cement - Thailand
- Jindal Steel & Power Ltd - India
- Tamil Nadu electricity Board
- PNOC Exploration Corporation - Philippines
- MS Steel International - UAE
- CIMB Investment Bank - Malaysia
- Thai Mozambique Logistica
- Merrill Lynch Commodities Europe
- Miang Besar Coal Terminal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Carbofer General Trading SA - India
- Sojitz Corporation - Japan
- Bukit Baiduri Energy - Indonesia
- GMR Energy Limited - India
- Xindia Steels Limited - India
- International Coal Ventures Pvt Ltd - India
- Bangladesh Power Developement Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- Metalloyd Limited - United Kingdom
- Singapore Mercantile Exchange
- Eastern Coal Council - USA
- Salva Resources Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Sical Logistics Limited - India
- South Luzon Thermal Energy Corporation
- Vijayanagar Sugar Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- The Treasury - Australian Government
- Kalimantan Lumbung Energi - Indonesia
- Malabar Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Sree Jayajothi Cements Limited - India
- Mercuria Energy - Indonesia
- Ambuja Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Banpu Public Company Limited - Thailand
- Aditya Birla Group - India
- Formosa Plastics Group - Taiwan
- IEA Clean Coal Centre - UK
- Binh Thuan Hamico - Vietnam
- Cigading International Bulk Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- Latin American Coal - Colombia
- Semirara Mining and Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Vedanta Resources Plc - India
- Global Coal Blending Company Limited - Australia
- Straits Asia Resources Limited - Singapore
- Riau Bara Harum - Indonesia
- European Bulk Services B.V. - Netherlands
- Planning Commission, India
- SMG Consultants - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Neyveli Lignite Corporation Ltd, - India
- Posco Energy - South Korea
- Dalmia Cement Bharat India
- Asmin Koalindo Tuhup - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Oldendorff Carriers - Singapore
- Mjunction Services Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Antam Resourcindo - Indonesia
- Indika Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Goldman Sachs - Singapore
- McConnell Dowell - Australia
- Ministry of Finance - Indonesia
- Savvy Resources Ltd - HongKong
- Minerals Council of Australia
- Central Java Power - Indonesia
- ICICI Bank Limited - India
- Commonwealth Bank - Australia
- Rashtriya Ispat Nigam Limited - India
- Larsen & Toubro Limited - India
- Medco Energi Mining Internasional
- Bukit Asam (Persero) Tbk - Indonesia
- Petron Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Mercator Lines Limited - India
- White Energy Company Limited
- Electricity Authority, New Zealand
- ASAPP Information Group - India
- Wilmar Investment Holdings
- SN Aboitiz Power Inc, Philippines
- Energy Development Corp, Philippines
- Samtan Co., Ltd - South Korea
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Bhoruka Overseas - Indonesia
- Romanian Commodities Exchange
- Mintek Dendrill Indonesia
- Leighton Contractors Pty Ltd - Australia
- Ministry of Mines - Canada
- Therma Luzon, Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Chamber of Mines of South Africa
- Indonesian Coal Mining Association
- Indian Oil Corporation Limited
- Kohat Cement Company Ltd. - Pakistan
- TNB Fuel Sdn Bhd - Malaysia
- Jorong Barutama Greston.PT - Indonesia
- Renaissance Capital - South Africa
- Lanco Infratech Ltd - India
- Aboitiz Power Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Essar Steel Hazira Ltd - India
- Coastal Gujarat Power Limited - India
- Manunggal Multi Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Anglo American - United Kingdom
- Toyota Tsusho Corporation, Japan
- AsiaOL BioFuels Corp., Philippines
- Orica Mining Services - Indonesia
- Kartika Selabumi Mining - Indonesia
- Kobexindo Tractors - Indoneisa
- Bulk Trading Sa - Switzerland
- Maheswari Brothers Coal Limited - India
- PowerSource Philippines DevCo
- Videocon Industries ltd - India
- Gujarat Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- Indogreen Group - Indonesia
- Siam City Cement PLC, Thailand
- Cement Manufacturers Association - India
- Sakthi Sugars Limited - India
- LBH Netherlands Bv - Netherlands
- India Bulls Power Limited - India
- New Zealand Coal & Carbon
- PTC India Limited - India
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