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