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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, 26 September 13
DRY BULK MARKET KEEPS ON RALLYING ON THE BACK OF HIGH CAPESIZE DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has kept its momentum over the course of the past week, on the back of increased demand for Capesizes and an improvement of mark ...
Wednesday, 25 September 13
RBCT'S COAL EXPORT DECLINES IN AUGUST
COALspot.com - Richards Bay Coal Terminal (RBCT) is the single largest coal export terminal in South African as well as in the world has shipped 16. ...
Wednesday, 25 September 13
CAPES TOUCHING RATES NO ONE BELIEVED COULD BE ACHIEVED IN 2013 - INTERMODAL
Chartering (Wet: Stable- / Dry: Firm+ )
The Dry Bulk market is the gift that keeps on giving these days. With rates for Capes touching numbers ...
Wednesday, 25 September 13
IS IT TIME AGAIN TO SUPERSIZE AGAIN? - GEORGE LAZARIDIS
After an early arrival of the seasonal rally in the Capesize market, things look to be on the upbeat for these dry bulk giants. With the Index reach ...
Monday, 23 September 13
AUSTRALIA'S NEWCASTLE PORT SHIPPED 3 PERCENT LESS COAL WEEK ON WEEK
COALspot.com: Power plant and semi-soft coking coal shipments from Australia's Newcastle port fell 3 per cent week on week to 2.92 million mt for t ...
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Showing 4101 to 4105 news of total 6871 |
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- Latin American Coal - Colombia
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- Planning Commission, India
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- OPG Power Generation Pvt Ltd - India
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- Parliament of New Zealand
- CNBM International Corporation - China
- VISA Power Limited - India
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- Electricity Authority, New Zealand
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- Siam City Cement - Thailand
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- Metalloyd Limited - United Kingdom
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- Indian Oil Corporation Limited
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- Baramulti Group, Indonesia
- Energy Development Corp, Philippines
- Deloitte Consulting - India
- Economic Council, Georgia
- Billiton Holdings Pty Ltd - Australia
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- European Bulk Services B.V. - Netherlands
- Semirara Mining and Power Corporation, Philippines
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- GN Power Mariveles Coal Plant, Philippines
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- SN Aboitiz Power Inc, Philippines
- Ministry of Mines - Canada
- Trasteel International SA, Italy
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- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- Independent Power Producers Association of India
- Iligan Light & Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Power Finance Corporation Ltd., India
- Ceylon Electricity Board - Sri Lanka
- The Treasury - Australian Government
- Madhucon Powers Ltd - India
- Coalindo Energy - Indonesia
- Energy Link Ltd, New Zealand
- Bhoruka Overseas - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Binh Thuan Hamico - Vietnam
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- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate General of MIneral and Coal - Indonesia
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- Medco Energi Mining Internasional
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- Bulk Trading Sa - Switzerland
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- Therma Luzon, Inc, Philippines
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- Eastern Coal Council - USA
- Star Paper Mills Limited - India
- Alfred C Toepfer International GmbH - Germany
- Sojitz Corporation - Japan
- Semirara Mining Corp, Philippines
- Xindia Steels Limited - India
- Renaissance Capital - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Sical Logistics Limited - India
- Straits Asia Resources Limited - Singapore
- Kideco Jaya Agung - Indonesia
- The State Trading Corporation of India Ltd
- Bhushan Steel Limited - India
- Tamil Nadu electricity Board
- Carbofer General Trading SA - India
- Aditya Birla Group - India
- McConnell Dowell - Australia
- LBH Netherlands Bv - Netherlands
- San Jose City I Power Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- Karaikal Port Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Directorate Of Revenue Intelligence - India
- Sinarmas Energy and Mining - Indonesia
- TeaM Sual Corporation - Philippines
- Ministry of Finance - Indonesia
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- Sakthi Sugars Limited - India
- IEA Clean Coal Centre - UK
- New Zealand Coal & Carbon
- Petron Corporation, Philippines
- Romanian Commodities Exchange
- Central Electricity Authority - India
- International Coal Ventures Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Indonesian Coal Mining Association
- PetroVietnam Power Coal Import and Supply Company
- Australian Coal Association
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- Bahari Cakrawala Sebuku - Indonesia
- Kartika Selabumi Mining - Indonesia
- Aboitiz Power Corporation - Philippines
- Attock Cement Pakistan Limited
- GMR Energy Limited - India
- GVK Power & Infra Limited - India
- Kaltim Prima Coal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vijayanagar Sugar Pvt Ltd - India
- Mintek Dendrill Indonesia
- Meenaskhi Energy Private Limited - India
- Mercator Lines Limited - India
- Minerals Council of Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Commodity Traders Exchange
- Meralco Power Generation, Philippines
- Orica Australia Pty. Ltd.
- Rio Tinto Coal - Australia
- SMC Global Power, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Indian Energy Exchange, India
- Kobexindo Tractors - Indoneisa
- Vizag Seaport Private Limited - India
- Miang Besar Coal Terminal - Indonesia
- PowerSource Philippines DevCo
- Coal and Oil Company - UAE
- White Energy Company Limited
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- Global Business Power Corporation, Philippines
- ASAPP Information Group - India
- Cement Manufacturers Association - India
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- Wood Mackenzie - Singapore
- Malabar Cements Ltd - India
- Goldman Sachs - Singapore
- Ind-Barath Power Infra Limited - India
- Ministry of Transport, Egypt
- The University of Queensland
- London Commodity Brokers - England
- Bukit Makmur.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- GAC Shipping (India) Pvt Ltd
- Anglo American - United Kingdom
- South Luzon Thermal Energy Corporation
- Mjunction Services Limited - India
- Manunggal Multi Energi - Indonesia
- Bhatia International Limited - India
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- Heidelberg Cement - Germany
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- Commonwealth Bank - Australia
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