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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, 12 September 13
PANAMAX : PACIFIC ROUNDS ARE NOW REPORTED BETWEEN USD 13K AND 15K PER DAY - FEARNRESEARCH
Handy
Nickel ore is a key support SE Asia/Feast rate at the moment; vessel in N.China were fixed around USD 11-12k, ships in mid China can expect a ...
Thursday, 12 September 13
CAPESIZE MARKET WILL BECOME EVEN TIGHTER - JEFFREY LANDSBERG
COALspot.com : While it is no secret that current capesize availability has become tight and has caused capesize rates to surge, availability is set ...
Thursday, 12 September 13
OVER THE WORST? WE MIGHT FIND OUT THIS WEEK - BIMCO
The shipping market has a spring in its step, even as summer draws to a close. There is it seems, confidence that finally, we are emerging into the ...
Thursday, 12 September 13
DRY BULK MARKET RALLY COMES AT A GOOD TIME FOR MOST SHIP OWNERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The latest surge of the dry bulk market has helped offset other lingering factors, which otherwise, could have plunged freight rates to new lows. Fo ...
Wednesday, 11 September 13
ASIA - PACIFIC THERMAL COAL MARKET TO REMAIN OVERSUPPLIED IN NEXT 12 MONTHS - FITCH RATINGS
COALspot.com: Fitch Ratings says the Asia-Pacific thermal coal market will remain oversupplied in the next 12 months because strong production has b ...
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- PTC India Limited - India
- Malabar Cements Ltd - India
- Altura Mining Limited, Indonesia
- GMR Energy Limited - India
- Rashtriya Ispat Nigam Limited - India
- Aditya Birla Group - India
- Bayan Resources Tbk. - Indonesia
- Riau Bara Harum - Indonesia
- Globalindo Alam Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- Indika Energy - Indonesia
- Thiess Contractors Indonesia
- Carbofer General Trading SA - India
- Bhoruka Overseas - Indonesia
- Tata Chemicals Ltd - India
- Straits Asia Resources Limited - Singapore
- Sojitz Corporation - Japan
- LBH Netherlands Bv - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- New Zealand Coal & Carbon
- Indo Tambangraya Megah - Indonesia
- Sindya Power Generating Company Private Ltd
- Power Finance Corporation Ltd., India
- Merrill Lynch Commodities Europe
- Economic Council, Georgia
- Siam City Cement - Thailand
- Price Waterhouse Coopers - Russia
- Ind-Barath Power Infra Limited - India
- Central Electricity Authority - India
- Meenaskhi Energy Private Limited - India
- Australian Commodity Traders Exchange
- Georgia Ports Authority, United States
- Heidelberg Cement - Germany
- PetroVietnam Power Coal Import and Supply Company
- IEA Clean Coal Centre - UK
- Meralco Power Generation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Antam Resourcindo - Indonesia
- Planning Commission, India
- Gujarat Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Leighton Contractors Pty Ltd - Australia
- Barasentosa Lestari - Indonesia
- Kumho Petrochemical, South Korea
- Kobexindo Tractors - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Attock Cement Pakistan Limited
- Grasim Industreis Ltd - India
- GVK Power & Infra Limited - India
- McConnell Dowell - Australia
- Singapore Mercantile Exchange
- Orica Australia Pty. Ltd.
- Energy Development Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Interocean Group of Companies - India
- Aboitiz Power Corporation - Philippines
- Dalmia Cement Bharat India
- Central Java Power - Indonesia
- Ministry of Finance - Indonesia
- Vizag Seaport Private Limited - India
- Medco Energi Mining Internasional
- CIMB Investment Bank - Malaysia
- Jindal Steel & Power Ltd - India
- Trasteel International SA, Italy
- Ambuja Cements Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Parry Sugars Refinery, India
- Australian Coal Association
- Salva Resources Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Kartika Selabumi Mining - Indonesia
- Tamil Nadu electricity Board
- Videocon Industries ltd - India
- Global Business Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- European Bulk Services B.V. - Netherlands
- Therma Luzon, Inc, Philippines
- TeaM Sual Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Larsen & Toubro Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Madhucon Powers Ltd - India
- Coalindo Energy - Indonesia
- Eastern Coal Council - USA
- Offshore Bulk Terminal Pte Ltd, Singapore
- Standard Chartered Bank - UAE
- Mercuria Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Siam City Cement PLC, Thailand
- Global Green Power PLC Corporation, Philippines
- Ministry of Mines - Canada
- Petron Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Holcim Trading Pte Ltd - Singapore
- VISA Power Limited - India
- Borneo Indobara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bhushan Steel Limited - India
- Sree Jayajothi Cements Limited - India
- Commonwealth Bank - Australia
- Latin American Coal - Colombia
- Billiton Holdings Pty Ltd - Australia
- Edison Trading Spa - Italy
- Port Waratah Coal Services - Australia
- Manunggal Multi Energi - Indonesia
- Jaiprakash Power Ventures ltd
- Baramulti Group, Indonesia
- CNBM International Corporation - China
- Karbindo Abesyapradhi - Indoneisa
- Bukit Makmur.PT - Indonesia
- Chamber of Mines of South Africa
- Eastern Energy - Thailand
- The University of Queensland
- Cigading International Bulk Terminal - Indonesia
- Indogreen Group - Indonesia
- AsiaOL BioFuels Corp., Philippines
- San Jose City I Power Corp, Philippines
- Essar Steel Hazira Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Anglo American - United Kingdom
- Makarim & Taira - Indonesia
- White Energy Company Limited
- Kideco Jaya Agung - Indonesia
- Marubeni Corporation - India
- Bhatia International Limited - India
- Electricity Generating Authority of Thailand
- Lanco Infratech Ltd - India
- Wood Mackenzie - Singapore
- Semirara Mining Corp, Philippines
- Independent Power Producers Association of India
- SMC Global Power, Philippines
- Maheswari Brothers Coal Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Indonesian Coal Mining Association
- SMG Consultants - Indonesia
- Coastal Gujarat Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Banpu Public Company Limited - Thailand
- Kepco SPC Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Renaissance Capital - South Africa
- OPG Power Generation Pvt Ltd - India
- Bharathi Cement Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Gujarat Sidhee Cement - India
- Mercator Lines Limited - India
- India Bulls Power Limited - India
- Indian Energy Exchange, India
- Thai Mozambique Logistica
- Indian Oil Corporation Limited
- Gujarat Mineral Development Corp Ltd - India
- ASAPP Information Group - India
- Wilmar Investment Holdings
- Binh Thuan Hamico - Vietnam
- Timah Investasi Mineral - Indoneisa
- Romanian Commodities Exchange
- Formosa Plastics Group - Taiwan
- Sinarmas Energy and Mining - Indonesia
- Kaltim Prima Coal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Intertek Mineral Services - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- Sical Logistics Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Mjunction Services Limited - India
- London Commodity Brokers - England
- Xindia Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Bukit Baiduri Energy - Indonesia
- Vedanta Resources Plc - India
- Vijayanagar Sugar Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Electricity Authority, New Zealand
- Orica Mining Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Africa Commodities Group - South Africa
- PowerSource Philippines DevCo
- Uttam Galva Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- Toyota Tsusho Corporation, Japan
- Posco Energy - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The State Trading Corporation of India Ltd
- Goldman Sachs - Singapore
- SN Aboitiz Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- Energy Link Ltd, New Zealand
- MS Steel International - UAE
- Star Paper Mills Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Coal and Oil Company - UAE
- Bulk Trading Sa - Switzerland
- Mintek Dendrill Indonesia
- The Treasury - Australian Government
- Cement Manufacturers Association - India
- Iligan Light & Power Inc, Philippines
- Deloitte Consulting - India
- Minerals Council of Australia
- Sakthi Sugars Limited - India
- Ministry of Transport, Egypt
- GAC Shipping (India) Pvt Ltd
- South Luzon Thermal Energy Corporation
- ICICI Bank Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Bangladesh Power Developement Board
- Agrawal Coal Company - India
- Parliament of New Zealand
- IHS Mccloskey Coal Group - USA
- Asmin Koalindo Tuhup - Indonesia
- Oldendorff Carriers - Singapore
- Bahari Cakrawala Sebuku - Indonesia
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