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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, 06 September 13
DRY BULK MARKET REACHES NEW YEAR-HIGHS ON THE BACK OF INCREASED CAPESIZE DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has been on the rise once again, but this time around any new increase of freight rates translates into new year-highs, thus bri ...
Friday, 06 September 13
US PRODUCED APPROXIMATELY 90.80 MMST OF COAL IN AUGUST
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 20.90 million short tons (mmst) of ...
Thursday, 05 September 13
INDONESIAN COAL EXPORTS UP BY 6.72 PERCENT IN JULY
COALspot.com: Indonesia, the world's largest multi grade coal exporter shipped 35.268* million tons of coal in July 2013. Indonesian coal exp ...
Thursday, 05 September 13
HANDY: NICKEL ORE WAS PUSHING THE FAR EAST MARKET - FEARNLEYS
Handy
Nickel Ore was pushing the Feast market, several ships were fixed from low teens to $14k. Indo/India was still supported by bauxite, while th ...
Thursday, 05 September 13
DRY BULK MARKET ON A HIGH ROLL, MAINLY THANKS TO CAPESIZE APPETITE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Capesize owners have been rejoycing on the back of renewed optimism for the further rise in the dry bulk market's freight rates, especially when on ...
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- Orica Australia Pty. Ltd.
- Mercator Lines Limited - India
- McConnell Dowell - Australia
- Bukit Baiduri Energy - Indonesia
- Minerals Council of Australia
- Gujarat Mineral Development Corp Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Borneo Indobara - Indonesia
- Lanco Infratech Ltd - India
- European Bulk Services B.V. - Netherlands
- Eastern Energy - Thailand
- Kaltim Prima Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- Trasteel International SA, Italy
- Semirara Mining and Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Ministry of Mines - Canada
- Energy Development Corp, Philippines
- Merrill Lynch Commodities Europe
- Global Business Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Bhushan Steel Limited - India
- Ambuja Cements Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- White Energy Company Limited
- New Zealand Coal & Carbon
- Thai Mozambique Logistica
- LBH Netherlands Bv - Netherlands
- PTC India Limited - India
- Indika Energy - Indonesia
- Petron Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Heidelberg Cement - Germany
- Thiess Contractors Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Economic Council, Georgia
- Kepco SPC Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Meralco Power Generation, Philippines
- Coastal Gujarat Power Limited - India
- Chamber of Mines of South Africa
- Jaiprakash Power Ventures ltd
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- Eastern Coal Council - USA
- Holcim Trading Pte Ltd - Singapore
- Georgia Ports Authority, United States
- PowerSource Philippines DevCo
- SMC Global Power, Philippines
- Posco Energy - South Korea
- Port Waratah Coal Services - Australia
- Romanian Commodities Exchange
- Star Paper Mills Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- IHS Mccloskey Coal Group - USA
- Larsen & Toubro Limited - India
- Aboitiz Power Corporation - Philippines
- Australian Commodity Traders Exchange
- Sakthi Sugars Limited - India
- Pendopo Energi Batubara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Parliament of New Zealand
- Commonwealth Bank - Australia
- Sree Jayajothi Cements Limited - India
- Iligan Light & Power Inc, Philippines
- Formosa Plastics Group - Taiwan
- Riau Bara Harum - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Indian Oil Corporation Limited
- AsiaOL BioFuels Corp., Philippines
- Banpu Public Company Limited - Thailand
- Indonesian Coal Mining Association
- MS Steel International - UAE
- Gujarat Sidhee Cement - India
- Malabar Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- Marubeni Corporation - India
- Bulk Trading Sa - Switzerland
- VISA Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Karbindo Abesyapradhi - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- Kohat Cement Company Ltd. - Pakistan
- Binh Thuan Hamico - Vietnam
- Metalloyd Limited - United Kingdom
- Karaikal Port Pvt Ltd - India
- Coalindo Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Ind-Barath Power Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Savvy Resources Ltd - HongKong
- PNOC Exploration Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Madhucon Powers Ltd - India
- Tata Chemicals Ltd - India
- Altura Mining Limited, Indonesia
- SMG Consultants - Indonesia
- Africa Commodities Group - South Africa
- Anglo American - United Kingdom
- Semirara Mining Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Vizag Seaport Private Limited - India
- Toyota Tsusho Corporation, Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Essar Steel Hazira Ltd - India
- Bukit Makmur.PT - Indonesia
- Orica Mining Services - Indonesia
- India Bulls Power Limited - India
- Grasim Industreis Ltd - India
- Tamil Nadu electricity Board
- Cement Manufacturers Association - India
- The University of Queensland
- SN Aboitiz Power Inc, Philippines
- Ministry of Finance - Indonesia
- Meenaskhi Energy Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Edison Trading Spa - Italy
- Simpson Spence & Young - Indonesia
- Latin American Coal - Colombia
- Globalindo Alam Lestari - Indonesia
- Baramulti Group, Indonesia
- Rashtriya Ispat Nigam Limited - India
- The State Trading Corporation of India Ltd
- IEA Clean Coal Centre - UK
- Ministry of Transport, Egypt
- Bangladesh Power Developement Board
- Energy Link Ltd, New Zealand
- Antam Resourcindo - Indonesia
- Sojitz Corporation - Japan
- Kideco Jaya Agung - Indonesia
- Samtan Co., Ltd - South Korea
- Coal and Oil Company - UAE
- TeaM Sual Corporation - Philippines
- London Commodity Brokers - England
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Electricity Authority, New Zealand
- Attock Cement Pakistan Limited
- The Treasury - Australian Government
- Dalmia Cement Bharat India
- Straits Asia Resources Limited - Singapore
- CIMB Investment Bank - Malaysia
- Rio Tinto Coal - Australia
- Wood Mackenzie - Singapore
- ICICI Bank Limited - India
- Bhoruka Overseas - Indonesia
- Power Finance Corporation Ltd., India
- Medco Energi Mining Internasional
- Makarim & Taira - Indonesia
- Chettinad Cement Corporation Ltd - India
- Australian Coal Association
- OPG Power Generation Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Wilmar Investment Holdings
- Asmin Koalindo Tuhup - Indonesia
- Intertek Mineral Services - Indonesia
- Singapore Mercantile Exchange
- Deloitte Consulting - India
- International Coal Ventures Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Indian Energy Exchange, India
- Kobexindo Tractors - Indoneisa
- Kumho Petrochemical, South Korea
- Price Waterhouse Coopers - Russia
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Bharathi Cement Corporation - India
- Central Electricity Authority - India
- Kartika Selabumi Mining - Indonesia
- Parry Sugars Refinery, India
- Bhatia International Limited - India
- Central Java Power - Indonesia
- Mercuria Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Videocon Industries ltd - India
- Alfred C Toepfer International GmbH - Germany
- Standard Chartered Bank - UAE
- Sical Logistics Limited - India
- CNBM International Corporation - China
- Indogreen Group - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- South Luzon Thermal Energy Corporation
- Aditya Birla Group - India
- Electricity Generating Authority of Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Siam City Cement - Thailand
- Mintek Dendrill Indonesia
- Mjunction Services Limited - India
- Xindia Steels Limited - India
- Oldendorff Carriers - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GMR Energy Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Planning Commission, India
- Vedanta Resources Plc - India
- Kapuas Tunggal Persada - Indonesia
- Agrawal Coal Company - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- GVK Power & Infra Limited - India
- Uttam Galva Steels Limited - India
- Interocean Group of Companies - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Renaissance Capital - South Africa
- Independent Power Producers Association of India
- Timah Investasi Mineral - Indoneisa
- Goldman Sachs - Singapore
- Carbofer General Trading SA - India
- ASAPP Information Group - India
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