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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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Wednesday, 04 September 13
RBCT SHIPPED 16.18 PERCENT MORE COAL IN JULY
COALspot.com - Richards Bay Coal Terminal (RBCT) is the single largest coal export terminal South African as well as in the world has shipped 6,162, ...
Wednesday, 04 September 13
SUPRAS AND HANDIES : INDONESIAN COAL CARGOES ARE SUPPORTING HEALTHY ACTIVITY LEVELS - INTERMODAL
The Dry Bulk market has pooled back a bit this week after firming for two weeks in a row. The BDI is s holding above 1,100 points and despite the sm ...
Tuesday, 03 September 13
AUSTRALIA'S NEWCASTLE PORT SHIPPED 22.93 PER CENT MORE COAL W-O-W
COALspot.com: Power plant and semi-soft coking coal shipments from Australia's Newcastle port up 22.93 per cent week on week to 3.39 million mt for ...
Sunday, 01 September 13
COAL SWAP SHOWS MIXED TREND
COALspot.com – Sub-Bit Indonesia coal swaps (FOB ) for average Q4 2013 delivery 1.25 percent up month on month. The swap was moved posit ...
Sunday, 01 September 13
INDONESIA TO INDIA SPOT FREIGHT STAYS FIRM THIS WEEK - VISTAAR
COALspot.com: The freight market continued to be firm with even though the BDI and Cape index dropped by about 3 pct week on week.
The BDI was do ...
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- Alfred C Toepfer International GmbH - Germany
- Miang Besar Coal Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- LBH Netherlands Bv - Netherlands
- Siam City Cement - Thailand
- European Bulk Services B.V. - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- Standard Chartered Bank - UAE
- Parry Sugars Refinery, India
- TNB Fuel Sdn Bhd - Malaysia
- Makarim & Taira - Indonesia
- Deloitte Consulting - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Power Finance Corporation Ltd., India
- PowerSource Philippines DevCo
- Merrill Lynch Commodities Europe
- Heidelberg Cement - Germany
- Indian Energy Exchange, India
- ASAPP Information Group - India
- PNOC Exploration Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Eastern Coal Council - USA
- The State Trading Corporation of India Ltd
- Global Green Power PLC Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Business Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Ambuja Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- New Zealand Coal & Carbon
- Holcim Trading Pte Ltd - Singapore
- Chettinad Cement Corporation Ltd - India
- Tamil Nadu electricity Board
- Eastern Energy - Thailand
- Thiess Contractors Indonesia
- Trasteel International SA, Italy
- Coal and Oil Company - UAE
- Manunggal Multi Energi - Indonesia
- Attock Cement Pakistan Limited
- Parliament of New Zealand
- Marubeni Corporation - India
- Riau Bara Harum - Indonesia
- London Commodity Brokers - England
- Formosa Plastics Group - Taiwan
- Sindya Power Generating Company Private Ltd
- IEA Clean Coal Centre - UK
- Therma Luzon, Inc, Philippines
- Bhushan Steel Limited - India
- Lanco Infratech Ltd - India
- Star Paper Mills Limited - India
- Rio Tinto Coal - Australia
- Meenaskhi Energy Private Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Renaissance Capital - South Africa
- Cigading International Bulk Terminal - Indonesia
- Bangladesh Power Developement Board
- Pendopo Energi Batubara - Indonesia
- Australian Commodity Traders Exchange
- Simpson Spence & Young - Indonesia
- Minerals Council of Australia
- Sojitz Corporation - Japan
- Planning Commission, India
- Kalimantan Lumbung Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- Carbofer General Trading SA - India
- GN Power Mariveles Coal Plant, Philippines
- Vizag Seaport Private Limited - India
- Savvy Resources Ltd - HongKong
- India Bulls Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Bhatia International Limited - India
- Thai Mozambique Logistica
- Cement Manufacturers Association - India
- Interocean Group of Companies - India
- Jaiprakash Power Ventures ltd
- Ministry of Transport, Egypt
- CNBM International Corporation - China
- Mintek Dendrill Indonesia
- Sree Jayajothi Cements Limited - India
- Aditya Birla Group - India
- Sarangani Energy Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Kideco Jaya Agung - Indonesia
- VISA Power Limited - India
- Coastal Gujarat Power Limited - India
- TeaM Sual Corporation - Philippines
- Malabar Cements Ltd - India
- IHS Mccloskey Coal Group - USA
- Xindia Steels Limited - India
- Kumho Petrochemical, South Korea
- Electricity Authority, New Zealand
- Sakthi Sugars Limited - India
- SMC Global Power, Philippines
- Bhoruka Overseas - Indonesia
- Binh Thuan Hamico - Vietnam
- International Coal Ventures Pvt Ltd - India
- McConnell Dowell - Australia
- Madhucon Powers Ltd - India
- Edison Trading Spa - Italy
- Banpu Public Company Limited - Thailand
- Oldendorff Carriers - Singapore
- Timah Investasi Mineral - Indoneisa
- Goldman Sachs - Singapore
- Electricity Generating Authority of Thailand
- Economic Council, Georgia
- Metalloyd Limited - United Kingdom
- Independent Power Producers Association of India
- Port Waratah Coal Services - Australia
- PTC India Limited - India
- Bukit Makmur.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Mercator Lines Limited - India
- Mjunction Services Limited - India
- Tata Chemicals Ltd - India
- Directorate Of Revenue Intelligence - India
- ICICI Bank Limited - India
- Ministry of Finance - Indonesia
- Salva Resources Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Africa Commodities Group - South Africa
- Essar Steel Hazira Ltd - India
- Videocon Industries ltd - India
- Sinarmas Energy and Mining - Indonesia
- Orica Mining Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Jindal Steel & Power Ltd - India
- Baramulti Group, Indonesia
- Indika Energy - Indonesia
- Indogreen Group - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Kaltim Prima Coal - Indonesia
- Australian Coal Association
- Medco Energi Mining Internasional
- Altura Mining Limited, Indonesia
- Iligan Light & Power Inc, Philippines
- Gujarat Sidhee Cement - India
- The University of Queensland
- Directorate General of MIneral and Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Posco Energy - South Korea
- Wilmar Investment Holdings
- Anglo American - United Kingdom
- Coalindo Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Dalmia Cement Bharat India
- Aboitiz Power Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Larsen & Toubro Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mercuria Energy - Indonesia
- Semirara Mining Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Indonesian Coal Mining Association
- Ministry of Mines - Canada
- Pipit Mutiara Jaya. PT, Indonesia
- MS Steel International - UAE
- Commonwealth Bank - Australia
- GVK Power & Infra Limited - India
- SN Aboitiz Power Inc, Philippines
- Wood Mackenzie - Singapore
- Agrawal Coal Company - India
- Gujarat Electricity Regulatory Commission - India
- Antam Resourcindo - Indonesia
- Indian Oil Corporation Limited
- Meralco Power Generation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Samtan Co., Ltd - South Korea
- Bharathi Cement Corporation - India
- AsiaOL BioFuels Corp., Philippines
- SMG Consultants - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Borneo Indobara - Indonesia
- Energy Development Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- White Energy Company Limited
- Bulk Trading Sa - Switzerland
- Sical Logistics Limited - India
- GAC Shipping (India) Pvt Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- OPG Power Generation Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Romanian Commodities Exchange
- Vedanta Resources Plc - India
- Central Java Power - Indonesia
- Siam City Cement PLC, Thailand
- Central Electricity Authority - India
- Billiton Holdings Pty Ltd - Australia
- GMR Energy Limited - India
- Petron Corporation, Philippines
- Energy Link Ltd, New Zealand
- Bayan Resources Tbk. - Indonesia
- Maheswari Brothers Coal Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Australia Pty. Ltd.
- Bukit Asam (Persero) Tbk - Indonesia
- The Treasury - Australian Government
- Kartika Selabumi Mining - Indonesia
- Singapore Mercantile Exchange
- Karaikal Port Pvt Ltd - India
- Latin American Coal - Colombia
- Intertek Mineral Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- Georgia Ports Authority, United States
- Kobexindo Tractors - Indoneisa
- Chamber of Mines of South Africa
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