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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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Sunday, 18 August 13
INDO - INDIA FREIGHT EXPECTED TO BE FIRM NEXT WEEK - VISTAAR
COALspot.com - The freight market was up this week with the BDI gaining more than 10 pct due to strong Cape Sector.
The BDI was closed at 1,102 p ...
Friday, 16 August 13
US COAL PRODUCTION SLIGHTLY UP ON WEEK
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 20.10 million short tons (mmst) of ...
Thursday, 15 August 13
CAPESIZE : TRENDS SOMETIMES SHIFT WITH NO PRIOR WARNING - FEARNRESEARCH
Handy
The influence of the summer holidays across Europe was felt in the Atlantic basin this week. Very little activity and a growing list of avail ...
Wednesday, 14 August 13
ANOTHER WEEK IN THE RED FOR DRY BULK CARRIERS - INTERMODAL
Chartering (Wet: Stable- / Dry: Stable- )
Another week in the red for Dry Bulk carriers with the market losing further steam as fewer an ...
Tuesday, 13 August 13
AUSTRALIA NEWCASTLE COAL EXPORTS JUMP 30.61 PERCENT ON WEEK
COALspot.com: Power plant and semi-soft coking coal shipments from Australia's Newcastle port up 30.61 per cent week on week to 2.95 million mt for ...
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- Standard Chartered Bank - UAE
- International Coal Ventures Pvt Ltd - India
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- Ceylon Electricity Board - Sri Lanka
- GAC Shipping (India) Pvt Ltd
- Global Green Power PLC Corporation, Philippines
- Parry Sugars Refinery, India
- Pipit Mutiara Jaya. PT, Indonesia
- Interocean Group of Companies - India
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- Miang Besar Coal Terminal - Indonesia
- Anglo American - United Kingdom
- Power Finance Corporation Ltd., India
- ICICI Bank Limited - India
- Global Business Power Corporation, Philippines
- Orica Mining Services - Indonesia
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- SN Aboitiz Power Inc, Philippines
- Kobexindo Tractors - Indoneisa
- OPG Power Generation Pvt Ltd - India
- GVK Power & Infra Limited - India
- CNBM International Corporation - China
- Minerals Council of Australia
- Larsen & Toubro Limited - India
- Indian Oil Corporation Limited
- Central Electricity Authority - India
- Bukit Makmur.PT - Indonesia
- San Jose City I Power Corp, Philippines
- Energy Development Corp, Philippines
- Sree Jayajothi Cements Limited - India
- ASAPP Information Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Riau Bara Harum - Indonesia
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- Africa Commodities Group - South Africa
- Thiess Contractors Indonesia
- Mjunction Services Limited - India
- White Energy Company Limited
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- Georgia Ports Authority, United States
- Parliament of New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Kideco Jaya Agung - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Jorong Barutama Greston.PT - Indonesia
- Edison Trading Spa - Italy
- Wilmar Investment Holdings
- GMR Energy Limited - India
- Chamber of Mines of South Africa
- Eastern Energy - Thailand
- Ministry of Transport, Egypt
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Karbindo Abesyapradhi - Indoneisa
- Toyota Tsusho Corporation, Japan
- TeaM Sual Corporation - Philippines
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- Central Java Power - Indonesia
- VISA Power Limited - India
- Mercator Lines Limited - India
- Independent Power Producers Association of India
- IHS Mccloskey Coal Group - USA
- Aditya Birla Group - India
- Semirara Mining and Power Corporation, Philippines
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Madhucon Powers Ltd - India
- Electricity Authority, New Zealand
- SMG Consultants - Indonesia
- Merrill Lynch Commodities Europe
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- Alfred C Toepfer International GmbH - Germany
- London Commodity Brokers - England
- Metalloyd Limited - United Kingdom
- Star Paper Mills Limited - India
- Kartika Selabumi Mining - Indonesia
- Romanian Commodities Exchange
- Bukit Baiduri Energy - Indonesia
- Australian Coal Association
- Rio Tinto Coal - Australia
- Videocon Industries ltd - India
- Singapore Mercantile Exchange
- Port Waratah Coal Services - Australia
- Meenaskhi Energy Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Chettinad Cement Corporation Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Orica Australia Pty. Ltd.
- Malabar Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Planning Commission, India
- Billiton Holdings Pty Ltd - Australia
- Bhushan Steel Limited - India
- Heidelberg Cement - Germany
- Renaissance Capital - South Africa
- MS Steel International - UAE
- Deloitte Consulting - India
- SMC Global Power, Philippines
- Aboitiz Power Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Siam City Cement - Thailand
- Indo Tambangraya Megah - Indonesia
- Medco Energi Mining Internasional
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- Neyveli Lignite Corporation Ltd, - India
- Indogreen Group - Indonesia
- PowerSource Philippines DevCo
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- Commonwealth Bank - Australia
- PetroVietnam Power Coal Import and Supply Company
- Indika Energy - Indonesia
- Coal and Oil Company - UAE
- Kapuas Tunggal Persada - Indonesia
- Formosa Plastics Group - Taiwan
- Leighton Contractors Pty Ltd - Australia
- Electricity Generating Authority of Thailand
- Meralco Power Generation, Philippines
- Savvy Resources Ltd - HongKong
- Karaikal Port Pvt Ltd - India
- Baramulti Group, Indonesia
- Mintek Dendrill Indonesia
- Sarangani Energy Corporation, Philippines
- Lanco Infratech Ltd - India
- Ministry of Finance - Indonesia
- Sojitz Corporation - Japan
- Semirara Mining Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sical Logistics Limited - India
- Kumho Petrochemical, South Korea
- Straits Asia Resources Limited - Singapore
- Simpson Spence & Young - Indonesia
- Uttam Galva Steels Limited - India
- New Zealand Coal & Carbon
- Holcim Trading Pte Ltd - Singapore
- Makarim & Taira - Indonesia
- Binh Thuan Hamico - Vietnam
- Tata Chemicals Ltd - India
- Price Waterhouse Coopers - Russia
- Intertek Mineral Services - Indonesia
- Sakthi Sugars Limited - India
- Petron Corporation, Philippines
- Grasim Industreis Ltd - India
- Bhatia International Limited - India
- Bhoruka Overseas - Indonesia
- Antam Resourcindo - Indonesia
- Bayan Resources Tbk. - Indonesia
- Directorate Of Revenue Intelligence - India
- IEA Clean Coal Centre - UK
- PNOC Exploration Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The State Trading Corporation of India Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Iligan Light & Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Bahari Cakrawala Sebuku - Indonesia
- Coalindo Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Indian Energy Exchange, India
- Posco Energy - South Korea
- Mercuria Energy - Indonesia
- Siam City Cement PLC, Thailand
- Marubeni Corporation - India
- Trasteel International SA, Italy
- Petrochimia International Co. Ltd.- Taiwan
- Directorate General of MIneral and Coal - Indonesia
- Vedanta Resources Plc - India
- Thai Mozambique Logistica
- Sinarmas Energy and Mining - Indonesia
- McConnell Dowell - Australia
- Gujarat Sidhee Cement - India
- Indonesian Coal Mining Association
- Goldman Sachs - Singapore
- Global Coal Blending Company Limited - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Agrawal Coal Company - India
- The University of Queensland
- Latin American Coal - Colombia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- Krishnapatnam Port Company Ltd. - India
- Dalmia Cement Bharat India
- Xindia Steels Limited - India
- Eastern Coal Council - USA
- Bharathi Cement Corporation - India
- Carbofer General Trading SA - India
- Bukit Asam (Persero) Tbk - Indonesia
- Maheswari Brothers Coal Limited - India
- Coastal Gujarat Power Limited - India
- Banpu Public Company Limited - Thailand
- CIMB Investment Bank - Malaysia
- Jindal Steel & Power Ltd - India
- Altura Mining Limited, Indonesia
- Wood Mackenzie - Singapore
- Economic Council, Georgia
- Maharashtra Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- Australian Commodity Traders Exchange
- Manunggal Multi Energi - Indonesia
- Ambuja Cements Ltd - India
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- Salva Resources Pvt Ltd - India
- Cement Manufacturers Association - India
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- Bulk Trading Sa - Switzerland
- South Luzon Thermal Energy Corporation
- Bangladesh Power Developement Board
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- Ministry of Mines - Canada
- The Treasury - Australian Government
- Energy Link Ltd, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Oldendorff Carriers - Singapore
- Samtan Co., Ltd - South Korea
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