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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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Monday, 12 August 13
GBCE SUCCESSFUL IN UPGRADING LOW RANK INDONESIAN COAL ON INDUSTRIAL SCALE
COALspot.com : GB Clean Energy Ltd. (GBCE) has annoused that, the company has successfully upgraded 2,426 tonnes of low rank 4,018 kcal NAR Ind ...
Monday, 12 August 13
INDIA - SAFE SHIPMENT OF IRON ORE FINES FROM INDIAN PORTS - WEST OF ENGLAND P&I CLUB
As Members may be aware, in 2009 two ships, the ‘Asian Forest’ and the ‘Black Rose’, capsized and sank following the liquefa ...
Sunday, 11 August 13
INDONESIAN COAL SWAPS : FLAT ON DAY
COALspot.com – Sub-Bit Indonesia coal swaps (FOB ) for average Q4 2013 delivery flat on day due to holidays in Indonesia, Malaysia & ...
Sunday, 11 August 13
SUPRAMAX FREIGHT RATES FROM INDONESIA TO INDIA CONTINUED TO BE SOFT - VISTAAR
COALspot.com : The freight market was soft this week with all indices down , the reason could be long weekend holidays in Indonesia, Singapore and M ...
Saturday, 10 August 13
MOODY'S: OUTLOOK FOR US COAL INDUSTRY CHANGES TO STABLE FROM NEGATIVE
Moody's Investors Service has changed its outlook for the US coal industry to stable from negative, the rating agency says in a new report, "U ...
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- Petron Corporation, Philippines
- Indian Energy Exchange, India
- Videocon Industries ltd - India
- Orica Mining Services - Indonesia
- PowerSource Philippines DevCo
- Chamber of Mines of South Africa
- Orica Australia Pty. Ltd.
- Kobexindo Tractors - Indoneisa
- New Zealand Coal & Carbon
- Oldendorff Carriers - Singapore
- Minerals Council of Australia
- Wilmar Investment Holdings
- Planning Commission, India
- Posco Energy - South Korea
- Makarim & Taira - Indonesia
- Pendopo Energi Batubara - Indonesia
- Essar Steel Hazira Ltd - India
- Bharathi Cement Corporation - India
- Global Green Power PLC Corporation, Philippines
- Mintek Dendrill Indonesia
- Xindia Steels Limited - India
- Binh Thuan Hamico - Vietnam
- Grasim Industreis Ltd - India
- Kartika Selabumi Mining - Indonesia
- Meenaskhi Energy Private Limited - India
- Indo Tambangraya Megah - Indonesia
- Kepco SPC Power Corporation, Philippines
- Georgia Ports Authority, United States
- Standard Chartered Bank - UAE
- Kapuas Tunggal Persada - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Energy Development Corp, Philippines
- Indogreen Group - Indonesia
- Latin American Coal - Colombia
- Gujarat Sidhee Cement - India
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- Agrawal Coal Company - India
- Cement Manufacturers Association - India
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- Interocean Group of Companies - India
- Samtan Co., Ltd - South Korea
- IEA Clean Coal Centre - UK
- Ceylon Electricity Board - Sri Lanka
- Asmin Koalindo Tuhup - Indonesia
- Australian Commodity Traders Exchange
- Romanian Commodities Exchange
- Thiess Contractors Indonesia
- Deloitte Consulting - India
- White Energy Company Limited
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- OPG Power Generation Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- MS Steel International - UAE
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- Petrochimia International Co. Ltd.- Taiwan
- Intertek Mineral Services - Indonesia
- Medco Energi Mining Internasional
- India Bulls Power Limited - India
- Siam City Cement - Thailand
- Aboitiz Power Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Rio Tinto Coal - Australia
- Chettinad Cement Corporation Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Oil Corporation Limited
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- Eastern Coal Council - USA
- Sinarmas Energy and Mining - Indonesia
- Therma Luzon, Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Iligan Light & Power Inc, Philippines
- Bhatia International Limited - India
- Ministry of Finance - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Bhoruka Overseas - Indonesia
- Coalindo Energy - Indonesia
- Central Electricity Authority - India
- Tata Chemicals Ltd - India
- Bayan Resources Tbk. - Indonesia
- Antam Resourcindo - Indonesia
- SMC Global Power, Philippines
- Madhucon Powers Ltd - India
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- Kumho Petrochemical, South Korea
- Baramulti Group, Indonesia
- Parry Sugars Refinery, India
- Krishnapatnam Port Company Ltd. - India
- Indika Energy - Indonesia
- GMR Energy Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Price Waterhouse Coopers - Russia
- Energy Link Ltd, New Zealand
- Port Waratah Coal Services - Australia
- Renaissance Capital - South Africa
- Kideco Jaya Agung - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Malabar Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dalmia Cement Bharat India
- Metalloyd Limited - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
- Lanco Infratech Ltd - India
- Manunggal Multi Energi - Indonesia
- Ministry of Transport, Egypt
- Thai Mozambique Logistica
- Africa Commodities Group - South Africa
- Larsen & Toubro Limited - India
- Siam City Cement PLC, Thailand
- Ambuja Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- TeaM Sual Corporation - Philippines
- Riau Bara Harum - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Electricity Authority, New Zealand
- Sree Jayajothi Cements Limited - India
- Leighton Contractors Pty Ltd - Australia
- The University of Queensland
- PNOC Exploration Corporation - Philippines
- Edison Trading Spa - Italy
- Barasentosa Lestari - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Anglo American - United Kingdom
- Merrill Lynch Commodities Europe
- VISA Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- McConnell Dowell - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Sojitz Corporation - Japan
- Jaiprakash Power Ventures ltd
- South Luzon Thermal Energy Corporation
- Marubeni Corporation - India
- San Jose City I Power Corp, Philippines
- Jindal Steel & Power Ltd - India
- GAC Shipping (India) Pvt Ltd
- Mercuria Energy - Indonesia
- Wood Mackenzie - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Independent Power Producers Association of India
- Borneo Indobara - Indonesia
- Toyota Tsusho Corporation, Japan
- International Coal Ventures Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Aditya Birla Group - India
- CIMB Investment Bank - Malaysia
- Coal and Oil Company - UAE
- Bhushan Steel Limited - India
- Sarangani Energy Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Mjunction Services Limited - India
- Bukit Makmur.PT - Indonesia
- Central Java Power - Indonesia
- Meralco Power Generation, Philippines
- The Treasury - Australian Government
- Simpson Spence & Young - Indonesia
- ICICI Bank Limited - India
- PTC India Limited - India
- Global Coal Blending Company Limited - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Sakthi Sugars Limited - India
- Attock Cement Pakistan Limited
- Star Paper Mills Limited - India
- Karaikal Port Pvt Ltd - India
- London Commodity Brokers - England
- IHS Mccloskey Coal Group - USA
- Ministry of Mines - Canada
- Tamil Nadu electricity Board
- Bangladesh Power Developement Board
- Semirara Mining Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Vedanta Resources Plc - India
- GN Power Mariveles Coal Plant, Philippines
- SN Aboitiz Power Inc, Philippines
- Australian Coal Association
- Globalindo Alam Lestari - Indonesia
- Parliament of New Zealand
- Economic Council, Georgia
- Goldman Sachs - Singapore
- ASAPP Information Group - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercator Lines Limited - India
- Eastern Energy - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Commonwealth Bank - Australia
- Sindya Power Generating Company Private Ltd
- European Bulk Services B.V. - Netherlands
- Vizag Seaport Private Limited - India
- Electricity Generating Authority of Thailand
- Trasteel International SA, Italy
- Sical Logistics Limited - India
- Indonesian Coal Mining Association
- Carbofer General Trading SA - India
- Rashtriya Ispat Nigam Limited - India
- Coastal Gujarat Power Limited - India
- The State Trading Corporation of India Ltd
- Salva Resources Pvt Ltd - India
- CNBM International Corporation - China
- Alfred C Toepfer International GmbH - Germany
- Pipit Mutiara Jaya. PT, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Global Business Power Corporation, Philippines
- SMG Consultants - Indonesia
- Altura Mining Limited, Indonesia
- Maheswari Brothers Coal Limited - India
- Power Finance Corporation Ltd., India
- Maharashtra Electricity Regulatory Commission - India
- Singapore Mercantile Exchange
- LBH Netherlands Bv - Netherlands
- Heidelberg Cement - Germany
- Miang Besar Coal Terminal - Indonesia
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