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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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Saturday, 10 August 13
DEMOLITION ACTIVITY TO BE CRUCIAL AGAIN IN PROVIDING SUPPORT TO THE DRY BULK MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
We appear to have forgotten demolition activity this year, with the Baltic Dry Index gaining traction in the latter part of the second half and emer ...
Friday, 09 August 13
US PRODUCED 4.00 PERCENT LESS COAL ON WEEK
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 20.00 million short tons (mmst) of ...
Thursday, 08 August 13
HANDY : NO POSITIVE SENTIMENT FOR THE FAR EAST MARKET - FEARNRESEARCH
Handy
No positive sentiment for the Far East market. There are a number of ships coming open in SE Asia this week and owners rating mid/high USD 8k ...
Thursday, 08 August 13
MALAYSIA HOSTS THIRD ANNUAL ASIAN SUB-BITUMINOUS COAL USERS' GROUP CONFERENCE
Press Release : The third Annual Asian Sub-Bituminous Coal Users’ Group (ASBCUG) conference convenes Sept. 30-Oct. 3 at the Eastern & Orie ...
Wednesday, 07 August 13
HANDIES : FINDING IT DIFFICULT TO SUSTAIN THEIR PREVIOUS LEVELS - KONSTANTINOS KONTOMICHIS
Broker's insight
by Konstantinos Kontomichis,
SnP Broker
Entering the most predictable month of the year, as expected the seasonal effects ha ...
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- New Zealand Coal & Carbon
- Global Coal Blending Company Limited - Australia
- Sinarmas Energy and Mining - Indonesia
- GVK Power & Infra Limited - India
- Medco Energi Mining Internasional
- GN Power Mariveles Coal Plant, Philippines
- Kaltim Prima Coal - Indonesia
- Parry Sugars Refinery, India
- Gujarat Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- Bhoruka Overseas - Indonesia
- Bukit Makmur.PT - Indonesia
- TeaM Sual Corporation - Philippines
- Metalloyd Limited - United Kingdom
- SN Aboitiz Power Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Global Business Power Corporation, Philippines
- Planning Commission, India
- Xindia Steels Limited - India
- Ministry of Transport, Egypt
- European Bulk Services B.V. - Netherlands
- Malabar Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- Salva Resources Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The Treasury - Australian Government
- Billiton Holdings Pty Ltd - Australia
- Agrawal Coal Company - India
- Altura Mining Limited, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Kapuas Tunggal Persada - Indonesia
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- Global Green Power PLC Corporation, Philippines
- Indian Oil Corporation Limited
- Bahari Cakrawala Sebuku - Indonesia
- Renaissance Capital - South Africa
- White Energy Company Limited
- Tamil Nadu electricity Board
- Interocean Group of Companies - India
- Essar Steel Hazira Ltd - India
- Coal and Oil Company - UAE
- Rio Tinto Coal - Australia
- Central Electricity Authority - India
- Wilmar Investment Holdings
- Minerals Council of Australia
- Leighton Contractors Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- Bayan Resources Tbk. - Indonesia
- The State Trading Corporation of India Ltd
- Australian Coal Association
- Kobexindo Tractors - Indoneisa
- VISA Power Limited - India
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- San Jose City I Power Corp, Philippines
- Indogreen Group - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Timah Investasi Mineral - Indoneisa
- Goldman Sachs - Singapore
- London Commodity Brokers - England
- SMG Consultants - Indonesia
- Port Waratah Coal Services - Australia
- Mjunction Services Limited - India
- Sindya Power Generating Company Private Ltd
- Alfred C Toepfer International GmbH - Germany
- TNB Fuel Sdn Bhd - Malaysia
- IHS Mccloskey Coal Group - USA
- Bhushan Steel Limited - India
- Simpson Spence & Young - Indonesia
- Borneo Indobara - Indonesia
- Orica Australia Pty. Ltd.
- Karbindo Abesyapradhi - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Meenaskhi Energy Private Limited - India
- Chamber of Mines of South Africa
- Commonwealth Bank - Australia
- Therma Luzon, Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Sojitz Corporation - Japan
- Australian Commodity Traders Exchange
- Dalmia Cement Bharat India
- Georgia Ports Authority, United States
- IEA Clean Coal Centre - UK
- Mintek Dendrill Indonesia
- Globalindo Alam Lestari - Indonesia
- Edison Trading Spa - Italy
- Carbofer General Trading SA - India
- Cement Manufacturers Association - India
- Indian Energy Exchange, India
- Gujarat Mineral Development Corp Ltd - India
- Singapore Mercantile Exchange
- Intertek Mineral Services - Indonesia
- Heidelberg Cement - Germany
- Petron Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Grasim Industreis Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bangladesh Power Developement Board
- Sarangani Energy Corporation, Philippines
- Sical Logistics Limited - India
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- South Luzon Thermal Energy Corporation
- Asia Pacific Energy Resources Ventures Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Wood Mackenzie - Singapore
- PNOC Exploration Corporation - Philippines
- Anglo American - United Kingdom
- Maheswari Brothers Coal Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Baiduri Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- GAC Shipping (India) Pvt Ltd
- Central Java Power - Indonesia
- Thai Mozambique Logistica
- Electricity Generating Authority of Thailand
- Orica Mining Services - Indonesia
- Ministry of Finance - Indonesia
- Eastern Energy - Thailand
- Karaikal Port Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Semirara Mining Corp, Philippines
- Ministry of Mines - Canada
- Coalindo Energy - Indonesia
- Attock Cement Pakistan Limited
- Madhucon Powers Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meralco Power Generation, Philippines
- MS Steel International - UAE
- Tata Chemicals Ltd - India
- Posco Energy - South Korea
- Energy Development Corp, Philippines
- Parliament of New Zealand
- Kumho Petrochemical, South Korea
- Ambuja Cements Ltd - India
- Banpu Public Company Limited - Thailand
- Barasentosa Lestari - Indonesia
- Savvy Resources Ltd - HongKong
- Indika Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Baramulti Group, Indonesia
- Bhatia International Limited - India
- Economic Council, Georgia
- Ceylon Electricity Board - Sri Lanka
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement - Thailand
- ICICI Bank Limited - India
- Africa Commodities Group - South Africa
- ASAPP Information Group - India
- Kalimantan Lumbung Energi - Indonesia
- Independent Power Producers Association of India
- Lanco Infratech Ltd - India
- Oldendorff Carriers - Singapore
- Bharathi Cement Corporation - India
- Marubeni Corporation - India
- Deloitte Consulting - India
- Vedanta Resources Plc - India
- SMC Global Power, Philippines
- Aditya Birla Group - India
- Kepco SPC Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Antam Resourcindo - Indonesia
- Mercuria Energy - Indonesia
- Trasteel International SA, Italy
- Holcim Trading Pte Ltd - Singapore
- Gujarat Sidhee Cement - India
- Vizag Seaport Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Jindal Steel & Power Ltd - India
- Electricity Authority, New Zealand
- Merrill Lynch Commodities Europe
- Latin American Coal - Colombia
- Cigading International Bulk Terminal - Indonesia
- Star Paper Mills Limited - India
- Siam City Cement PLC, Thailand
- Eastern Coal Council - USA
- PowerSource Philippines DevCo
- Bulk Trading Sa - Switzerland
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CIMB Investment Bank - Malaysia
- Indo Tambangraya Megah - Indonesia
- Larsen & Toubro Limited - India
- Aboitiz Power Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Coastal Gujarat Power Limited - India
- GMR Energy Limited - India
- Binh Thuan Hamico - Vietnam
- CNBM International Corporation - China
- PTC India Limited - India
- McConnell Dowell - Australia
- Power Finance Corporation Ltd., India
- Romanian Commodities Exchange
- Directorate General of MIneral and Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Rashtriya Ispat Nigam Limited - India
- Pendopo Energi Batubara - Indonesia
- LBH Netherlands Bv - Netherlands
- Price Waterhouse Coopers - Russia
- Straits Asia Resources Limited - Singapore
- Semirara Mining and Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Mercator Lines Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Kideco Jaya Agung - Indonesia
- Standard Chartered Bank - UAE
- The University of Queensland
- Sakthi Sugars Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Thiess Contractors Indonesia
- Ind-Barath Power Infra Limited - India
- Uttam Galva Steels Limited - India
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