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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, 04 August 13
COAL SWAP MARKET HAS LOST DIRECTION; STRUGGLING TO CATCH UP
COALspot.com – Sub-Bit Indonesia coal swaps (FOB ) for average October 2013 delivery slightly down on day, week and month on Friday, 2 A ...
Sunday, 04 August 13
INDONESIA TO INDIA SUPRAMAX FREIGHT SOFT DUE TO HOLIDAYS IN INDONESIA - VISTAAR
COALspot.com : The freight market was fairly steady this week with the BDI recovering towards north since second half of the week with the support o ...
Friday, 02 August 13
DRY BULK MARKET STABILIZES ON RENEWED MARKET ACTIVITY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has kept its positive footing this week, although it's still a far cry to deem the market situation as a growing one, especiall ...
Friday, 02 August 13
ASIA ACCOUNTS FOR 27.95 PERCENT OF US COAL EXPORTS IN Q1, 2013
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 20.80 million short tons (mmst) of ...
Thursday, 01 August 13
CAPESIZE: THE FLOW OF CARGOES REMAINS RELATIVELY STABLE, AND THE PACIFIC IS LOOKING PROMISING - FEARNLEYS AS
Handy
The Pacific market is still facing low activity, so no wonder that the tonnage list is getting longer. It´s still Ramadan and only a fe ...
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- Wilmar Investment Holdings
- Singapore Mercantile Exchange
- Ceylon Electricity Board - Sri Lanka
- Africa Commodities Group - South Africa
- Coal and Oil Company - UAE
- Timah Investasi Mineral - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Chettinad Cement Corporation Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Merrill Lynch Commodities Europe
- Xindia Steels Limited - India
- Bangladesh Power Developement Board
- Ministry of Mines - Canada
- Energy Development Corp, Philippines
- Indogreen Group - Indonesia
- ICICI Bank Limited - India
- Dalmia Cement Bharat India
- Uttam Galva Steels Limited - India
- Essar Steel Hazira Ltd - India
- Bulk Trading Sa - Switzerland
- Ministry of Transport, Egypt
- MS Steel International - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jindal Steel & Power Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- PTC India Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Orica Mining Services - Indonesia
- Semirara Mining Corp, Philippines
- Carbofer General Trading SA - India
- Kartika Selabumi Mining - Indonesia
- Sree Jayajothi Cements Limited - India
- Mercator Lines Limited - India
- The University of Queensland
- Aboitiz Power Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Posco Energy - South Korea
- Medco Energi Mining Internasional
- Agrawal Coal Company - India
- Asmin Koalindo Tuhup - Indonesia
- Barasentosa Lestari - Indonesia
- GVK Power & Infra Limited - India
- Meralco Power Generation, Philippines
- New Zealand Coal & Carbon
- Power Finance Corporation Ltd., India
- Ministry of Finance - Indonesia
- Electricity Authority, New Zealand
- Neyveli Lignite Corporation Ltd, - India
- Commonwealth Bank - Australia
- SMG Consultants - Indonesia
- Mintek Dendrill Indonesia
- Sarangani Energy Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- White Energy Company Limited
- Parry Sugars Refinery, India
- Attock Cement Pakistan Limited
- CIMB Investment Bank - Malaysia
- Cigading International Bulk Terminal - Indonesia
- Videocon Industries ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Sojitz Corporation - Japan
- Therma Luzon, Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Grasim Industreis Ltd - India
- Vedanta Resources Plc - India
- Indonesian Coal Mining Association
- Simpson Spence & Young - Indonesia
- Mercuria Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Rio Tinto Coal - Australia
- Borneo Indobara - Indonesia
- Maheswari Brothers Coal Limited - India
- Deloitte Consulting - India
- PNOC Exploration Corporation - Philippines
- South Luzon Thermal Energy Corporation
- SN Aboitiz Power Inc, Philippines
- Cement Manufacturers Association - India
- Bukit Asam (Persero) Tbk - Indonesia
- SMC Global Power, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Kobexindo Tractors - Indoneisa
- Coastal Gujarat Power Limited - India
- Global Business Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Economic Council, Georgia
- Baramulti Group, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Romanian Commodities Exchange
- Parliament of New Zealand
- Kumho Petrochemical, South Korea
- Bayan Resources Tbk. - Indonesia
- Bhatia International Limited - India
- Kapuas Tunggal Persada - Indonesia
- Directorate Of Revenue Intelligence - India
- Minerals Council of Australia
- Sinarmas Energy and Mining - Indonesia
- McConnell Dowell - Australia
- VISA Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Marubeni Corporation - India
- The State Trading Corporation of India Ltd
- Thiess Contractors Indonesia
- Holcim Trading Pte Ltd - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Energy - Thailand
- Heidelberg Cement - Germany
- San Jose City I Power Corp, Philippines
- IEA Clean Coal Centre - UK
- Ind-Barath Power Infra Limited - India
- Antam Resourcindo - Indonesia
- ASAPP Information Group - India
- Coalindo Energy - Indonesia
- Central Electricity Authority - India
- Port Waratah Coal Services - Australia
- Chamber of Mines of South Africa
- International Coal Ventures Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Orica Australia Pty. Ltd.
- Jorong Barutama Greston.PT - Indonesia
- Central Java Power - Indonesia
- Binh Thuan Hamico - Vietnam
- Renaissance Capital - South Africa
- Vizag Seaport Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Savvy Resources Ltd - HongKong
- Krishnapatnam Port Company Ltd. - India
- Interocean Group of Companies - India
- India Bulls Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Karaikal Port Pvt Ltd - India
- PowerSource Philippines DevCo
- Indo Tambangraya Megah - Indonesia
- The Treasury - Australian Government
- Bhoruka Overseas - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Lanco Infratech Ltd - India
- Latin American Coal - Colombia
- TeaM Sual Corporation - Philippines
- Indika Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Independent Power Producers Association of India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Petron Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- PetroVietnam Power Coal Import and Supply Company
- Leighton Contractors Pty Ltd - Australia
- Tamil Nadu electricity Board
- Metalloyd Limited - United Kingdom
- Bukit Makmur.PT - Indonesia
- Standard Chartered Bank - UAE
- Formosa Plastics Group - Taiwan
- Gujarat Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mjunction Services Limited - India
- GMR Energy Limited - India
- Toyota Tsusho Corporation, Japan
- Sical Logistics Limited - India
- Makarim & Taira - Indonesia
- Price Waterhouse Coopers - Russia
- Sakthi Sugars Limited - India
- Australian Commodity Traders Exchange
- Gujarat Sidhee Cement - India
- Goldman Sachs - Singapore
- Kepco SPC Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Wood Mackenzie - Singapore
- Intertek Mineral Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Anglo American - United Kingdom
- Star Paper Mills Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Edison Trading Spa - Italy
- London Commodity Brokers - England
- Riau Bara Harum - Indonesia
- Malabar Cements Ltd - India
- Siam City Cement - Thailand
- Tata Chemicals Ltd - India
- GAC Shipping (India) Pvt Ltd
- Semirara Mining and Power Corporation, Philippines
- Australian Coal Association
- Straits Asia Resources Limited - Singapore
- Sindya Power Generating Company Private Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Bhushan Steel Limited - India
- Bharathi Cement Corporation - India
- Kaltim Prima Coal - Indonesia
- Manunggal Multi Energi - Indonesia
- Trasteel International SA, Italy
- Siam City Cement PLC, Thailand
- European Bulk Services B.V. - Netherlands
- Electricity Generating Authority of Thailand
- Georgia Ports Authority, United States
- Indian Energy Exchange, India
- Kideco Jaya Agung - Indonesia
- Altura Mining Limited, Indonesia
- Meenaskhi Energy Private Limited - India
- Thai Mozambique Logistica
- Jaiprakash Power Ventures ltd
- Salva Resources Pvt Ltd - India
- Ambuja Cements Ltd - India
- LBH Netherlands Bv - Netherlands
- CNBM International Corporation - China
- Eastern Coal Council - USA
- Planning Commission, India
- Maharashtra Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Indian Oil Corporation Limited
- Aditya Birla Group - India
- Oldendorff Carriers - Singapore
- Larsen & Toubro Limited - India
- Rashtriya Ispat Nigam Limited - India
- Energy Link Ltd, New Zealand
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