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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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Thursday, 25 July 13
CAPESIZE : PACIFIC AND ATLANTIC RATES ARE HOLDING STEADY - FEARNLEYS AS
Handy
The Far East market remains quiet even if some Indo coal trip orders were fed in the market at early this week. Prompt ships passing Singapor ...
Thursday, 25 July 13
SUMMER LULL CHIPPING AWAY RECENT GAINS IN DRY BULK FREIGHT RATES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
In what seems to be establishing as a permanent trend, at least for the time being, the dry bulk market kept on retreating yesterday, even if this r ...
Tuesday, 23 July 13
NEWCASTLE'S COAL EXPORTS CLIMB 17.82% ON WEEK, PORT'S DATA SHOWS
COALspot.com: Newcastle port in Australia has loaded 3,369,865 tons of coal for the week ended 0700 hours 22 July 2013, Newcastle Port Corp. s ...
Monday, 22 July 13
DRY BULK MARKET DIFFICULT TO MAINTAIN POSITIVE DRIVE CLAIMS SHIPBROKER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has seen a significant recovery in recent weeks, leading most ship classes to earnings above their operating expenses, thus brin ...
Monday, 22 July 13
INDO COAL SWAP FOR AUGUST 13 DELIVERY GAINED ON WEEK BUT LOST ON DAY AND MONTH
COALspot.com – Sub-Bit Indonesia coal swaps (FOB ) for average August 2013 delivery slightly up on week but fell on day and month on Fri ...
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- Global Coal Blending Company Limited - Australia
- Bangladesh Power Developement Board
- Dalmia Cement Bharat India
- Gujarat Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Goldman Sachs - Singapore
- Chamber of Mines of South Africa
- GMR Energy Limited - India
- Sree Jayajothi Cements Limited - India
- Port Waratah Coal Services - Australia
- Indonesian Coal Mining Association
- India Bulls Power Limited - India
- Iligan Light & Power Inc, Philippines
- SMG Consultants - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- CNBM International Corporation - China
- Tamil Nadu electricity Board
- Thai Mozambique Logistica
- Borneo Indobara - Indonesia
- Electricity Authority, New Zealand
- The University of Queensland
- Attock Cement Pakistan Limited
- Cigading International Bulk Terminal - Indonesia
- Sojitz Corporation - Japan
- Kalimantan Lumbung Energi - Indonesia
- Cement Manufacturers Association - India
- Bayan Resources Tbk. - Indonesia
- Bhushan Steel Limited - India
- Ind-Barath Power Infra Limited - India
- Parliament of New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Eastern Coal Council - USA
- Straits Asia Resources Limited - Singapore
- Neyveli Lignite Corporation Ltd, - India
- LBH Netherlands Bv - Netherlands
- Maheswari Brothers Coal Limited - India
- Renaissance Capital - South Africa
- IHS Mccloskey Coal Group - USA
- Mintek Dendrill Indonesia
- Sical Logistics Limited - India
- Therma Luzon, Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Ceylon Electricity Board - Sri Lanka
- Star Paper Mills Limited - India
- Bukit Baiduri Energy - Indonesia
- Bhatia International Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Medco Energi Mining Internasional
- Globalindo Alam Lestari - Indonesia
- Ministry of Mines - Canada
- Kideco Jaya Agung - Indonesia
- CIMB Investment Bank - Malaysia
- Parry Sugars Refinery, India
- Carbofer General Trading SA - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ambuja Cements Ltd - India
- Romanian Commodities Exchange
- Lanco Infratech Ltd - India
- Coastal Gujarat Power Limited - India
- Africa Commodities Group - South Africa
- PNOC Exploration Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Riau Bara Harum - Indonesia
- Standard Chartered Bank - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Karaikal Port Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Malabar Cements Ltd - India
- Kobexindo Tractors - Indoneisa
- OPG Power Generation Pvt Ltd - India
- PTC India Limited - India
- Mercuria Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Energy Link Ltd, New Zealand
- Banpu Public Company Limited - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Interocean Group of Companies - India
- Pendopo Energi Batubara - Indonesia
- Indo Tambangraya Megah - Indonesia
- Economic Council, Georgia
- Vizag Seaport Private Limited - India
- Miang Besar Coal Terminal - Indonesia
- Singapore Mercantile Exchange
- Indogreen Group - Indonesia
- Larsen & Toubro Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Coal and Oil Company - UAE
- London Commodity Brokers - England
- SMC Global Power, Philippines
- Petron Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Siam City Cement - Thailand
- Chettinad Cement Corporation Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Agrawal Coal Company - India
- SN Aboitiz Power Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Barasentosa Lestari - Indonesia
- ASAPP Information Group - India
- Bahari Cakrawala Sebuku - Indonesia
- Kaltim Prima Coal - Indonesia
- Videocon Industries ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- New Zealand Coal & Carbon
- Energy Development Corp, Philippines
- Australian Coal Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Formosa Plastics Group - Taiwan
- Indian Oil Corporation Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- European Bulk Services B.V. - Netherlands
- Essar Steel Hazira Ltd - India
- VISA Power Limited - India
- Toyota Tsusho Corporation, Japan
- Electricity Generating Authority of Thailand
- Metalloyd Limited - United Kingdom
- Vedanta Resources Plc - India
- McConnell Dowell - Australia
- Edison Trading Spa - Italy
- Leighton Contractors Pty Ltd - Australia
- Ministry of Finance - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Global Green Power PLC Corporation, Philippines
- Eastern Energy - Thailand
- Manunggal Multi Energi - Indonesia
- Latin American Coal - Colombia
- TeaM Sual Corporation - Philippines
- Commonwealth Bank - Australia
- Mercator Lines Limited - India
- Planning Commission, India
- The Treasury - Australian Government
- Orica Australia Pty. Ltd.
- Trasteel International SA, Italy
- Deloitte Consulting - India
- International Coal Ventures Pvt Ltd - India
- Orica Mining Services - Indonesia
- Meralco Power Generation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- White Energy Company Limited
- GN Power Mariveles Coal Plant, Philippines
- Sinarmas Energy and Mining - Indonesia
- Ministry of Transport, Egypt
- Alfred C Toepfer International GmbH - Germany
- Jindal Steel & Power Ltd - India
- Oldendorff Carriers - Singapore
- Rashtriya Ispat Nigam Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kartika Selabumi Mining - Indonesia
- Baramulti Group, Indonesia
- Heidelberg Cement - Germany
- Pipit Mutiara Jaya. PT, Indonesia
- PowerSource Philippines DevCo
- Karbindo Abesyapradhi - Indoneisa
- Simpson Spence & Young - Indonesia
- Marubeni Corporation - India
- IEA Clean Coal Centre - UK
- Central Electricity Authority - India
- Jaiprakash Power Ventures ltd
- Binh Thuan Hamico - Vietnam
- Indika Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Intertek Mineral Services - Indonesia
- Anglo American - United Kingdom
- Directorate Of Revenue Intelligence - India
- Georgia Ports Authority, United States
- MS Steel International - UAE
- Semirara Mining and Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Uttam Galva Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- Mjunction Services Limited - India
- Global Business Power Corporation, Philippines
- Independent Power Producers Association of India
- Wilmar Investment Holdings
- Tata Chemicals Ltd - India
- Gujarat Sidhee Cement - India
- Xindia Steels Limited - India
- Grasim Industreis Ltd - India
- Bukit Makmur.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- Minerals Council of Australia
- Asmin Koalindo Tuhup - Indonesia
- Coalindo Energy - Indonesia
- Thiess Contractors Indonesia
- Posco Energy - South Korea
- Salva Resources Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- GVK Power & Infra Limited - India
- Merrill Lynch Commodities Europe
- Krishnapatnam Port Company Ltd. - India
- Indian Energy Exchange, India
- ICICI Bank Limited - India
- Sarangani Energy Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Sakthi Sugars Limited - India
- Kapuas Tunggal Persada - Indonesia
- Kumho Petrochemical, South Korea
- Central Java Power - Indonesia
- The State Trading Corporation of India Ltd
- Savvy Resources Ltd - HongKong
- Altura Mining Limited, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- Australian Commodity Traders Exchange
- Makarim & Taira - Indonesia
- Rio Tinto Coal - Australia
- Bulk Trading Sa - Switzerland
- South Luzon Thermal Energy Corporation
- San Jose City I Power Corp, Philippines
- Aditya Birla Group - India
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- Wood Mackenzie - Singapore
- Antam Resourcindo - Indonesia
- Madhucon Powers Ltd - India
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