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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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Friday, 19 July 13
U.S.COAL PRODUCTION TOTALED APPROXIMATELY 19.60 MMST WEEK ENDED JULY 13
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 19.60 million short tons (mmst) of ...
Friday, 19 July 13
TNPL IS LOOKING FOR 300 K MT OF 6000 GAD COAL FOR FIVE MONTH
COALspot.com - Tamil Nadu Newsprint & Papers Ltd. , an Indian paper maker, is seeking 300,000 metric tons ± 5% (In 5 shipments about 60,0 ...
Thursday, 18 July 13
3RD ANNUAL FLOATING TERMINALS, INDONESIA
Commercial applications for offshore transshipment facilities
Floating Terminal solutions are increasingly being deployed by miners, independent ...
Thursday, 18 July 13
THE CAPE MARKET APPEARS TO BE HOLDING FIRM - FEARNLEYS AS
Handy
In the Pacific, market maintained similar levels during the week. There is several Indo coal orders in the market, ships passing Singapore fi ...
Thursday, 18 July 13
DRY BULK MARKETS RETAINS RECENT GAINS, MOVES SIDEWAYS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has kept on moving sideways this week, as evidenced by the latest trends of the industry's benchmark, the Baltic Dry Index (BDI ...
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- Pendopo Energi Batubara - Indonesia
- LBH Netherlands Bv - Netherlands
- The State Trading Corporation of India Ltd
- Deloitte Consulting - India
- Price Waterhouse Coopers - Russia
- IHS Mccloskey Coal Group - USA
- Billiton Holdings Pty Ltd - Australia
- Bukit Baiduri Energy - Indonesia
- Orica Australia Pty. Ltd.
- Eastern Energy - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Anglo American - United Kingdom
- Kaltim Prima Coal - Indonesia
- The University of Queensland
- Xindia Steels Limited - India
- Ind-Barath Power Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Goldman Sachs - Singapore
- Leighton Contractors Pty Ltd - Australia
- ASAPP Information Group - India
- Riau Bara Harum - Indonesia
- Timah Investasi Mineral - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Australian Coal Association
- New Zealand Coal & Carbon
- Lanco Infratech Ltd - India
- Global Business Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Marubeni Corporation - India
- Aboitiz Power Corporation - Philippines
- Aditya Birla Group - India
- Bhoruka Overseas - Indonesia
- Straits Asia Resources Limited - Singapore
- ICICI Bank Limited - India
- Kartika Selabumi Mining - Indonesia
- Meenaskhi Energy Private Limited - India
- Port Waratah Coal Services - Australia
- Baramulti Group, Indonesia
- Ambuja Cements Ltd - India
- Metalloyd Limited - United Kingdom
- Directorate Of Revenue Intelligence - India
- Georgia Ports Authority, United States
- Agrawal Coal Company - India
- SN Aboitiz Power Inc, Philippines
- Ministry of Finance - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Altura Mining Limited, Indonesia
- Formosa Plastics Group - Taiwan
- Chettinad Cement Corporation Ltd - India
- TeaM Sual Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- Coalindo Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Jaiprakash Power Ventures ltd
- India Bulls Power Limited - India
- Indian Energy Exchange, India
- Kohat Cement Company Ltd. - Pakistan
- Toyota Tsusho Corporation, Japan
- Asmin Koalindo Tuhup - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Wood Mackenzie - Singapore
- Economic Council, Georgia
- Vijayanagar Sugar Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Kideco Jaya Agung - Indonesia
- Borneo Indobara - Indonesia
- Intertek Mineral Services - Indonesia
- Power Finance Corporation Ltd., India
- International Coal Ventures Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Kapuas Tunggal Persada - Indonesia
- South Luzon Thermal Energy Corporation
- SMC Global Power, Philippines
- Sojitz Corporation - Japan
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Vizag Seaport Private Limited - India
- Energy Development Corp, Philippines
- London Commodity Brokers - England
- Savvy Resources Ltd - HongKong
- Semirara Mining Corp, Philippines
- Electricity Authority, New Zealand
- Salva Resources Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Bukit Makmur.PT - Indonesia
- Petron Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- San Jose City I Power Corp, Philippines
- Merrill Lynch Commodities Europe
- Central Electricity Authority - India
- Indika Energy - Indonesia
- Thiess Contractors Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Star Paper Mills Limited - India
- Malabar Cements Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Commodity Traders Exchange
- European Bulk Services B.V. - Netherlands
- Global Green Power PLC Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Carbofer General Trading SA - India
- Mjunction Services Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Meralco Power Generation, Philippines
- Central Java Power - Indonesia
- Vedanta Resources Plc - India
- Samtan Co., Ltd - South Korea
- Jorong Barutama Greston.PT - Indonesia
- Dalmia Cement Bharat India
- Kumho Petrochemical, South Korea
- Parry Sugars Refinery, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IEA Clean Coal Centre - UK
- Jindal Steel & Power Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Bangladesh Power Developement Board
- Kobexindo Tractors - Indoneisa
- McConnell Dowell - Australia
- Barasentosa Lestari - Indonesia
- VISA Power Limited - India
- Coastal Gujarat Power Limited - India
- Therma Luzon, Inc, Philippines
- Gujarat Sidhee Cement - India
- Uttam Galva Steels Limited - India
- Interocean Group of Companies - India
- Wilmar Investment Holdings
- Sinarmas Energy and Mining - Indonesia
- Heidelberg Cement - Germany
- Mercator Lines Limited - India
- PowerSource Philippines DevCo
- Siam City Cement - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Oldendorff Carriers - Singapore
- Energy Link Ltd, New Zealand
- CIMB Investment Bank - Malaysia
- Trasteel International SA, Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Mining Services - Indonesia
- Mercuria Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- SMG Consultants - Indonesia
- Electricity Generating Authority of Thailand
- Commonwealth Bank - Australia
- Planning Commission, India
- Grasim Industreis Ltd - India
- Coal and Oil Company - UAE
- Larsen & Toubro Limited - India
- Indogreen Group - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Standard Chartered Bank - UAE
- Tamil Nadu electricity Board
- The Treasury - Australian Government
- Bayan Resources Tbk. - Indonesia
- Independent Power Producers Association of India
- PTC India Limited - India
- Chamber of Mines of South Africa
- Mintek Dendrill Indonesia
- MS Steel International - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Indian Oil Corporation Limited
- Sical Logistics Limited - India
- CNBM International Corporation - China
- Medco Energi Mining Internasional
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indonesian Coal Mining Association
- Eastern Coal Council - USA
- Rashtriya Ispat Nigam Limited - India
- Iligan Light & Power Inc, Philippines
- Videocon Industries ltd - India
- Tata Chemicals Ltd - India
- Siam City Cement PLC, Thailand
- Indo Tambangraya Megah - Indonesia
- Edison Trading Spa - Italy
- Ministry of Transport, Egypt
- Makarim & Taira - Indonesia
- Renaissance Capital - South Africa
- Bharathi Cement Corporation - India
- Attock Cement Pakistan Limited
- Posco Energy - South Korea
- GAC Shipping (India) Pvt Ltd
- Minerals Council of Australia
- Romanian Commodities Exchange
- Bhushan Steel Limited - India
- Alfred C Toepfer International GmbH - Germany
- Singapore Mercantile Exchange
- Ceylon Electricity Board - Sri Lanka
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Africa Commodities Group - South Africa
- Krishnapatnam Port Company Ltd. - India
- PNOC Exploration Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Parliament of New Zealand
- Ministry of Mines - Canada
- Thai Mozambique Logistica
- GMR Energy Limited - India
- Sakthi Sugars Limited - India
- Maheswari Brothers Coal Limited - India
- White Energy Company Limited
- Bhatia International Limited - India
- GVK Power & Infra Limited - India
- Cement Manufacturers Association - India
- Rio Tinto Coal - Australia
- Latin American Coal - Colombia
- Sarangani Energy Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Essar Steel Hazira Ltd - India
- OPG Power Generation Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Manunggal Multi Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Madhucon Powers Ltd - India
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