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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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Wednesday, 17 July 13
NEWCASTLE COAL EXPORTS FELL 3.85% ON WEEK
COALspot.com: Newcastle port in Australia has loaded 2,860,149 tons of coal for the week ended 0700 hours 15 July 2013, Newcastle Port Corp. s ...
Wednesday, 17 July 13
TORN BETWEEN A CREDIT CRUNCH AND SUSTAINABLE GROWTH - GEORGE DERMATIS
COALspot.com: In 2012 China expanded at a rate of 7.8%, its worst annual performance in 13 years, raising criticism over the newly appointed governm ...
Tuesday, 16 July 13
TAKE - OR - PAY CONTRACTS CONTINUE TO INCENTIVISE AUSTRALIAN COAL PRODUCERS DESPITE POTENTIAL NEGATIVE CASH MARGINS - WOOD MACKENZIE
Australia's coal production has continued to grow, despite lower coal prices in 2013. Global investors and suppliers are therefore questioning whet ...
Monday, 15 July 13
INDONESIAN GOVERNMENT HAS REVISED DOWN ITS JULY BENCH-MARK COAL PRICE TO US$ 81.69 PER MT
COALspot. com - Indonesian Coal Price Reference dropped 3.75 % and hitting a 2013 low. The Indonesian government has revised down its owned coal ben ...
Monday, 15 July 13
INDO COAL SWAPS ARE STRUGGLING FOR RIGHT DIRECTION
COALspot.com – Indo coal swaps are struggling to find the right direction. Sub-Bit Indonesia coal swaps (FOB ) for average August 2013 d ...
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- Wilmar Investment Holdings
- Pendopo Energi Batubara - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Dalmia Cement Bharat India
- Bhatia International Limited - India
- Therma Luzon, Inc, Philippines
- Semirara Mining Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- New Zealand Coal & Carbon
- McConnell Dowell - Australia
- Coal and Oil Company - UAE
- Bayan Resources Tbk. - Indonesia
- Merrill Lynch Commodities Europe
- Tata Chemicals Ltd - India
- Bhoruka Overseas - Indonesia
- Indo Tambangraya Megah - Indonesia
- Maheswari Brothers Coal Limited - India
- Global Coal Blending Company Limited - Australia
- Altura Mining Limited, Indonesia
- Meenaskhi Energy Private Limited - India
- IEA Clean Coal Centre - UK
- Parliament of New Zealand
- Straits Asia Resources Limited - Singapore
- Price Waterhouse Coopers - Russia
- ICICI Bank Limited - India
- Sarangani Energy Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Xindia Steels Limited - India
- Georgia Ports Authority, United States
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karbindo Abesyapradhi - Indoneisa
- Indika Energy - Indonesia
- Economic Council, Georgia
- Indogreen Group - Indonesia
- Bhushan Steel Limited - India
- Larsen & Toubro Limited - India
- Sojitz Corporation - Japan
- Latin American Coal - Colombia
- Eastern Energy - Thailand
- Antam Resourcindo - Indonesia
- Port Waratah Coal Services - Australia
- Interocean Group of Companies - India
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- Mercuria Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Deloitte Consulting - India
- Borneo Indobara - Indonesia
- GMR Energy Limited - India
- Africa Commodities Group - South Africa
- Australian Coal Association
- Thiess Contractors Indonesia
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- CNBM International Corporation - China
- AsiaOL BioFuels Corp., Philippines
- SMC Global Power, Philippines
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- Global Green Power PLC Corporation, Philippines
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- SN Aboitiz Power Inc, Philippines
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- Indian Oil Corporation Limited
- Central Electricity Authority - India
- Ministry of Mines - Canada
- Riau Bara Harum - Indonesia
- Eastern Coal Council - USA
- Commonwealth Bank - Australia
- Bukit Makmur.PT - Indonesia
- Bharathi Cement Corporation - India
- Mercator Lines Limited - India
- Coastal Gujarat Power Limited - India
- Central Java Power - Indonesia
- Heidelberg Cement - Germany
- Parry Sugars Refinery, India
- Vizag Seaport Private Limited - India
- Karaikal Port Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jaiprakash Power Ventures ltd
- Trasteel International SA, Italy
- Siam City Cement - Thailand
- Power Finance Corporation Ltd., India
- Posco Energy - South Korea
- Star Paper Mills Limited - India
- Toyota Tsusho Corporation, Japan
- Anglo American - United Kingdom
- GN Power Mariveles Coal Plant, Philippines
- ASAPP Information Group - India
- Agrawal Coal Company - India
- GVK Power & Infra Limited - India
- Kideco Jaya Agung - Indonesia
- Wood Mackenzie - Singapore
- Baramulti Group, Indonesia
- Bulk Trading Sa - Switzerland
- Orica Australia Pty. Ltd.
- Goldman Sachs - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thai Mozambique Logistica
- Medco Energi Mining Internasional
- GAC Shipping (India) Pvt Ltd
- Sinarmas Energy and Mining - Indonesia
- Ambuja Cements Ltd - India
- South Luzon Thermal Energy Corporation
- Jindal Steel & Power Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Kobexindo Tractors - Indoneisa
- Petron Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- PetroVietnam Power Coal Import and Supply Company
- Timah Investasi Mineral - Indoneisa
- Renaissance Capital - South Africa
- Makarim & Taira - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Madhucon Powers Ltd - India
- Essar Steel Hazira Ltd - India
- IHS Mccloskey Coal Group - USA
- Rashtriya Ispat Nigam Limited - India
- Sindya Power Generating Company Private Ltd
- Kapuas Tunggal Persada - Indonesia
- Kartika Selabumi Mining - Indonesia
- Attock Cement Pakistan Limited
- Bangladesh Power Developement Board
- The Treasury - Australian Government
- White Energy Company Limited
- VISA Power Limited - India
- PNOC Exploration Corporation - Philippines
- Energy Link Ltd, New Zealand
- Malabar Cements Ltd - India
- Gujarat Sidhee Cement - India
- Metalloyd Limited - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- MS Steel International - UAE
- International Coal Ventures Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Romanian Commodities Exchange
- Semirara Mining and Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Mintek Dendrill Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Finance - Indonesia
- Samtan Co., Ltd - South Korea
- The University of Queensland
- LBH Netherlands Bv - Netherlands
- Singapore Mercantile Exchange
- Minerals Council of Australia
- Electricity Generating Authority of Thailand
- Lanco Infratech Ltd - India
- Ind-Barath Power Infra Limited - India
- Indonesian Coal Mining Association
- TeaM Sual Corporation - Philippines
- Mjunction Services Limited - India
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Barasentosa Lestari - Indonesia
- Chamber of Mines of South Africa
- San Jose City I Power Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Oldendorff Carriers - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Energy Development Corp, Philippines
- Orica Mining Services - Indonesia
- Formosa Plastics Group - Taiwan
- Carbofer General Trading SA - India
- Intertek Mineral Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Electricity Authority, New Zealand
- Directorate Of Revenue Intelligence - India
- Sical Logistics Limited - India
- Planning Commission, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Mineral Development Corp Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Kaltim Prima Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Global Business Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Savvy Resources Ltd - HongKong
- Alfred C Toepfer International GmbH - Germany
- Rio Tinto Coal - Australia
- Kalimantan Lumbung Energi - Indonesia
- Meralco Power Generation, Philippines
- Simpson Spence & Young - Indonesia
- The State Trading Corporation of India Ltd
- Indian Energy Exchange, India
- Videocon Industries ltd - India
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- Cement Manufacturers Association - India
- London Commodity Brokers - England
- Sakthi Sugars Limited - India
- Aditya Birla Group - India
- Binh Thuan Hamico - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Coalindo Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Directorate General of MIneral and Coal - Indonesia
- Australian Commodity Traders Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vedanta Resources Plc - India
- PTC India Limited - India
- SMG Consultants - Indonesia
- Uttam Galva Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Edison Trading Spa - Italy
- European Bulk Services B.V. - Netherlands
- Ministry of Transport, Egypt
- Independent Power Producers Association of India
- Standard Chartered Bank - UAE
- Tamil Nadu electricity Board
- Iligan Light & Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
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