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Thursday, 16 April 15
NEW COMMODITY SUPERHIGHWAY WILL EMERGE IN CHINA, ALTERING ENERGY TRADE FLOWS - WOOD MACKENZIE
 Wood Mackenzie says that China’s Go West strategy – encouraging coastal to inland flow of capital and people - will result in the formation of a new commodity superhighway. This new superhighway will impact the energy trade flows within China and externally via the new Silk Road routes; which acts to link the country's east to west, onwards to Central Asia and beyond. This represents significant business and investment opportunities in China's west.
Wood Mackenzie’s Principal Asia Economist, Ms Cynthia Lim, explains China’s Go West policy, “The plan is already underway and is often touted as China’s silver bullet to ensure long-term GDP growth as the economically dominant coastal region approaches maturity. The coastal provinces will have to upgrade their industries to higher value-add sectors, such as services while industries will relocate inland westwards. This is shifting the regional distribution of demand centres and power generation; and the impact will become more apparent in the next two decades. This will form an impressive commodity superhighway.”
The commodity superhighway will have three main implications: "The first implication," says Mr Frank Yu, Senior Asia Power Consultant, “Is that power generation in the central and western regions will almost triple from around 3,200 Terrawatt hours (TWh) in 2015 to almost 9,600TWh in 2035. This far outpaces the coastal region’s generation growth in the same period, which is only set to increase from under 3,000TWh to 6,000TWh.”
The second implication is the emergence of new energy trade flows within China, from the inland west to coastal regions of China. Mr Yu explains, “Coastal regions will become further reliant on China’s west to meet its energy demand. The west has an abundant supply of energy, accounting for more than 65% of China’s marketable coal and gas reserves. As coal remains the dominant fuel, coal-fired power plants in central and western province areas will generate more power to feed demand-heavy coastal centres through long-distance power transmission grids. Additionally, the coastal region’s generation growth in the same period, which is only set to increase from under 3,000TWh to 6,000TWh.”
The second implication is the emergence of new energy trade flows within China, from the inland west to coastal regions of China. Mr Yu explains, “Coastal regions will become further reliant on China’s west to meet its energy demand. The west has an abundant supply of energy, accounting for more than 65% of China’s marketable coal and gas reserves. As coal remains the dominant fuel, coal-fired power plants in central and western province areas will generate more power to feed demand-heavy coastal centres through long-distance power transmission grids. Additionally, the west holds the majority of renewable energy potential – hydropower, wind and solar. We also expect shale gas production in the west to ramp up, particularly from Sichuan, Shaanxi and Xinjiang, to around 140 billion cubic metres (bcm) by 2035. ”
Wood Mackenzie says the third implication is that planned transport infrastructure build will open up new markets in Central Asia and facilitate energy imports into China via its western border. China is planning two main routes – the new land-borne ‘Silk Road Economic Belt’ and the ‘21st Century Maritime Silk Road’, from southeast China to west Asia, via the South China sea. Infrastructure development will make Xinjiang a key gateway for commodity trade between China, Central Asia and Russia. Ms Lim says, “Xinjiang is strategically important because of its rich energy resources and as a transport hub with oil and gas supplies from Central Asia and Russia converging before being distributed for use in the east.
“For China’s west to fulfil its growth potential, significant investment is needed in energy production and transport infrastructure. We estimate that investment in new power generation capacity and coal mines in Xinjiang, for example, will total US$140billion (bn) and US$120bn respectively in the next 20 years. However, there are also key risks to the success of this commodity superhighway that investors will have to watch for.”
Wood Mackenzie's analysis says the risks are: Firstly, the pace and scale of economic and energy reforms - slow progress in restructuring provincial government debt and introducing market pricing for gas and power could subdue western development. Secondly, the rate of building infrastructure for power transmission as this is key for the success of trade routes with coastal China and Central Asia. Thirdly, water scarcity as it could mean coal mining and power plants that already face cost pressure from extra raw material preparation requirements like coal washing could face higher costs. Lastly, political risks must be managed – this includes diplomatic relationships with China’s Central Asian neighbours in building the new trade routes as well as potential domestic unrest in Xinjiang.
Ms Lim concludes, “Many of the risks can be mitigated through government support and finance but the geopolitical and social risks are far less predictable. China’s west has the energy resources, cost advantages and policy support to become a new energy and commodity superhighway, re-defining the flow of trade for decades to come. It could drive robust GDP growth for China through the longer-term and strengthen China’s economic and political influence with its neighbours. Given the high stakes of this commodity superhighway, success of the Go West strategy is a major Chinese government priority.”
About Wood Mackenzie:
Wood Mackenzie is a global leader in commercial intelligence for the energy, chemicals, metals and mining industries, providing objective analysis and advice on assets, companies, and markets to leading international and national energy and metals companies as well as financial institutions and governments.
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Friday, 29 May 15
COAL PRODUCTION IN THE U.S. ALMOST FLAT THIS PAST WEEK
COALspot.com – United States the second largest coal producer in the world has produced approximately totaled an estimated 16.1 million short ...
Friday, 29 May 15
SOUTH KOREAN STATE-OWNED UTILITY KOREA MIDLAND POWER INVITES BIDS FOR 780K MT OF COAL FOR H2' 15
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued an new tender to buy total 780K Metric Tons (MT) of HCV and LCV ...
Thursday, 28 May 15
TIMEBAR FOR DEMURRAGE CLAIMS - SKULD
KNOWLEDGE TO ELEVATE
English law has traditionally had a strict approach to contractually agreed time bars between commercial parties as well ...
Wednesday, 27 May 15
MARKET INSIGHT - TIMOS PAPADIMITRIOU
Earlier in the year I looked at how the market was reacting to the prolonged fall of the price of oil. Back then it was still unclear if the fallin ...
Tuesday, 26 May 15
HOW HAS THE DROP IN OIL PRICES AFFECTED OTHER COMMODITIES? - CLYDE & CO
KNOWLEDGE TO ELEVATE
The effects of the dramatic drop in the price of both Ice March Brent, the international oil marker, and its US counterpa ...
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- PNOC Exploration Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Directorate Of Revenue Intelligence - India
- Standard Chartered Bank - UAE
- Therma Luzon, Inc, Philippines
- Australian Coal Association
- Makarim & Taira - Indonesia
- Barasentosa Lestari - Indonesia
- Bukit Makmur.PT - Indonesia
- Semirara Mining Corp, Philippines
- Mintek Dendrill Indonesia
- Rashtriya Ispat Nigam Limited - India
- Indika Energy - Indonesia
- New Zealand Coal & Carbon
- The State Trading Corporation of India Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sindya Power Generating Company Private Ltd
- Savvy Resources Ltd - HongKong
- Neyveli Lignite Corporation Ltd, - India
- Mercuria Energy - Indonesia
- Antam Resourcindo - Indonesia
- Bharathi Cement Corporation - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Trasteel International SA, Italy
- SN Aboitiz Power Inc, Philippines
- Indian Oil Corporation Limited
- The University of Queensland
- Lanco Infratech Ltd - India
- Parry Sugars Refinery, India
- IEA Clean Coal Centre - UK
- Kepco SPC Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- White Energy Company Limited
- Thai Mozambique Logistica
- PTC India Limited - India
- Coastal Gujarat Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Pendopo Energi Batubara - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Orica Mining Services - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- TeaM Sual Corporation - Philippines
- Interocean Group of Companies - India
- Dalmia Cement Bharat India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Coal Blending Company Limited - Australia
- India Bulls Power Limited - India
- Meenaskhi Energy Private Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Globalindo Alam Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- Kobexindo Tractors - Indoneisa
- International Coal Ventures Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Leighton Contractors Pty Ltd - Australia
- Parliament of New Zealand
- Wood Mackenzie - Singapore
- Energy Development Corp, Philippines
- Jaiprakash Power Ventures ltd
- Port Waratah Coal Services - Australia
- Electricity Generating Authority of Thailand
- Vizag Seaport Private Limited - India
- Goldman Sachs - Singapore
- Chettinad Cement Corporation Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Bhatia International Limited - India
- Manunggal Multi Energi - Indonesia
- Commonwealth Bank - Australia
- Coalindo Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Medco Energi Mining Internasional
- Georgia Ports Authority, United States
- Iligan Light & Power Inc, Philippines
- Deloitte Consulting - India
- Xindia Steels Limited - India
- Global Business Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Metalloyd Limited - United Kingdom
- IHS Mccloskey Coal Group - USA
- Bayan Resources Tbk. - Indonesia
- Anglo American - United Kingdom
- Attock Cement Pakistan Limited
- ASAPP Information Group - India
- Indian Energy Exchange, India
- Larsen & Toubro Limited - India
- Australian Commodity Traders Exchange
- GVK Power & Infra Limited - India
- Maheswari Brothers Coal Limited - India
- San Jose City I Power Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Sojitz Corporation - Japan
- Miang Besar Coal Terminal - Indonesia
- SMG Consultants - Indonesia
- Binh Thuan Hamico - Vietnam
- Grasim Industreis Ltd - India
- Star Paper Mills Limited - India
- Planning Commission, India
- Kumho Petrochemical, South Korea
- Cement Manufacturers Association - India
- Siam City Cement - Thailand
- Altura Mining Limited, Indonesia
- Independent Power Producers Association of India
- GAC Shipping (India) Pvt Ltd
- Wilmar Investment Holdings
- Meralco Power Generation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Bulk Trading Sa - Switzerland
- Kartika Selabumi Mining - Indonesia
- Renaissance Capital - South Africa
- PowerSource Philippines DevCo
- Pipit Mutiara Jaya. PT, Indonesia
- Samtan Co., Ltd - South Korea
- Electricity Authority, New Zealand
- Salva Resources Pvt Ltd - India
- Bangladesh Power Developement Board
- Asmin Koalindo Tuhup - Indonesia
- Rio Tinto Coal - Australia
- Eastern Energy - Thailand
- Banpu Public Company Limited - Thailand
- Kapuas Tunggal Persada - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Price Waterhouse Coopers - Russia
- Posco Energy - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Mjunction Services Limited - India
- Tata Chemicals Ltd - India
- Sical Logistics Limited - India
- Straits Asia Resources Limited - Singapore
- Malabar Cements Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- London Commodity Brokers - England
- Bukit Baiduri Energy - Indonesia
- Heidelberg Cement - Germany
- Vedanta Resources Plc - India
- Gujarat Mineral Development Corp Ltd - India
- Thiess Contractors Indonesia
- Orica Australia Pty. Ltd.
- Baramulti Group, Indonesia
- Toyota Tsusho Corporation, Japan
- Simpson Spence & Young - Indonesia
- Ind-Barath Power Infra Limited - India
- McConnell Dowell - Australia
- OPG Power Generation Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining and Power Corporation, Philippines
- Indonesian Coal Mining Association
- Romanian Commodities Exchange
- Central Java Power - Indonesia
- Formosa Plastics Group - Taiwan
- Madhucon Powers Ltd - India
- Jindal Steel & Power Ltd - India
- Bhushan Steel Limited - India
- Ministry of Finance - Indonesia
- Videocon Industries ltd - India
- CNBM International Corporation - China
- Ambuja Cements Ltd - India
- Petron Corporation, Philippines
- MS Steel International - UAE
- Energy Link Ltd, New Zealand
- Latin American Coal - Colombia
- Sakthi Sugars Limited - India
- Indogreen Group - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Siam City Cement PLC, Thailand
- Minerals Council of Australia
- Aditya Birla Group - India
- Mercator Lines Limited - India
- Gujarat Sidhee Cement - India
- Essar Steel Hazira Ltd - India
- Riau Bara Harum - Indonesia
- SMC Global Power, Philippines
- The Treasury - Australian Government
- Chamber of Mines of South Africa
- Uttam Galva Steels Limited - India
- CIMB Investment Bank - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Sree Jayajothi Cements Limited - India
- Africa Commodities Group - South Africa
- Economic Council, Georgia
- Kideco Jaya Agung - Indonesia
- South Luzon Thermal Energy Corporation
- Petrochimia International Co. Ltd.- Taiwan
- Agrawal Coal Company - India
- Marubeni Corporation - India
- ICICI Bank Limited - India
- Carbofer General Trading SA - India
- Aboitiz Power Corporation - Philippines
- Ministry of Transport, Egypt
- Sinarmas Energy and Mining - Indonesia
- Singapore Mercantile Exchange
- LBH Netherlands Bv - Netherlands
- Karaikal Port Pvt Ltd - India
- VISA Power Limited - India
- Eastern Coal Council - USA
- Oldendorff Carriers - Singapore
- Power Finance Corporation Ltd., India
- PetroVietnam Power Coal Import and Supply Company
- Borneo Indobara - Indonesia
- Merrill Lynch Commodities Europe
- Central Electricity Authority - India
- GMR Energy Limited - India
- Coal and Oil Company - UAE
- Ministry of Mines - Canada
- Indo Tambangraya Megah - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Sarangani Energy Corporation, Philippines
- Tamil Nadu electricity Board
- Kalimantan Lumbung Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
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