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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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Wednesday, 20 May 15
TANKER MARKET INSIGHT - JOHN N. COTZIAS
Since Early October 2014 the tanker market has been experiencing a very positive momentum and has continued its strong performance so far in 2015. ...
Wednesday, 20 May 15
FOB RICHARDS BAY COAL SWAPS GAINED M-O-M, W-O-W
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q3' 2015 increased month over month and week over week.
The Q3 swap has increas ...
Wednesday, 20 May 15
BUKIT ASAM'S AVERAGE EXPORT PRICE WAS UNDER PRESSURE DURING Q1
COALspot.com: Indonesia’s state owned coal producer saw their profits fall in the first quarter of the year compared to the same period last ...
Wednesday, 20 May 15
IRON ORE PRICES TO REMAIN WEAK ON LOW DEMAND, HIGH OUTPUT - FITCH
Iron ore prices will stay low for several years due to increasing supply, weak demand growth in China and the slower-than-expected closure of high- ...
Tuesday, 19 May 15
KOMIPO IS SEEKING TOTAL 2.34 MMT OF HCV AND LCV COAL FOR 2015 - 2017
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued an new tender to buy total 2.34 million Metric Tons (MT) of HCV ...
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- Ceylon Electricity Board - Sri Lanka
- Bharathi Cement Corporation - India
- White Energy Company Limited
- Leighton Contractors Pty Ltd - Australia
- Orica Australia Pty. Ltd.
- Orica Mining Services - Indonesia
- Energy Link Ltd, New Zealand
- Deloitte Consulting - India
- Bayan Resources Tbk. - Indonesia
- Coal and Oil Company - UAE
- Kaltim Prima Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Indika Energy - Indonesia
- Borneo Indobara - Indonesia
- Electricity Authority, New Zealand
- Kepco SPC Power Corporation, Philippines
- The Treasury - Australian Government
- Kobexindo Tractors - Indoneisa
- Riau Bara Harum - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Miang Besar Coal Terminal - Indonesia
- Central Electricity Authority - India
- Kartika Selabumi Mining - Indonesia
- Formosa Plastics Group - Taiwan
- Electricity Generating Authority of Thailand
- Kohat Cement Company Ltd. - Pakistan
- Medco Energi Mining Internasional
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Coal Blending Company Limited - Australia
- Rashtriya Ispat Nigam Limited - India
- Indogreen Group - Indonesia
- New Zealand Coal & Carbon
- Power Finance Corporation Ltd., India
- Independent Power Producers Association of India
- Toyota Tsusho Corporation, Japan
- IHS Mccloskey Coal Group - USA
- Antam Resourcindo - Indonesia
- Planning Commission, India
- Kapuas Tunggal Persada - Indonesia
- Tata Chemicals Ltd - India
- Mercator Lines Limited - India
- PNOC Exploration Corporation - Philippines
- Coalindo Energy - Indonesia
- VISA Power Limited - India
- Eastern Coal Council - USA
- South Luzon Thermal Energy Corporation
- Chamber of Mines of South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GMR Energy Limited - India
- Samtan Co., Ltd - South Korea
- Sree Jayajothi Cements Limited - India
- Cement Manufacturers Association - India
- Attock Cement Pakistan Limited
- Pipit Mutiara Jaya. PT, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Parry Sugars Refinery, India
- Siam City Cement PLC, Thailand
- Bhushan Steel Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Sidhee Cement - India
- Simpson Spence & Young - Indonesia
- Thiess Contractors Indonesia
- Sindya Power Generating Company Private Ltd
- Ministry of Transport, Egypt
- Directorate Of Revenue Intelligence - India
- Lanco Infratech Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indonesian Coal Mining Association
- Trasteel International SA, Italy
- Petrochimia International Co. Ltd.- Taiwan
- The State Trading Corporation of India Ltd
- Commonwealth Bank - Australia
- Timah Investasi Mineral - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Bhatia International Limited - India
- Globalindo Alam Lestari - Indonesia
- Thai Mozambique Logistica
- Grasim Industreis Ltd - India
- Ind-Barath Power Infra Limited - India
- Minerals Council of Australia
- Wilmar Investment Holdings
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vedanta Resources Plc - India
- Latin American Coal - Colombia
- SN Aboitiz Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Indian Energy Exchange, India
- Sojitz Corporation - Japan
- Heidelberg Cement - Germany
- Madhucon Powers Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Economic Council, Georgia
- Asmin Koalindo Tuhup - Indonesia
- Essar Steel Hazira Ltd - India
- Savvy Resources Ltd - HongKong
- Carbofer General Trading SA - India
- GAC Shipping (India) Pvt Ltd
- SMG Consultants - Indonesia
- Aditya Birla Group - India
- Bangladesh Power Developement Board
- Mercuria Energy - Indonesia
- Videocon Industries ltd - India
- Larsen & Toubro Limited - India
- Mintek Dendrill Indonesia
- Bulk Trading Sa - Switzerland
- LBH Netherlands Bv - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Mjunction Services Limited - India
- Goldman Sachs - Singapore
- ICICI Bank Limited - India
- Marubeni Corporation - India
- Indian Oil Corporation Limited
- Manunggal Multi Energi - Indonesia
- Uttam Galva Steels Limited - India
- India Bulls Power Limited - India
- San Jose City I Power Corp, Philippines
- Interocean Group of Companies - India
- Xindia Steels Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Therma Luzon, Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Energy Development Corp, Philippines
- Altura Mining Limited, Indonesia
- Malabar Cements Ltd - India
- Petron Corporation, Philippines
- London Commodity Brokers - England
- Coastal Gujarat Power Limited - India
- Vizag Seaport Private Limited - India
- Jindal Steel & Power Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Oldendorff Carriers - Singapore
- Ministry of Finance - Indonesia
- European Bulk Services B.V. - Netherlands
- Star Paper Mills Limited - India
- Ambuja Cements Ltd - India
- PTC India Limited - India
- Anglo American - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Chettinad Cement Corporation Ltd - India
- Karaikal Port Pvt Ltd - India
- Sical Logistics Limited - India
- Bukit Baiduri Energy - Indonesia
- Africa Commodities Group - South Africa
- Jaiprakash Power Ventures ltd
- Siam City Cement - Thailand
- SMC Global Power, Philippines
- Sakthi Sugars Limited - India
- Salva Resources Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Port Waratah Coal Services - Australia
- Eastern Energy - Thailand
- Dalmia Cement Bharat India
- IEA Clean Coal Centre - UK
- Metalloyd Limited - United Kingdom
- Central Java Power - Indonesia
- Maheswari Brothers Coal Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Krishnapatnam Port Company Ltd. - India
- Meenaskhi Energy Private Limited - India
- Romanian Commodities Exchange
- Wood Mackenzie - Singapore
- Meralco Power Generation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Kumho Petrochemical, South Korea
- Posco Energy - South Korea
- McConnell Dowell - Australia
- Standard Chartered Bank - UAE
- PetroVietnam Power Coal Import and Supply Company
- Straits Asia Resources Limited - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Electricity Regulatory Commission - India
- Holcim Trading Pte Ltd - Singapore
- Sinarmas Energy and Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- Parliament of New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Renaissance Capital - South Africa
- PowerSource Philippines DevCo
- Intertek Mineral Services - Indonesia
- TeaM Sual Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Ministry of Mines - Canada
- Global Green Power PLC Corporation, Philippines
- Edison Trading Spa - Italy
- Global Business Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Bhoruka Overseas - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Georgia Ports Authority, United States
- Jorong Barutama Greston.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- Australian Coal Association
- Merrill Lynch Commodities Europe
- CNBM International Corporation - China
- Tamil Nadu electricity Board
- Baramulti Group, Indonesia
- Agrawal Coal Company - India
- MS Steel International - UAE
- GVK Power & Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Australian Commodity Traders Exchange
- Singapore Mercantile Exchange
- ASAPP Information Group - India
- Makarim & Taira - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Iligan Light & Power Inc, Philippines
- Semirara Mining Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- The University of Queensland
- Rio Tinto Coal - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Barasentosa Lestari - Indonesia
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