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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, 08 May 15
COAL PRODUCTION IN U.S. UP 3.2% THIS PAST WEEK - EIA
COALspot.com – United States the second largest coal producer in the world has produced approximately totaled an estimated 17.4 million short ...
Wednesday, 06 May 15
COMBINATION OF HOLIDAYS AND A SHAKY MARKET PUT ADDITIONAL PRESSURE ON RATES
COALspot.com: The combination of holidays and a shaky market is always a recipe for additional pressure on rates and last week was no exception. Wi ...
Wednesday, 06 May 15
SHIPPING MARKET INSIGHT - GEORGE ILIOPOULOS
The first four months of 2015 are now behind us and they make up for a decent amount of time to look back and assess how the year is evolving so fa ...
Tuesday, 05 May 15
MIFA BERSAUDARA UNIT OF ABM INVESTAMA STARTS OPERATING $200M COAL MINE IN ACEH
Reswara Minergi Hartama, a coal mining unit of coal miner ABM Investama known as known as Reswara, inaugurated a $200 million integrated coal minin ...
Tuesday, 05 May 15
FREIGHT DERIVATIVE VOLUMES REACHED TOTALED 14,154 CONTRACTS IN APRIL - SGX
COALspot.com: “Our unique suite of freight and bulk commodity products provides market participants with a wide range of trading strategies a ...
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- Electricity Authority, New Zealand
- Australian Coal Association
- Eastern Energy - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Global Business Power Corporation, Philippines
- Makarim & Taira - Indonesia
- SN Aboitiz Power Inc, Philippines
- Cement Manufacturers Association - India
- Planning Commission, India
- Commonwealth Bank - Australia
- Attock Cement Pakistan Limited
- Tamil Nadu electricity Board
- Maheswari Brothers Coal Limited - India
- Sarangani Energy Corporation, Philippines
- Romanian Commodities Exchange
- TeaM Sual Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Posco Energy - South Korea
- PowerSource Philippines DevCo
- Mercuria Energy - Indonesia
- Semirara Mining Corp, Philippines
- Uttam Galva Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Marubeni Corporation - India
- OPG Power Generation Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Power Finance Corporation Ltd., India
- Star Paper Mills Limited - India
- SMC Global Power, Philippines
- Kapuas Tunggal Persada - Indonesia
- Interocean Group of Companies - India
- Global Coal Blending Company Limited - Australia
- Indo Tambangraya Megah - Indonesia
- Vizag Seaport Private Limited - India
- Bayan Resources Tbk. - Indonesia
- Renaissance Capital - South Africa
- Economic Council, Georgia
- Georgia Ports Authority, United States
- Grasim Industreis Ltd - India
- Kartika Selabumi Mining - Indonesia
- Bukit Makmur.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- VISA Power Limited - India
- Thiess Contractors Indonesia
- McConnell Dowell - Australia
- GAC Shipping (India) Pvt Ltd
- Agrawal Coal Company - India
- Riau Bara Harum - Indonesia
- The Treasury - Australian Government
- Port Waratah Coal Services - Australia
- Indian Energy Exchange, India
- Mercator Lines Limited - India
- Africa Commodities Group - South Africa
- Siam City Cement PLC, Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Energy Development Corp, Philippines
- Trasteel International SA, Italy
- GN Power Mariveles Coal Plant, Philippines
- Deloitte Consulting - India
- Bulk Trading Sa - Switzerland
- Krishnapatnam Port Company Ltd. - India
- Essar Steel Hazira Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Minerals Council of Australia
- Bhatia International Limited - India
- Bukit Baiduri Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Mintek Dendrill Indonesia
- Ceylon Electricity Board - Sri Lanka
- Aditya Birla Group - India
- Kideco Jaya Agung - Indonesia
- Simpson Spence & Young - Indonesia
- The University of Queensland
- South Luzon Thermal Energy Corporation
- Toyota Tsusho Corporation, Japan
- Medco Energi Mining Internasional
- Billiton Holdings Pty Ltd - Australia
- Ministry of Mines - Canada
- Madhucon Powers Ltd - India
- Orica Australia Pty. Ltd.
- Bangladesh Power Developement Board
- Bukit Asam (Persero) Tbk - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Sical Logistics Limited - India
- Ministry of Transport, Egypt
- Ambuja Cements Ltd - India
- Chamber of Mines of South Africa
- Meralco Power Generation, Philippines
- Independent Power Producers Association of India
- Ministry of Finance - Indonesia
- Jindal Steel & Power Ltd - India
- Eastern Coal Council - USA
- ICICI Bank Limited - India
- Antam Resourcindo - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Kumho Petrochemical, South Korea
- White Energy Company Limited
- Semirara Mining and Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Heidelberg Cement - Germany
- Salva Resources Pvt Ltd - India
- The State Trading Corporation of India Ltd
- MS Steel International - UAE
- PetroVietnam Power Coal Import and Supply Company
- Bhoruka Overseas - Indonesia
- Sakthi Sugars Limited - India
- Therma Luzon, Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Carbofer General Trading SA - India
- Price Waterhouse Coopers - Russia
- Binh Thuan Hamico - Vietnam
- SMG Consultants - Indonesia
- Gujarat Sidhee Cement - India
- Global Green Power PLC Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Formosa Plastics Group - Taiwan
- Tata Chemicals Ltd - India
- Globalindo Alam Lestari - Indonesia
- International Coal Ventures Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Orica Mining Services - Indonesia
- Indonesian Coal Mining Association
- Bhushan Steel Limited - India
- Karaikal Port Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Wilmar Investment Holdings
- Standard Chartered Bank - UAE
- Rashtriya Ispat Nigam Limited - India
- Directorate Of Revenue Intelligence - India
- European Bulk Services B.V. - Netherlands
- Electricity Generating Authority of Thailand
- Rio Tinto Coal - Australia
- Videocon Industries ltd - India
- Sojitz Corporation - Japan
- Lanco Infratech Ltd - India
- ASAPP Information Group - India
- Leighton Contractors Pty Ltd - Australia
- Coalindo Energy - Indonesia
- IEA Clean Coal Centre - UK
- Metalloyd Limited - United Kingdom
- Latin American Coal - Colombia
- Chettinad Cement Corporation Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Meenaskhi Energy Private Limited - India
- Coastal Gujarat Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Goldman Sachs - Singapore
- Miang Besar Coal Terminal - Indonesia
- GMR Energy Limited - India
- New Zealand Coal & Carbon
- Kaltim Prima Coal - Indonesia
- India Bulls Power Limited - India
- IHS Mccloskey Coal Group - USA
- Sindya Power Generating Company Private Ltd
- Oldendorff Carriers - Singapore
- Anglo American - United Kingdom
- Parliament of New Zealand
- Larsen & Toubro Limited - India
- Central Java Power - Indonesia
- Manunggal Multi Energi - Indonesia
- Baramulti Group, Indonesia
- Coal and Oil Company - UAE
- Cigading International Bulk Terminal - Indonesia
- Dalmia Cement Bharat India
- Gujarat Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- Savvy Resources Ltd - HongKong
- Banpu Public Company Limited - Thailand
- Altura Mining Limited, Indonesia
- Edison Trading Spa - Italy
- Kalimantan Lumbung Energi - Indonesia
- Merrill Lynch Commodities Europe
- Indian Oil Corporation Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indogreen Group - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Straits Asia Resources Limited - Singapore
- GVK Power & Infra Limited - India
- Central Electricity Authority - India
- Borneo Indobara - Indonesia
- CIMB Investment Bank - Malaysia
- Energy Link Ltd, New Zealand
- Indika Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Sree Jayajothi Cements Limited - India
- CNBM International Corporation - China
- Samtan Co., Ltd - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- PNOC Exploration Corporation - Philippines
- Petron Corporation, Philippines
- Singapore Mercantile Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Malabar Cements Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mjunction Services Limited - India
- AsiaOL BioFuels Corp., Philippines
- Xindia Steels Limited - India
- London Commodity Brokers - England
- Thai Mozambique Logistica
- Jorong Barutama Greston.PT - Indonesia
- Iligan Light & Power Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- PTC India Limited - India
- Kepco SPC Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- San Jose City I Power Corp, Philippines
- Parry Sugars Refinery, India
- Vedanta Resources Plc - India
- Bharathi Cement Corporation - India
- Pipit Mutiara Jaya. PT, Indonesia
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