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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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Tuesday, 10 March 15
FOB NEWCASTLE COAL SWAPS HEADING SOUTH
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery declined US$ 0.24 per MT (-0.47%) month over month and US$ 1.52 (-2.93%) we ...
Tuesday, 10 March 15
CFR SOUTH CHINA POWER-STATION COAL SWAPS DECLINE
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery fell US$ 0.42 (-0.74%) per MT month over month and declined US$ 1.00 &nbs ...
Monday, 09 March 15
INDONESIA GREETS INDIA RATE CUT AS GOOD FOR EXPORTS - GLOBEASIA
Indonesian commodity producers and economists have hailed the Indian central bank’s rate cut as good for boosting exports from Southeast Asia ...
Monday, 09 March 15
CHINA'S SUPREME COURT ISSUES NEW JUDICIAL INTERPRETATION ON SHIP ARREST AND JUDICIAL SALE OF SHIPS - GARD
KNOWLEDGE TO ELEVATE
China is not traditionally a popular jurisdiction for ship arrest. However, Members and clients with ships calling at por ...
Monday, 09 March 15
CHINA'S IMPORTS - NEVER MORE IMPORTANT TO SHIPPING? - CLARKSONS
Over the last 15 years China has led maritime forecasters a right old dance. In 2002, rumours that Chinese iron ore imports were about to take off ...
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Tata Chemicals Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Africa Commodities Group - South Africa
- Meenaskhi Energy Private Limited - India
- Indika Energy - Indonesia
- Renaissance Capital - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Makarim & Taira - Indonesia
- Antam Resourcindo - Indonesia
- Power Finance Corporation Ltd., India
- Singapore Mercantile Exchange
- Metalloyd Limited - United Kingdom
- OPG Power Generation Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Global Coal Blending Company Limited - Australia
- Billiton Holdings Pty Ltd - Australia
- Borneo Indobara - Indonesia
- Romanian Commodities Exchange
- Central Java Power - Indonesia
- Wilmar Investment Holdings
- Iligan Light & Power Inc, Philippines
- Parry Sugars Refinery, India
- Posco Energy - South Korea
- Indian Oil Corporation Limited
- Xindia Steels Limited - India
- Riau Bara Harum - Indonesia
- Bayan Resources Tbk. - Indonesia
- Global Business Power Corporation, Philippines
- Bhushan Steel Limited - India
- Binh Thuan Hamico - Vietnam
- Semirara Mining and Power Corporation, Philippines
- Central Electricity Authority - India
- Eastern Energy - Thailand
- Sinarmas Energy and Mining - Indonesia
- Carbofer General Trading SA - India
- Larsen & Toubro Limited - India
- New Zealand Coal & Carbon
- Chamber of Mines of South Africa
- Asmin Koalindo Tuhup - Indonesia
- Grasim Industreis Ltd - India
- GMR Energy Limited - India
- Interocean Group of Companies - India
- The Treasury - Australian Government
- Karaikal Port Pvt Ltd - India
- Deloitte Consulting - India
- SN Aboitiz Power Inc, Philippines
- Tamil Nadu electricity Board
- Barasentosa Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Attock Cement Pakistan Limited
- Kideco Jaya Agung - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- LBH Netherlands Bv - Netherlands
- PTC India Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Simpson Spence & Young - Indonesia
- AsiaOL BioFuels Corp., Philippines
- The University of Queensland
- Australian Coal Association
- Bhatia International Limited - India
- ASAPP Information Group - India
- Mjunction Services Limited - India
- Globalindo Alam Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Energy Development Corp, Philippines
- Banpu Public Company Limited - Thailand
- Manunggal Multi Energi - Indonesia
- Edison Trading Spa - Italy
- SMG Consultants - Indonesia
- GAC Shipping (India) Pvt Ltd
- Coal and Oil Company - UAE
- The State Trading Corporation of India Ltd
- Minerals Council of Australia
- Kartika Selabumi Mining - Indonesia
- Baramulti Group, Indonesia
- Samtan Co., Ltd - South Korea
- Wood Mackenzie - Singapore
- San Jose City I Power Corp, Philippines
- Parliament of New Zealand
- Heidelberg Cement - Germany
- Uttam Galva Steels Limited - India
- Commonwealth Bank - Australia
- Videocon Industries ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Sidhee Cement - India
- Sindya Power Generating Company Private Ltd
- Trasteel International SA, Italy
- Cement Manufacturers Association - India
- Bhoruka Overseas - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Electricity Authority, New Zealand
- Mercuria Energy - Indonesia
- Standard Chartered Bank - UAE
- Intertek Mineral Services - Indonesia
- Goldman Sachs - Singapore
- Oldendorff Carriers - Singapore
- CNBM International Corporation - China
- Bahari Cakrawala Sebuku - Indonesia
- Dalmia Cement Bharat India
- Star Paper Mills Limited - India
- Ceylon Electricity Board - Sri Lanka
- Mercator Lines Limited - India
- India Bulls Power Limited - India
- Sarangani Energy Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- SMC Global Power, Philippines
- Indonesian Coal Mining Association
- TNB Fuel Sdn Bhd - Malaysia
- European Bulk Services B.V. - Netherlands
- Eastern Coal Council - USA
- Directorate Of Revenue Intelligence - India
- Savvy Resources Ltd - HongKong
- Bukit Baiduri Energy - Indonesia
- Planning Commission, India
- Jaiprakash Power Ventures ltd
- Petron Corporation, Philippines
- Indogreen Group - Indonesia
- Energy Link Ltd, New Zealand
- Rio Tinto Coal - Australia
- GN Power Mariveles Coal Plant, Philippines
- Kepco SPC Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Siam City Cement - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Pipit Mutiara Jaya. PT, Indonesia
- Independent Power Producers Association of India
- Kaltim Prima Coal - Indonesia
- TeaM Sual Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Aboitiz Power Corporation - Philippines
- Orica Mining Services - Indonesia
- Altura Mining Limited, Indonesia
- Sakthi Sugars Limited - India
- MS Steel International - UAE
- Formosa Plastics Group - Taiwan
- Medco Energi Mining Internasional
- Australian Commodity Traders Exchange
- Madhucon Powers Ltd - India
- Ministry of Transport, Egypt
- Jindal Steel & Power Ltd - India
- International Coal Ventures Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Anglo American - United Kingdom
- Bharathi Cement Corporation - India
- Latin American Coal - Colombia
- Petrochimia International Co. Ltd.- Taiwan
- Kumho Petrochemical, South Korea
- Electricity Generating Authority of Thailand
- PowerSource Philippines DevCo
- Meralco Power Generation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Leighton Contractors Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Vedanta Resources Plc - India
- Merrill Lynch Commodities Europe
- Kalimantan Lumbung Energi - Indonesia
- GVK Power & Infra Limited - India
- Mintek Dendrill Indonesia
- McConnell Dowell - Australia
- Semirara Mining Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bulk Trading Sa - Switzerland
- PNOC Exploration Corporation - Philippines
- London Commodity Brokers - England
- Pendopo Energi Batubara - Indonesia
- Global Green Power PLC Corporation, Philippines
- ICICI Bank Limited - India
- Bukit Makmur.PT - Indonesia
- Coalindo Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Bangladesh Power Developement Board
- Thai Mozambique Logistica
- Economic Council, Georgia
- Directorate General of MIneral and Coal - Indonesia
- Aditya Birla Group - India
- Maheswari Brothers Coal Limited - India
- Agrawal Coal Company - India
- Kapuas Tunggal Persada - Indonesia
- Essar Steel Hazira Ltd - India
- VISA Power Limited - India
- Vizag Seaport Private Limited - India
- Ambuja Cements Ltd - India
- Ministry of Mines - Canada
- Port Waratah Coal Services - Australia
- Georgia Ports Authority, United States
- IEA Clean Coal Centre - UK
- Jorong Barutama Greston.PT - Indonesia
- Lanco Infratech Ltd - India
- Ministry of Finance - Indonesia
- Sojitz Corporation - Japan
- South Luzon Thermal Energy Corporation
- Malabar Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Marubeni Corporation - India
- Toyota Tsusho Corporation, Japan
- White Energy Company Limited
- Vijayanagar Sugar Pvt Ltd - India
- Thiess Contractors Indonesia
- Gujarat Electricity Regulatory Commission - India
- Kobexindo Tractors - Indoneisa
- Indian Energy Exchange, India
- Price Waterhouse Coopers - Russia
- Holcim Trading Pte Ltd - Singapore
- Siam City Cement PLC, Thailand
- Orica Australia Pty. Ltd.
- Sical Logistics Limited - India
- Straits Asia Resources Limited - Singapore
- CIMB Investment Bank - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
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