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Thursday, 19 November 15
CHINA STEEL PRODUCTION CAPACITY TO PEAK IN 2016 - FITCH RATINGS
 COALspot.com: Fitch Ratings today says that China's steel production capacity is likely to peak in 2016, with capacity elimination over the next five years likely to outpace additions.
In the Q&A below, Hong Kong-based Laura Zhai and Shanghai-based Charles Li of Fitch's Industrial Team, discuss the factors driving their forecasts for China's steel production, exports and consumption.
Q. Chinese steel production capacity continues to increase despite weak demand; when will capacity peak?
Fitch expects Chinese steel production capacity to increase to about 1.17 billion tonnes in 2015 from 1.15 billion in 2014. The increase in 2015 includes about 30 million tonnes of new capacity, which is partly offset by estimated capacity shutdown of 10 million tonnes. Fitch expects annual new capacity of around 16 million tonnes to be added in 2016 and 2017, although this will be offset by shutdowns of plants with total capacity of 75 million-85 million tonnes over the next five years. This will result in capacity peaking in 2016.
Fitch believes that future capacity elimination in China will mainly be driven by market forces rather regulations. Most of the regulatory measures implemented have already forced out smaller players and the plants that remain in operation are larger in comparison and comply with existing policies. Stricter environment standards could also cause financially weak steel producers to shut down because they will not be able to afford the required investments.
Q. China's apparent steel consumption declined in 2014 for the first time in 20 years, and the decrease has extended into 2015. What is Fitch's expectation for steel consumption for 2016 and after?
The decline in China's apparent steel consumption (sum of production and imports, less exports) was mostly due to slower fixed-asset investment (FAI) growth and de-stocking in the steel industry.
China's FAI rose by 10.2% in 10M15, slower than the 15.9% in 10M14, due to deceleration in activity in the manufacturing and property sectors, which accounted for 33% and 23%, respectively of FAI in China in 10M15. The slowdown in construction activity led to a collapse in steel prices. At the same time, steelmakers stepped up sales of their stocks. De-stocking is not captured in apparent consumption, contributing to an understatement of the apparent consumption figure.
Fitch expects FAI growth to pick up slightly in 2Q-3Q16, driven by real-estate construction activities, before reverting to a lower level of normalised growth 12-18 months later. Fitch believes that Chinese apparent consumption of steel will remain flat in the next few years now that de-stocking has ended, at about 760 million tonnes a year. Any substantial negative or positive surprises in growth rates are likely to be driven by swings in real-estate construction activities.
Q. What is Fitch's expectation for Chinese steel exports in the long term?
Exports of steel reached 93.8 million tonnes in 2014, but are likely to return to around 70 million-80 million tonnes a year in the long term. China's exports comprise product sales overseas and the transfer of production capacity overseas, which is known as capacity export in China, to alleviate overcapacity in China.
In the short term, Fitch expects Chinese steel producers to continue to enjoy cost advantages stemming from further depreciation in the Chinese yuan and lower material prices, which will help drive exports.
Over the long term, exports will be mainly driven by China's One Belt One Road plan, where Chinese funding for the construction of a network of transport, energy, and telecommunications infrastructure extending across Asia to Europe and East Africa will create demand for either Chinese steel products or Chinese-constructed production capacities abroad, as a means to alleviate current overcapacity issues in China. The implementation of this policy, though, will depend on domestic government funding and more concrete policy guidelines.
Q. What are the key challenges for Chinese steel producers amid oversupply and slack demand in the market?
Fitch believes that Chinese producers will need to invest in R&D to facilitate manufacturing of higher-value-added products. They will also be faced with more stringent environmental regulations, such as lower limits on sulphur dioxide emission (a major by-product of steel making). Meeting these new standards would require substantial investment with no significant benefit to EBITDA, which may reduce profitability for some steel manufacturers.
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Tuesday, 24 November 15
COAL PRICES SET TO REMAIN UNDER PRESSURE UNTIL 2016 DUE TO OVER SUPPLY GLUT; H1 '16 COAL SWAPS DOWN 13% M-M
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2016 delivery slid $5 per ton (12.05%) month over month to US$ 36.50 per ton. The s ...
Monday, 23 November 15
NEGATIVE 2016 OUTLOOK FOR WESTERN EUROPEAN STEEL - SAYS FITCH RATINGS
COALspot.com: European steel in 2016 are both negative for the sector and for issuer ratings.
This reflects our expectation that import levels ...
Monday, 23 November 15
DRY BULK MARKET: NET FLEET GROWTH IS SLOWING DOWN, AS SHIP OWNERS ARE LOOKING FOR WAYS TO ALLEVIATING MARKET MELTDOWN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has been in “meltdown” mode for a few weeks now, unable to find support and avoid the fall in historical lows. As s ...
Monday, 23 November 15
CS50 COAL INDEX CLOSED AT $40.27 PER TON; FELL 0.15% FROM LAST WEEK
COALspot.com: The 5700 GAR CS (i) coal index fell by US cents 3 per ton week over week on 20 November 2015. CS 57 (5700 GAR coal) index closed at U ...
Monday, 23 November 15
CFR SOUTH CHINA COAL SWAPS FALL FURTHER ON LOW DEMAND
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery declined US$ 6.75 (13.99%) per ton month over month.
A commodity swa ...
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- Parry Sugars Refinery, India
- McConnell Dowell - Australia
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- Essar Steel Hazira Ltd - India
- Toyota Tsusho Corporation, Japan
- Meenaskhi Energy Private Limited - India
- Tamil Nadu electricity Board
- Grasim Industreis Ltd - India
- Borneo Indobara - Indonesia
- Africa Commodities Group - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
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- Indonesian Coal Mining Association
- Aboitiz Power Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Sindya Power Generating Company Private Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Pendopo Energi Batubara - Indonesia
- Marubeni Corporation - India
- Malabar Cements Ltd - India
- Mercuria Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Medco Energi Mining Internasional
- Bulk Trading Sa - Switzerland
- PetroVietnam Power Coal Import and Supply Company
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Wood Mackenzie - Singapore
- Coal and Oil Company - UAE
- Chamber of Mines of South Africa
- Indika Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Mineral Development Corp Ltd - India
- Edison Trading Spa - Italy
- Jindal Steel & Power Ltd - India
- Orica Mining Services - Indonesia
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- Latin American Coal - Colombia
- SMG Consultants - Indonesia
- Bangladesh Power Developement Board
- Bukit Makmur.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- CNBM International Corporation - China
- Star Paper Mills Limited - India
- Ceylon Electricity Board - Sri Lanka
- Energy Development Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Global Coal Blending Company Limited - Australia
- European Bulk Services B.V. - Netherlands
- New Zealand Coal & Carbon
- Bhushan Steel Limited - India
- Thiess Contractors Indonesia
- Kobexindo Tractors - Indoneisa
- Ambuja Cements Ltd - India
- Sakthi Sugars Limited - India
- Heidelberg Cement - Germany
- Indian Oil Corporation Limited
- Billiton Holdings Pty Ltd - Australia
- Kalimantan Lumbung Energi - Indonesia
- Energy Link Ltd, New Zealand
- Therma Luzon, Inc, Philippines
- Banpu Public Company Limited - Thailand
- Semirara Mining Corp, Philippines
- Siam City Cement - Thailand
- GMR Energy Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Intertek Mineral Services - Indonesia
- Romanian Commodities Exchange
- Leighton Contractors Pty Ltd - Australia
- Petron Corporation, Philippines
- The State Trading Corporation of India Ltd
- The Treasury - Australian Government
- Timah Investasi Mineral - Indoneisa
- PowerSource Philippines DevCo
- Wilmar Investment Holdings
- Siam City Cement PLC, Thailand
- Sinarmas Energy and Mining - Indonesia
- SMC Global Power, Philippines
- South Luzon Thermal Energy Corporation
- Sical Logistics Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Kideco Jaya Agung - Indonesia
- Global Business Power Corporation, Philippines
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- Vedanta Resources Plc - India
- India Bulls Power Limited - India
- GVK Power & Infra Limited - India
- London Commodity Brokers - England
- Petrochimia International Co. Ltd.- Taiwan
- ASAPP Information Group - India
- SN Aboitiz Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Globalindo Alam Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Kepco SPC Power Corporation, Philippines
- Videocon Industries ltd - India
- Eastern Energy - Thailand
- CIMB Investment Bank - Malaysia
- Manunggal Multi Energi - Indonesia
- Xindia Steels Limited - India
- Deloitte Consulting - India
- Coastal Gujarat Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Agrawal Coal Company - India
- Salva Resources Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Global Green Power PLC Corporation, Philippines
- Baramulti Group, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Parliament of New Zealand
- Gujarat Sidhee Cement - India
- Ministry of Transport, Egypt
- IHS Mccloskey Coal Group - USA
- Makarim & Taira - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Rio Tinto Coal - Australia
- Thai Mozambique Logistica
- Jorong Barutama Greston.PT - Indonesia
- Aditya Birla Group - India
- Electricity Authority, New Zealand
- Carbofer General Trading SA - India
- Bukit Baiduri Energy - Indonesia
- Larsen & Toubro Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Ind-Barath Power Infra Limited - India
- Central Java Power - Indonesia
- Trasteel International SA, Italy
- Antam Resourcindo - Indonesia
- Ministry of Mines - Canada
- Cement Manufacturers Association - India
- Renaissance Capital - South Africa
- Vizag Seaport Private Limited - India
- Standard Chartered Bank - UAE
- Sojitz Corporation - Japan
- Georgia Ports Authority, United States
- Orica Australia Pty. Ltd.
- Gujarat Electricity Regulatory Commission - India
- Price Waterhouse Coopers - Russia
- GAC Shipping (India) Pvt Ltd
- Goldman Sachs - Singapore
- Kapuas Tunggal Persada - Indonesia
- Riau Bara Harum - Indonesia
- Planning Commission, India
- Karaikal Port Pvt Ltd - India
- Indogreen Group - Indonesia
- Altura Mining Limited, Indonesia
- Interocean Group of Companies - India
- Eastern Coal Council - USA
- Electricity Generating Authority of Thailand
- GN Power Mariveles Coal Plant, Philippines
- Asmin Koalindo Tuhup - Indonesia
- White Energy Company Limited
- Sarangani Energy Corporation, Philippines
- Madhucon Powers Ltd - India
- Indian Energy Exchange, India
- Posco Energy - South Korea
- Merrill Lynch Commodities Europe
- Rashtriya Ispat Nigam Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Oldendorff Carriers - Singapore
- Sree Jayajothi Cements Limited - India
- Bhoruka Overseas - Indonesia
- San Jose City I Power Corp, Philippines
- Barasentosa Lestari - Indonesia
- Ministry of Finance - Indonesia
- Singapore Mercantile Exchange
- The University of Queensland
- Minerals Council of Australia
- Australian Commodity Traders Exchange
- Attock Cement Pakistan Limited
- Power Finance Corporation Ltd., India
- Port Waratah Coal Services - Australia
- IEA Clean Coal Centre - UK
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Anglo American - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mjunction Services Limited - India
- Iligan Light & Power Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Tata Chemicals Ltd - India
- Bhatia International Limited - India
- Maheswari Brothers Coal Limited - India
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- Independent Power Producers Association of India
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Kartika Selabumi Mining - Indonesia
- Formosa Plastics Group - Taiwan
- PTC India Limited - India
- Kaltim Prima Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Australian Coal Association
- Commonwealth Bank - Australia
- Neyveli Lignite Corporation Ltd, - India
- Mintek Dendrill Indonesia
- ICICI Bank Limited - India
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Economic Council, Georgia
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- Cigading International Bulk Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Directorate Of Revenue Intelligence - India
- Bayan Resources Tbk. - Indonesia
- Dalmia Cement Bharat India
- VISA Power Limited - India
- Central Electricity Authority - India
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