China's Coal Imports Climb
Radio Free Asia

An analysis by Michael Lelyveld
2012-12-31

Great summary article

Philip Andrews-Speed, principal fellow in the East Asia program at the National University of Singapore's Energy Studies Institute

Coal accounts for more than half of China's rail tonnage, but bottlenecks in the system have forced more coal onto waterways and crowded roads, the IEA said.
Under the five-year plan, rail transport of coal is expected to reach 2.6 billion tons by 2015. Some 60 percent of the traffic would come from Shanxi and Shaanxi provinces and Inner Mongolia to coastal centers, the northeast and the south.

Despite increases in rail and domestic transport to coastal ports, imports are still expected for eastern and southern provinces including Jilin, Zhejiang and Guangdong, the report indicated.
Wang Zhanjun, head of the coal association, said at an industry meeting in Shanxi on Dec. 22 that imports are set to continue at "high levels" in 2013, Xinhua reported.

Alaska coal exports dip in 2012: company official 
PLATTS

Has Usibelli's 2012 production numbers per Keith Walters. Discusses Chuitna and Wishbone hill as export projects that are in development.

Coal exporters seen adding 15 pct supply by 2014 -Barclays 

Barclay's analyst Trevor Sikorsky (Europe-based) forecasts increase in coal supply exceeding demand. Regarding China and Asia-Pacific he says "Chinese coal imports are expected to stabilise next year before contracting by 35 million tonnes in 2014 to 100 million tonnes" Also, according to article improved transportation infrastructure in China is expected to bolster the use of domestic coal, thereby reducing the need for imports and healthier Chinese hydroelectric reserves should further help temper coal demand.

Coal Three-Year Low Sees Indonesia Rethink China
Bloomberg

Fitri Wulandari | December 27, 2012

Long, multiple excerpts . . .

...
Chinese coal imports will slow next year and shrink in 2014, according to Barclays Plc. Thermal coal purchases by Malaysia, Thailand and the Philippines will rise to 53 million metric tons in 2014, up from an estimated 51 million this year, according to Wood Mackenzie Ltd., which says more than 70 percent of that will be supplied by Indonesia. The nation’s benchmark price slid to a 34-month low of $81.44 a ton in November, data compiled by Bloomberg show.

Indonesia is counting on its neighbors to help consume a planned 10 percent increase in output and reduce its reliance on Chinese buyers who delayed deliveries this year as domestic stockpiles rose to a record. Southeast Asian power stations are expanding and offering alternative destinations for Indonesia’s exports, according to the nation’s coal mining association.

“Indonesian producers had too much of their coal going into China and have learned a good lesson about the risk of over-relying on the Chinese market,” said Bart Lucarelli, the Bangkok-based managing director of Roleva Energy, a consultant whose clients have included Thailand’s energy ministry. “When market conditions weakened earlier this year, Chinese coal buyers forced Indonesian suppliers to reduce their contracted coal prices by very large amounts.”
...
Record Stockpiles
Coal stockpiles at China’s largest power utilities climbed to a record 94 million tons as of Oct. 19 as slowing economic growth weakened demand for electricity generation, according to the China Coal Transport and Distribution Association. The nation’s economy grew 7.4 percent in the three months ended September, the weakest pace in more than three years, while power output that month fell to the lowest level since May, data from the Beijing-based National Bureau of Statistics show.

Growth in China’s seaborne imports of thermal coal is likely to slow to 2 percent in 2013 compared with 39 percent this year, Barclays Plc predicted in a Dec. 21 report. Shipments will be 145 million tons, compared with 142 million in 2012, then drop to 110 million in 2014 as improved transport links make it easier for the nation to use domestically produced coal, the bank said.

Indonesia plans to produce 366 million tons of the fuel in 2013, up from an estimated 332 million this year, the country’s energy and mineral resources ministry said Oct. 8. Exports may be 292 million tons, compared with 265 million in 2012, the data show.
...
‘Heavyweight’ China
Southeast Asia won’t eclipse China anytime soon, according to Kiah Wei Giam, a Singapore-based analyst at Wood Mackenzie, a UK-based consultant to mining and energy companies. The country, which burns coal for about three-quarters of its electricity output, will boost power consumption 6.5 percent in 2013, the Chinese-language 21st Century Business Herald reported Dec. 6, citing an unidentified official at the National Energy Administration in Beijing.

The nation was the biggest buyer of Indonesian coal in 2011, accounting for 25 percent of shipments of 258 million tons, according to data from Indonesia’s energy and mineral resources ministry. Indonesia is also China’s biggest supplier of thermal coal, providing 57 million tons, or 36 percent, of imports in the first 11 months of this year, data compiled by Bloomberg Industries show.
...
‘Dependable’ BuyersIndonesian producers are shifting their focus to smaller markets in Southeast Asia where customers are considered more reliable, said Supriatna Suhala, the Jakarta-based executive director of the Indonesian Coal Mining Association.

“The Southeast Asian market has high-quality and dependable buyers,” Suhala said. “They’re not after cheaper prices as is the case with some other buyers. They prefer to sign deals with suppliers who can ship on time and deliver good- quality coal.”
Malaysia: imports may reach 29.7 million tons in five years, up 29 percent from this year, and 40 million by 2020 as new power plants start, TNB Fuel Services, a unit of the state utility, Tenaga Nasional Bhd, said in Bali last month. The proportion of lower-quality sub-bituminous coal, the grade typically produced by Indonesia, will increase to 65 percent by 2020 from 45 percent now, Mohamad Shaiful Bahri Hussain, the managing director of TNB Fuel, said at the meeting of buyers and producers.

Vietnam may import 10 million tons of coal by 2015, rising to 60 million by 2020, the Tuoi Tre newspaper reported Jan. 11, citing the Vietnam National Coal-Mineral Industries Group. Vietnam Electricity has started building a 28.5 trillion-dong ($1.4 billion) coal-fired power station in the Mekong Delta province of Tra Vinh as the nation seeks to reduce reliance on hydro power, the government said Dec. 8.

...“We expect Southeast Asian demand to continue inching upward during 2013 and 2014,” Karim Awad, the Bangkok-based head of corporate-finance transactions at AWR Lloyd, an energy and mining adviser, said in an e-mail on Dec. 7. “While it will be difficult to side-step Chinese buyers, suppliers are conscious of managing counterparty risk, recognizing the benefits from customer diversification where possible.”

— With assistance from Widya Utami in Jakarta and Jing Yang in Shanghai

China to end govt intervention in thermal coal market
Reuters
Fayen Wong

Dec 21 (Reuters) - China, the world's top coal importer, said it would scrap a regulation to cap spot thermal coal prices and would no longer intervene in annual coal price negotiations between sellers and utilities starting in 2013.

China's coal market has stabilised, and the sector no longer needs such rules, the National Development and Reform Commission (NDRC) said in a statement on its website on Friday, adding that the move was aimed at reforming the coal industry.

Coal price contracts currently are signed every year at an annual meeting organised by the NDRC and the industry association. Coal suppliers have to sell certain quantities to power companies at prices set far below market rates.

Under this system, power companies have managed to buy around half their annual coal consumption at preferential rates.

Contract prices for 2012 were set at around 599 yuan ($96.14) per tonne, and the government introduced a price ceiling on spot coal prices in late 2011 of 800 yuan ($130).
In the international market, Australia's Newcastle spot thermal coal index has fallen around 30 percent this year to about $84 this week.

Coal producer sources said they would continue to ink long-term contracts with power companies but that, instead of a headline price for the whole year, the terms would be adjusted on a more regular basis to better reflect market conditions.

The end of government intervention is not bad news for power companies such as Huaneng Power International and Datang Power , analysts have said, given that China's coal market is likely to be well supplied over the next few years.

Coal producers said they have had preliminary talks with buyers on volumes for the 2013 term contracts. Some said the volumes would be largely unchanged and that they want to guarantee sales, since the market could again be oversupplied next year.

Traders said the timing of the government's decision suggests Beijing is no longer worried about coal shortages at home, which led to severe price spikes in 2008 and late 2010.

"Production growth has risen over the past few years, but demand growth has slowed. Imports have also risen sharply, and that can easily fill any temporary shortage that might emerge in the future," said a Beijing-based trader.

China's coal imports in the first 11 months of 2012 have jumped nearly 30 percent to 205.5 million tonnes.

Analysts said China's coal imports are expected to rise further in 2013 on the back of weak overseas demand and low international coal prices. ($1 = 6.2302 Chinese yuan) (Editing by Ron Popeski and Jane Baird)

Executive Summary (Chinese/English) of the 1st China  Energy Outlook (中国能源展望)
Energy Research Institute (ERI) of the National Development and Reform Commission (NDRC)
aka (国家发展和改革委员会能源研究所)

One key recommendation relating to coal imports is Recommendation 2 - which is a recommendation that China move away from its insistence upon being self-sufficient in coal.

Recommendation is that China should increase coal imports to increase balance of supply and demand from East Coast and SE with the Western part of country. Under this scenario, authors estimate a potential incremental increase in coal imports of 430MM tonnes (300MM in SE, ie, Guangzhou). This would be under a scenario where coal is kept in the West for use in regional development (huge oversimplification in paraphrasing by me).

China’s Coal Imports Poised to Jump as Coke Export Tax Scrapped (COKING COAL IMPORTS)Bloomberg

Helen Yuan  hyuan@bloomberg.net
Editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

The “silent” removal of a 40 percent tax on China’s coke exports, coming after the World Trade Organization ruled against the practice, will drive up production and boost the nation’s coal imports, analysts said.

Exports of coke, used to make steel in blast furnaces, will jump next year, leading to more demand for the coal used to make the product in coking ovens in China, UOB Kay-Hian Ltd. analyst Helen Lau and researcher Custeel.com’s Mu Wenxin said.

China’s coke exports plunged to about 1 million metric tons this year amid the curbs, from an annual average of 15 million tons between 2000 and 2007. Should exports rebound to that average, demand for coking coal may rise by 20 million tons, benefiting suppliers including Mongolian Mining Corp. (975) and Winsway Coking Coal Holding Ltd. (1733), Lau said.
China didn’t include coke on the official list of export taxes for next year announced this week by the Ministry of Finance.

. . .  The price of coke shipped from China’s Tianjin port may drop to $285 a ton from the current $401, making it affordable for Japanese users, Lau estimated.

CN lands export coal contract

Progressive Railroading

Coalspur Mines Ltd. and CN reached an agreement on a seven-year coal transportation contract for the planned Vista project in Alberta, which has the potential to become one of North America's largest export thermal coal mines. The pact is expected to be executed in first-quarter 2013.

.....Coalspur President and Chief Executive Officer Gill Winckler.

... CN plans on supplying equipment to move Coalspur's coal to West Coast terminals. Coalspur has secured a port allocation agreement with Ridley Terminals Inc. at the Port of Prince Rupert, British Columbia, to export thermal coal from the Vista mine to Asia Pacific Rim countries, including China, Japan and Korea.

Australian Newcastle coal exports surge 19% on week in year-end rush

Platts

Coal Heads for a Comeback
BARRONS

RHIANNON HOYLE

The fuel should benefit from the rising price of natural gas, plus China's huge appetite for energy.

Wood Mackenzie expects China to buy 241 million metric tons of thermal coal from the seaborne, or export, market next year, rising to 267 million in 2014. That compares with 224 million tons this year.

Already there's been a slight uptick in the world thermal-coal market. Since the end of October, benchmark prices have risen around 10%. Widely watched thermal coal from South Africa's Richards Bay trades around $88 a ton.

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Whitehaven Coal eyes China deal
Sky News

Whitehaven Coal has held talks with China's largest coal company, Shenhua Group, about a deal that could help it get embattled entrepreneur Nathan Tinkler off its share register.

Whitehaven confirmed on Wednesday that it had spoken to Shenhua, in discussions believed to revolve around the Chinese group selling its NSW Watermark coal assets in exchange for equity, or alternatively acquiring Whitehaven.

Key Words:
Patersons Securities analyst Matthew Trivett
Whitehaven
Tinkler
Shenhua

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Coal May Pass Oil As World's No. 1 Energy Source By 2017, Study Says
NPR
Bill Chappell

Despite a slowdown in U.S. consumption, coal is poised to replace oil as the world's top energy source — possibly in the next five years, according to the International Energy Agency. The rise will be driven almost entirely by new energy demands in China and India, the IEA says.

"This report sees that trend continuing. In fact, the world will burn around 1.2 billion more tonnes of coal per year by 2017 compared to today – equivalent to the current coal consumption of Russia and the United States combined," says IEA Executive Director Maria van der Hoeven. 

Together, China and India will account for more than 90 percent of the rise in demand for coal over the next five years, according to the IEA.

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Indonesia Thermal Coal Swaps Climb a Fourth Day; China Unchanged

Bloomberg
Fitri Wulandari

The swap for Indonesian sub-bituminous coal with a calorific value of 4,900 kilocalories a kilogram in the first quarter of 2013 rose 35 cents to $63.55 a metric ton on a net- as-received basis yesterday, Ginga said in an e-mail today. The January contract also climbed 35 cents to $63.55 a ton.

Contracts for coal with a heating value of 5,500 kilocalories a kilogram for shipment to SouthChina in the first quarter remained at $84 a ton on a net-as-received basis, the energy broker said. The swap for January held at $83.65.

进口煤优势重现 煤炭进口商豪赌套利2012年12月14日
来源:21世纪经济报道

Story starts with Gao Hong (nervous 忐忑 tante (34)) - he just signed a big contract that involved 20 million loan to buy up a mine's entire output. He has bet the entire company on what happens to prices next year

观望市场 - waiting on the market sidelines
But, other buyers are not signing contracts to import coal because they are waiting for the prices to come down. Right now the quoted prices are too high. One such guy is VP Shen Zhaozhou - he is looking for Africa or Indonesia 5500KCal coal - the 628 RMB price he just got quoted is too high. He thinks that demand in South China and along the coast will increase and that supplies are sufficient, but that if the economy doesn't recovery then life is going to get difficult (中间贸易商的日子肯定不好过)

价格优势重现 - the reappearance of price advantage

Prices in May had 160RMB spread between Australia and Qinhuangdao CIF. For 5500Kcal coal, at 20-30 RMB price difference between guonei and guowai is enough to set users about importing again. Especially power producers who will buy cheaper imported coal and go so far as break orders/ contracts. The last 3 years large users (power plants and steelworks) have gotten usedto importing and if a price discrepancy reappears, they will import more.

This presents a challenge to domestic coal producers and their current set prices won't work;as soon as they go up a little the buyers will import. Coastal power producers are still have a high leve. of enthusiastic about importing coal

At the same time there is information arising that domestic producing regions prices are going to be adjusted upwards. 电煤价格并轨对进口煤市场短期内影响不大。而长期来看，取消了重点电煤之后，进口煤的区位优势和价格优势可能会进一步显现，进口煤的竞争力相对会有所增强。

他解释，由于取消了重点电煤，国内用煤企业对国际市场的关注可能也会增加，未来单独的进口贸易越来越难做，必须要和国外的矿商和国内的终端用户联合起来，才能有效降低风险。

Quotes an analyst name Li Yan who thinks that import markets are going to become more important - more important for large users who will focus more on these markets that will become more competitive. Independently importing will become harder and it will be more important to work with overseas mines and domestic end-users to limit risk.


Special words:
到岸价 - daoanjia (CIF)
李延 - Li Yan coal analyst 中商流通生产力促进中心分析 (DPPC Distribution Promotion and Producitivity Center)
浙江启新煤电集团 - 副总经理 - 沈兆洲 - Shen Zhao Zhou - VP of Zhejiang XXXX
国家能源主管部门 -
按兵不动 = anbingbudong - hold back the troops (wait and see)
套利 - taoli(44) arbitrage

ASIA THERMAL COAL: Low Chinese buying weighs on Newcastle, Indonesian prices

PLATTS
Deepak Kannan, deepak_kannan@platts.com; Stephanie Wilson, stephanie_wilson@platts.com; Reggie Le, newsdesk@platts.com
Edited by Jeremy Lovell, jeremy_lovell@platts.com

"He said last week three Capesize cargoes of Newcastle 5,500 kcal/kg NAR coal were reportedly traded at $75/mt FOB into South Korea, which is willing to pay higher prices than China . . . 

"Combined coal stocks at China's four major Bohai Sea ports stood at 17.189 million mt Sunday, up 5% week-on-week and rising for the seventh week in a row, Qinhuangdao Port data released Monday showed . . . 

"Very few cargoes had been traded out of Indonesia into China so far, according to the source, who said there was still a $4-5/mt gap between bids and offers . . .  

"Platts also assessed the daily price of FOB Kalimantan 4,200 kcal/kg GAR coal for loading in the next 7-45 days at $38.60/mt, unchanged from Monday.

Coal freight rates from Qinhuangdao to South China ports fall slightly

PLATTS
Reggie Le, newsdesk@platts.com
Edited by Haripriya Banerjee, haripriya_banerjee@platts.com

"For vessels with the capacity to carry 20,000-30,000 mt, the freight rate from Qinhuangdao to Zhangjiagang fell to an average of Yuan 32.60/mt ($5.22/mt), down Yuan 0.60/mt week on week, data from the report showed.
For vessels with 40,000-50,000 mt of capacity, the freight rate from Qinhuangdao to Shanghai fell Yuan 0.40/mt week on week to an average of Yuan 26.0/mt.
However, the freight rate for 50,000-60,000 mt capacity vessels transporting coal from Qinhuangdao to Guangzhou edged up Yuan 0.30/mt week on week to Yuan 37.10/mt.

Meanwhile, coal stocks at Qinhuangdao Port stood at 6.62 million mt Wednesday, similar to a week ago, port figures showed. Qinhuangdao Port had 6.78 million mt of coal on December 2, 6.56 million mt on November 25, 6.53 million mt of coal on November 18, 6.07 million mt on November 11, and 5.82 million mt on November 4, Platts has reported previously."

Coal Prices to Stay Low Until China Inventories Fall

For Mongolia, China's too close for comfort

Bloomberg
Charles Hutzler

After years of testy debate, Mongolia broke ground this spring for a railroad that will haul coal across the pebbled Gobi desert to China, but with one costly condition.
Citing national security, the government ordered the rails be laid 1,520 millimeters apart, Mongolia's standard gauge inherited from the Soviets. The width ensures that the rails cannot connect to China's, which are 85 millimeters (about 3 1/2 inches) closer together. So at the border, either the train undercarriages will need to be changed or the coal transferred to trucks, adding costs in delivering the fuel to Mongolia's biggest customer.

In case you were wondering what Qinhuangdao looks like from the air

 
View Larger Map

USTDA AND U.S. DOT SUPPORT THE DEVELOPMENT OF CHINA'S RAILWAYS AND PORTS

The first activity is a technical workshop focused on heavy haul rail development in China. The workshop will be led by DOT's Federal Railroad Administration, in coordination with the Chinese Ministry of Rail (MOR) and the American Rail Working Group, an organization composed of more than 25 companies. Railway transportation plays a key role in China's economic development. Following the rapid development of its passenger rail network, MOR is now making plans for more heavy haul rail in order to improve cargo shipping efficiency and lower operation costs. The United States has the largest heavy haul railroad network in the world, and experienced U.S. firms have cutting-edge technology and products that can assist China in achieving its transportation goals. The Heavy Haul Rail Technical Workshop will mobilize U.S. expertise and resources to foster greater cooperation among private sector entities, government agencies, and industry representatives in both the United States and China.

大秦铁路增量补欠 煤炭压港难以再现

Daqin Railway incremental shipment

The Daqin Railway is moving as much coal as it can even though downstream demand is weak and reserves are at a high level. Is this going to lead to port and generator coal piles to reach capacity? The writer ( doesn't think so.

At the end of October, Taiyuan railroad offices held a meeting and create a plan to increase shipments  1.32 million tonnes / day for the next 60 days. This is an increase from 60 to 65 20 tonnes trains per day. From Dec. 1 -3, the Daqin line moved 1.3 million tonnes per day (average) and increase of 11 tonnes per day or 33 tonnes over the three days. From Dec. 3-6 moved 1.317 million tonnes per day. According to the railroad plan, 37, 20 tonne trains for Qinhuangdao, 3 15 tonne trains, Tangshan 7 15 tonne trains; Guotoujingtan port 10, 20 tonne trains; Caofeidian port 12 20 tonne trains.

October YTD Daqin line moved 348.35  million tonnes of coal; 15.49 million tonnes less than same period last year. 84% of this went to Qinhuangdao and Tangshan (Hebei); the remaining 16% went to Duanjialing, Gaogezhuang, Jixian West Port (Tianjin), Northwest (Dongbei) and into Daqin RR's own lines.


1.1.经济持续、稳步发展，需求保持一定水平
According to media, in October entire society used 399.8 BN KWH of electricity. Total electricity demand for October grew 6.05% vs last Oct, which is 3% faster than September; changed this year's condition of persistently falling behind. Total industrial  295.7 BN KWH of electricty - 5.89% more than same period last year - the fastest increase this year. Out of this, heavy industry used 245.1 BN KWH 5.81% more than last year this is 5.9 percentage points faster than last month's increase. Light industry electrical consumption increase 6.2%; increase started in May.

2.刺激政策会增加煤炭需求
Estimates of new public XXXXXXXXX also policies starting become apparent
Nov and Dec are the winter months, heating season is going to pull on demand; along with the decrease in hydro electricity generation, increase in thermal power,

NRDC in early September began to energetically examine city rail, public roads and transportaiton construction planning projects - local governments also matching them and competitively enlarging the scope of the projects Shanxi Heilongjian Chongqing etc 10 districts in turn announced a combined total exceeding 10TN RMB regional economic stimulus --. Vigorously stimultated steel, cement etc capital construction material demand, raw steel price increased in response and steel production also started to increase. Acc to stats, October steel, nonferrous metals industry production index rose prominently; ferrous metal process industry orders index increased 13.8 percent arriving at 58%. The rapid rebound of cement and steal is causing the demand for coal to recover.

3.煤炭需求增加，港口发运将保持高位
something something - lookking at history the last time there was pressuron the ports was back in the winter of 2008, with the financial crisis, recession and large factories shutting down that coal began to pile up and create pressure.

4.配套港口增多，堆存量能力提高

5.“三西”煤矿没有太大增量。

6.流向沿线京津唐秦沿线电厂的车流保持一定水平