Beijing Business Today reported that China's coal and electricity companies signed deals for a total of 1.87 billion metric tonnes of coal for 2013, an increase of 55.8% YoY.
Analysts said the surge is due to the liberalization of the coal and electricity prices. Uncertain about the future price of coal, electricity companies are willing to purchase more coal. Coal producers are also willing to sell more coal as they are faced with rising stocks of the commodity.
In December, China's State Council decided to liberalize the prices of coal supplied to power plants in 2013.
Most power generated in China comes from coal-fired plants, which makes power producers heavily exposed to the prices of the commodity. In order to keep electricity tariffs stable, the government has asked coal suppliers for years to sell to power firms at contracted prices, which are far below market rates.
Source - Beijing Business Today
Dry bulk panamax market heavily oversupplied and unlikely to find support in 2013
Despite positive indication for a significant surge of dry bulk demand this year, the oversupply problems of the market, will continue to weigh heavily in terms of freight rates.
The BDI was up by 9 points to 743, with Panamaxes posting an increase of 35 points to 717, which was enough to push the market higher, as all other subsectors were mostly unchanged.
According to a recent note from analysts Commodore Research & Consultancy, "Chinese demand for imported thermal coal has started the week at an extremely robust level and is poised to stay strong during the remainder of this week. 8 vessels were chartered to haul thermal coal cargoes to China on Monday. This was a huge amount for a single day's worth of chartering activity.
During times of moderate demand, an average of 3 vessels is normally chartered to haul thermal coal cargoes to China each day. Demand is poised to stay robust throughout this week and into next week due to low Chinese coal port stockpiles and intensifying winter electricity demand. Coal stockpiles at Qinhuangdao have fallen to 6.1 million tonne. This is well below the crucial 7mt level that official strive to maintain at all Coal stockpiles at Qinhuangdao times.
According to Commodore, panamax rates aren't expected to find significant support in the near term.
It concludes that "We continue to anticipate that new building deliveries will be very high this month. Dry bulk fleet growth traditionally surges every January, as owners normally delay a large amount of December deliveries to be delivered one month later in January. Delaying December deliveries allow owners to receive vessels that will be viewed as being a year younger.”
Source - www.hellenicshippingnews.com
China's coal imports hit record high
China's coal imports jumped to a record of nearly 30 million tonnes in December, driving full-year imports to a high of over 230 million tonnes, as buyers flocked to cheap overseas supplies as they restock. Shipments surged to 29.0 million tonnes in December, up 36.6 percent from year ago and marking the third consecutive monthly rise as traders boosted steam coal supplies over the winter and as steel mills with low inventory stepped up coking coal purchases on a brighter economic outlook.
Total coal imports for 2012 hit 234.3 million tonnes, jumping 28.7 percent from a year earlier, official customs data showed on Monday. Indonesia again took the top spot as the largest supplier to China in 2012. Shipments for the year from Russia and Colombia nearly doubled from 2011, while imports from the United States, Canada and Australia all jumped over 80 percent.
"Weaker regional prices in early November has seen the arbitrage for imported coal re-emerge, so that brought more Chinese traders to the market," said a Shanghai-based coal trader. "The jump in coking coal imports was also helped by restocking activities by steel mills. Considering the fall in coal stocks at utilities and harsh weather in December, imports will likely stay robust in January."
Combined coal stocks held by China's six power generation companies in eastern and southern China stood at 14.65 million tonnes in the week to January 17th. The stocks represent around 20.5 days of consumption, compared to an average 22 days in late December.
The harshest winter in three decades has boosted thermal coal consumption, with the utilities having consumed a combined 5.012 million tonnes of coal last week, up 2.0 percent from the preceding week. Coking coal imports stood at 7.58 million tonnes in December, up 51.4 percent year on year and bringing full year imports to 53.6 million tonnes. Total exports for the year fell nearly a quarter from year ago to 14.7 million tonnes.