Wednesday, March 27, 2013


March 26th AKRR email summary

The news related to longer-term trends in export coal markets in the Pacific was a little light this last two weeks but still interesting in the details. I'll go out on a limb and say it continues to support a rather glum outlook on price and volume for Pacific seaborne coal for the foreseeable future. 

Competitively-priced cargoes of Indonesian thermal coal added to the downward pressure on Chinese spot prices Wednesday, with a Panamax spot cargo of Kalimantan 5,500 kcal/kg NAR coal heard placed into south China at $83/mt CFR basis, market sources said.

Falls in domestic thermal coal prices and a bullish freight market have together made Chinese buyers more restrained in their purchasing behavior for seaborne-traded cargoes. "We don't like booking cargoes far ahead in the current market," said a source at a Shanxi-based trader.


US
Gov. Jay Inslee and Oregon Gov. John Kitzhaber wrote a letter to the White House today asking for a study of the climate-change and air-pollution effects of coal leases on federal lands and export of that coal to Asia.

That could put a new obstacle in the way of a series of shipping terminals proposed for Bellingham, Longview and the Oregon coast intended to send coal to Asia. Environmental agencies are already looking into their potential effects, but the two governors want a study of the broader effects of coal burning.

Australia
Coal shipments from Newcastle port in eastern Australia were steady week on week Monday at 2.39 million mt loaded on to 29 ships as the authorities embarked on a round-the-clock dredging program to increase the depth of the shipping channel after a build-up of silt, said a spokeswoman for the Newcastle Port Corporation.

China
China Thermal Coal Supplies Rise to 32-Week High as Price Slides - Bloomberg
Power-station coal stockpiles at China’s largest port for the fuel rose to the highest level in 32 weeks as prices slid to a three-year low.

Utilities in China, the world’s biggest energy user, cut coal consumption as hydro power generation increased in the first two months, according to Helen Lau, a Hong Kong-based analyst at UOB-Kay Hian Ltd. Stockpiles also rose because the landed cost of imported coal is about 10 yuan to 20 yuan a ton cheaper than domestic supplies, she said. Coal at the Australian port of Newcastle, a benchmark grade for Asia, cost $89.15 a ton as of March 15, according to data from IHS McCloskey.

“Power plants are keen to restock inventories when domestic coal is still at a premium to imports, leading to high inventories,” Lau said. Chinese prices are “close to a bottom” as the country’s power demand is set to pick up in the second quarter, she said.

 
Nice little summary of the large scale high-voltage transmission project. Most experts think the lack of water makes this unfeasible; and the NDRC wonks think it is a bad idea. But still, it's nice to see that someone wrote an article about this series of massive potential projects.


Unrelated but interesting:
I can't decide if this is clever or stupid - and I wonder how much he has sitting idle in Cypriot banks:
John Fredriksen, the richest shipping investor, is spending $2.6 billion on the biggest fleet of fuel-efficient ships in history, betting that record energy costs and a global capacity glut won’t ease any time soon.

What's a desperate coal exec to do about his stock price with articles like this:
Rising Indian coal imports are the knight in shining armour for producers from the Americas through Africa to Asia -- at least that's the impression the industry is keen to give.

Yes, this is for coking coal; but maybe forward markets will develop for steam coa