ARRC May 14th Update
The last time the concentration of Earth's main greenhouse gas reached this mark, horses and camels lived in the high Arctic.
Is it time for entrepreneurial Alaskans to start raising camels in the Mat-su Valley? Bactrian or dromedary better suited? I lean Bactrian.
The global thermal coal market will remain oversupplied this decade as dwindling demand for the fuel clashes with rising production, Deutsche Bank said on Thursday.
Thermal coal prices have already dropped around 30 percent since last peaking in 2011 after the nuclear reactor meltdown at Japan's Fukushima power station triggered a boom in coal and gas imports from the world's third biggest economy. Since then, healthy production from coal exporters such as Australia, South Africa and Colombia have clashed with slowing demand from key users in North America, Europe and China, and Deutsche Bank said this trend was set to continue until 2020.
European coal prices need $80 rise for gas to become competitive- Deutsch Bank (Reuters) - Deutsche Bank seemingly contradicts itself by recommending that traders go long coal and short gas. If you are a market-neutral, spread trader, this recommendation is for you. A steady decline in European coal prices that has coincided with a tight gas market means that coal prices would have to rise by almost $80 per tonne in order to restore competitiveness to gas for power generation, Deutsche Bank said on Tuesday.
RIP King Coal? Summary piece in the Diplomat blog, recapping where the market stands after the end of Japan / Australia contract price negotiations as well as other consequences of the commodity market hang-over.
King Coal’ may not have been dethroned, but the industry’s recent challenges has left the region’s producers badly bruised. A slump in prices has seen a spate of mine closures, job cuts and earnings downgrades across the Asia-Pacific as coal miners have belatedly come to grips with the end of the boom. Falling Chinese demand, the impact of the U.S. shale boom and rising production have seen prices halve from their peak levels.
USA
Kinder Morgan Inc. decided not to seek permits at the Port of St. Helens industrial park because of the site's logistics, not because the debate over coal exports from the Pacific Northwest to Asia, said spokesman Allen Fore.
Mitch McConnell plans to introduce legislation that would target the Environmental Protection Agency’s coal mining permit approval process
Senator from Kentucky has ideas on how to create jobs in West Virginia.
AUSTRALIA
Glencore Xstrata will stop work on a planned 35 million tonnes per annum coal export terminal on Australia's Balaclava Island as a result of poor coal market conditions, the company said on Monday. "This decision has been made as a result of the poor current market conditions in the Australian coal industry, excess port capacity in Queensland, specific shipping limitations and concerns about the industry's medium-term outlook," it said in a statement.
SYDNEY—Unions representing workers at Australia's biggest coal-export terminal have threatened imminent industrial action as a row with Port Waratah Coal Services over job security escalates. PWCS, which counts Rio Tinto RIO.LN +0.93% PLC and Glencore Xstrata GLEN.LN +0.92% PLC as users and major shareholders, exports mostly to Japan and China. The terminal handles more than 105 million metric tons of coal annually at its facilities in the city of Newcastle in Australia's New South Wales state.
Petrovietnam to Import Australian Coal to Meet Energy Needs By Vu Trong Khanh - WSJ
Vietnam plans to import coal from Australia to help it meet rapidly growing energy needs that are being driven by economic growth averaging 7% over the past decade. Vietnam, once a major coal exporter, has seen its foreign sales nosedive as supplies are being kept home for domestic use. Exploitation of abundant reserves of offshore natural gas is going slowly, in part due to commercial wrangling, and Vietnam’s first nuclear power plants won’t start generation until at least 2020.
CHINA
Liu Tienan is the highest profile official to be investigated under the new Xi Jinping government anti-corruption campaign. Liu is the first real "tiger" to be caught in the "tigers & flies" campaign.
China moves to reform energy taxes - FT/ Leslie Hook
The tax reforms will shift from volume-based taxes, set years ago and generally very low, to value-based taxes that will fluctuate alongside commodity prices. The new system was implemented for oil and gas late last year, and is expected to be extended to coal and other commodities. . . Details about the coal tax have been scarce, but analysts believe Beijing will follow the oil and gas model and introduce a value-based tax of about 5 per cent on coking and thermal coal. At current thermal coal prices that would equate to a tax increase of about Rmb 20 a tonne, resulting in more than Rmb 60bn of additional taxes per year. . . Analysts say such an increase is likely to be paired with a streamlining of the local taxes on coal miners, which can vary significantly among provinces, to ameliorate the impact on coal miners’ balance sheets.
China introduced a round of reforms in November in which the resources tax for oil and gas moved from volume-based to a value-based tax, set at 5 percent of the value of the oil and gas produced. China National Offshore Oil Corp. in its 2012 annual report said the revised tax policy increased oil production costs by nearly 17 percent per barrel. But those reforms didn't include coal, which is still taxed by volume and accounts for about 70 percent of the country's energy generation . . . In March the government set a target to cap coal consumption to 4 billion tons by 2015. . . While there are no exact details about a possible coal tax, analysts say the government likely would follow the oil and gas model and introduce a value-based tax of about 5 percent on coking and thermal coal.
Global Times reported that Chinese coal companies have seen their profit margins shrink amid sluggish demand and an influx of cheaper coal imports.
Chinese coal miners are likely to cut output more to curb losses after a flood of cheap imports and higher hydro power output hit domestic demand in the world's top producer and consumer of the fuel, miners and traders said. . . Smaller miners with higher costs were first to reduce output as the global coal market struggled to absorb abundant supplies, while bigger producers may be forced to follow suit. As the world's top importer, China's demand influences trade flows and prices worldwide.
China is witnessing another round of coal mine production cuts. Nearly half the coal mines in Ordos, North China's Inner Mongolia Autonomous Region have cut production because coal prices have fallen to a near three-year low, industry insiders said Wednesday.
Some small coal mines in the region have even halted production, and only big ones such as China Shenhua Energy Co are still in operation, media reports said.
Ordos produced 597 million tons of coal in 2012, accounting for over 16 percent of China's total coal production, the 21st Century Business Herald newspaper reported Wednesday.
Coal prices have been falling since the beginning of this year. Currently quality thermal coal is priced at around 650 yuan ($106) per ton, a 20 percent drop compared with the same period last year.
China has ordered production suspended at all coal mines in the southwestern province of Sichuan after a blast on May 11 killed 28 workers. Sichuan produces less than 1% of China's coal but these kinds of disasters are behind the drive to close down smaller mines.