When someone shares with you something of value, you have an obligation to share it with others.
Monday, 8 March 2010
China’s coal demand likely to underpin world prices
China’s appetite for imported coal will provide a solid floor for global prices of the commodity this year, but its imports may miss last year’s peak as price-sensitive buyers shy from recovering prices.
China’s coal demand likely to underpin world prices
But imports this year seen falling below last year’s peak
Reuters 08 March 2010
China’s appetite for imported coal will provide a solid floor for global prices of the commodity this year, but its imports may miss last year’s peak as price-sensitive buyers shy from recovering prices.
China sucked up the excess coal supply in the Asia-Pacific market in 2009 and attracted coal from as far away as Colombia, South Africa and the US as the economic meltdown shrivelled world demand and pulverised prices.
This year, analysts say, China’s coal consumption growth could keep pace with economic growth, forecast at 9.5 per cent by a Reuters poll.
‘The consensus is that China’s coal output is likely to hit 3.3 billion tonnes, from last year’s 3 billion tonnes,’ said Lu Ping, an analyst at China Merchants Securities. ‘Demand is probably going to grow 8 to 9 per cent, in tandem with GDP growth. Imports may fall below 100 million tonnes in 2010, unlikely to stay on last year’s stunning level. It won’t be as easy to buy coal from the international market as last year.’
China’s coal needs are mainly met by its vast domestic production. So a small variance in domestic output can trigger a big swing in imports.
With 2010 output forecast at 3.3 billion tonnes, 9 per cent demand growth would imply a fall of about 10 per cent in net imports, and every one percentage point variance in demand would raise or lower annual imports by about 30 million tonnes.
If 2010 output turns out to be just one per cent higher than that, at 3.333 billion tonnes, net imports could slump as much as 90 per cent from 2009.
Asia’s benchmark thermal coal prices at Australia’s Newcastle port have risen nearly 30 per cent since late August, peaking above US$100 a tonne in January before easing to around US$95, in a buying rush partly triggered by a supply crunch after China trimmed domestic output by closing small mines.
Those closures also contributed to a tenfold leap in China’s net imports of higher grades of coal used in steelmaking.
‘If China keeps doing what it’s doing - it doesn’t have to grow, but just stay where it is - and the US and Western Europe and the rest of the world recover, we think that market is going to be very, very tight for the next two or three years,’ Teck Resources president Don Lindsay told a recent conference call.
China registered record coal imports of 126 million tonnes in 2009, triple the 2008 level, while net imports hit 103 million tonnes, official customs data show. The world’s third-largest economy leapt back to life with economic growth of 10.7 per cent in the last quarter of 2009, bolstering the outlook for coal demand, which has been buoyed by a harsh winter and the appetite of China’s huge steel sector.
Chinese power demand is expected to grow 7 per cent in 2010, similar to 2009, while coal output is set to rise by 5 per cent from nearly 3 billion tonnes in 2009, the government’s National Energy Administration said.
Traders were cautious about this year’s import business.
‘Coal imports will be limited in 2010, simply because whenever the Chinese buy something, the price goes up,’ said a coal trader based in Guangdong province.
A price spike didn’t stop power generators buying in what analysts called ‘desperation’ over winter, however. Coal imports hit a stunning 16 million tonnes in December, up sixfold from a year before, taking 2009’s total imports to more than double the 2008 figure.
The global market has been rocked by the sudden emergence of China as a major buyer of thermal coal, the lower quality grades used for power generation, and a commodity in which it was previously self-sufficient.
‘The seaborne thermal coal trade’s fortunes have become increasingly tied to those of China’s domestic market, effectively linked by China’s large, rising import flows,’ UBS analysts led by Ghee Peh said in a research note.
The bank also raised its forecast for contract thermal coal prices for the Japanese fiscal year starting on April 1, to US$95 a tonne from US$90, citing high demand from China and India and supply-side problems in Australia, Indonesia and South Africa.
2 comments:
China’s coal demand likely to underpin world prices
But imports this year seen falling below last year’s peak
Reuters
08 March 2010
China’s appetite for imported coal will provide a solid floor for global prices of the commodity this year, but its imports may miss last year’s peak as price-sensitive buyers shy from recovering prices.
China sucked up the excess coal supply in the Asia-Pacific market in 2009 and attracted coal from as far away as Colombia, South Africa and the US as the economic meltdown shrivelled world demand and pulverised prices.
This year, analysts say, China’s coal consumption growth could keep pace with economic growth, forecast at 9.5 per cent by a Reuters poll.
‘The consensus is that China’s coal output is likely to hit 3.3 billion tonnes, from last year’s 3 billion tonnes,’ said Lu Ping, an analyst at China Merchants Securities. ‘Demand is probably going to grow 8 to 9 per cent, in tandem with GDP growth. Imports may fall below 100 million tonnes in 2010, unlikely to stay on last year’s stunning level. It won’t be as easy to buy coal from the international market as last year.’
China’s coal needs are mainly met by its vast domestic production. So a small variance in domestic output can trigger a big swing in imports.
With 2010 output forecast at 3.3 billion tonnes, 9 per cent demand growth would imply a fall of about 10 per cent in net imports, and every one percentage point variance in demand would raise or lower annual imports by about 30 million tonnes.
If 2010 output turns out to be just one per cent higher than that, at 3.333 billion tonnes, net imports could slump as much as 90 per cent from 2009.
Asia’s benchmark thermal coal prices at Australia’s Newcastle port have risen nearly 30 per cent since late August, peaking above US$100 a tonne in January before easing to around US$95, in a buying rush partly triggered by a supply crunch after China trimmed domestic output by closing small mines.
Those closures also contributed to a tenfold leap in China’s net imports of higher grades of coal used in steelmaking.
‘If China keeps doing what it’s doing - it doesn’t have to grow, but just stay where it is - and the US and Western Europe and the rest of the world recover, we think that market is going to be very, very tight for the next two or three years,’ Teck Resources president Don Lindsay told a recent conference call.
China registered record coal imports of 126 million tonnes in 2009, triple the 2008 level, while net imports hit 103 million tonnes, official customs data show. The world’s third-largest economy leapt back to life with economic growth of 10.7 per cent in the last quarter of 2009, bolstering the outlook for coal demand, which has been buoyed by a harsh winter and the appetite of China’s huge steel sector.
Chinese power demand is expected to grow 7 per cent in 2010, similar to 2009, while coal output is set to rise by 5 per cent from nearly 3 billion tonnes in 2009, the government’s National Energy Administration said.
Traders were cautious about this year’s import business.
‘Coal imports will be limited in 2010, simply because whenever the Chinese buy something, the price goes up,’ said a coal trader based in Guangdong province.
A price spike didn’t stop power generators buying in what analysts called ‘desperation’ over winter, however. Coal imports hit a stunning 16 million tonnes in December, up sixfold from a year before, taking 2009’s total imports to more than double the 2008 figure.
The global market has been rocked by the sudden emergence of China as a major buyer of thermal coal, the lower quality grades used for power generation, and a commodity in which it was previously self-sufficient.
‘The seaborne thermal coal trade’s fortunes have become increasingly tied to those of China’s domestic market, effectively linked by China’s large, rising import flows,’ UBS analysts led by Ghee Peh said in a research note.
The bank also raised its forecast for contract thermal coal prices for the Japanese fiscal year starting on April 1, to US$95 a tonne from US$90, citing high demand from China and India and supply-side problems in Australia, Indonesia and South Africa.
Post a Comment