Tuesday, July 14, 2015

ARP: the global coal market oversupply and stagnant – Banker


             In the first half of the international steam coal market was filled with the fuel, and prices fluctuated around low levels. On the global outlook for the sector affected by the high oversupply and slowing Asian economies – According to information from the IDA.

 
 

The report Katowice branch of the Industrial Development Agency (ARP), which, among others, monitors performance of the industry in the country and collects data from the world indicates that international coal market is expected to change the trend. But while until recently the increase in demand for coal affected by such factors. Stimuli seasonal, now the market is not saturated even stimulate such factors.


 

ARP analyzing the price trends indicates that prices in the European terminals ARA (ie Amsterdam – Rotterdam – Antwerp) and in the terminal Richards Bay in South Africa from the end of June oscillated below the critical level of $ 60 per ton (coal with calorific value of 6,000 kcal / kg). Price increases due to the seasonal increase in demand for energy, among others, in South Africa, Vietnam or Pakistan recorded only Australian ports – to the level of 62.5 dollar per tonne.
 

Import of coal permanently reduce China – defining trends in the global market for this fuel. This is the result, among others, political action to reduce coal imports there of poor quality, emphasis on increased consumption of energy from clean sources large enough ability of Chinese hydroelectric power plant, as well as the competitiveness of the Chinese raw material (at a low cost of internal transport due to low oil prices).

 

Prices in the Chinese port of Qinhuangdao in early June (66.4 US dollars per ton of coal 5,500 kcal / kg) were by approx. 20 percent. lower than at the beginning of the year. IDA brings to Reuters calculations, which show that in May of 2015. Coal imports in China – 14.25 million tonnes – was over 40 percent. lower than a year earlier (at that time in Japan imports also fell by 15 per cent., and in South Korea by 10.5 percent.). According to data from the Chinese customs administration of the total imports in the first five months of 2015. There reached 83.26 million tons and was over 38 percent. lower than in the previous. year.

 

The report cites ARP Australian analysts who believe that prices in global markets in the next two years will remain at relatively low levels due to the high oversupply and shift production towards cleaner energy sources. Australian observers also believe, among others, considered unlikely to impossible to compensate rustic production costs (already reduced by the producers practically to a minimum) increasing production.

 

ARP quoted by some analysts expect that the impulse for the markets will a flowing from Indonesia announced to raise the current generating capacity of 47 GW to 35 GW of new capacity over the next five years (of which 20 GW of coal-fired power plants). As a result, the current level of coal exports from Indonesia (approx. 360 million tons annually) should fall by 140 million tonnes – which would correspond to reduced imports in China.
 

This mechanism could therefore balance the market. Other observers, however, point out the increasing coal production in Russia (this year is expected to be 360 ​​million tonnes – 4 million tons more than in 2014.). With falling demand in this country for energy (including as a result of sanctions), increasing the likelihood that there produced the raw material will increase the oversupply in the global market.


 

Although a solution that would avoid this scenario, it would impose sanctions on Russian coal imports into the customs territory of the EU, too big tangle of interests does not allow for the implementation of this solution into force – indicates the ARP. (PAP)

 

MTB / p /

 

PAP Economy

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