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From: AB <asepbuh...@yahoo.com>
Date: Mon, 24 Aug 2009 22:44:36
To: <obrolan-bandar@yahoogroups.com>
Subject: Bls: [ob] Coal Rally Ending as China Shuns Imports, Opens Mines
time for shorting coal stocks?
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Terkirim: Senin, 24 Agustus, 2009 21:24:25
Judul: [ob] Coal Rally Ending as China Shuns Imports, Opens Mines
Aug. 24 (Bloomberg) -- China’s unprecedented appetite for imported coal is
about to be sated, jeopardizing a five-month rally in prices by adding to a
global surplus of the fuel used in power plants from Perth to Chicago.
After importing a record 48 million tons in the first six months, China is
opening mines idled by worker deaths this year following safety upgrades in a
bid to bolster economic growth. Huadian Power International Corp. expects
China’s largest coal- mining province, Shanxi, to boost output by 60 percent in
the second half of the year. That would mean an increase of 150 million metric
tons, almost twice what Germany burns annually.
With little need to buy coal outside the country, prices may tumble, falling as
much as 7 percent in Europe alone, Barclays Capital says. China’s purchases
will plunge 33 percent between June 30 and Dec. 31, based on the median
estimate of four analysts surveyed by Bloomberg.
“In the first half, China really supported the market and put a pretty firm
floor under the thermal-coal price because it was sucking in so many imports,”
said Andrew Harrington, an analyst at Patersons Securities Ltd. in Sydney.
“It’s difficult to be confident that it will continue at such a rate.”
China’s July coal imports fell 13 percent to 13.9 million tons from 16 million
tons in June, a record high, customs data show today. Demand from China, which
uses coal to generate about 80 percent of its electricity, helped ease a global
supply glut that sent U.S. inventories to an 18-year high.
Earnings Hit
A retreat in prices may curb profit at Xstrata Plc, the mining company that is
the biggest shipper of coal for power stations, said Nick Hatch, an analyst at
ING Groep NV in London. Coal was the biggest contributor to operating earnings
last year for Zug, Switzerland-based Xstrata, which boosted output of the
mineral by 11 percent in the first half.
“If China stops importing as much coal, it clearly may mean lower coal prices
in the seaborne market, and that could have an impact on earnings,” said Hatch,
who has a “buy” rating on Xstrata and mining companies Rio Tinto Group and
Anglo American Plc, which also produce coal.
Claire Divver, a spokeswoman for Xstrata, declined to comment. Murray Houston,
the general manager for the company’s South African coal unit, said on Aug. 13
that shipments to China will increase “due to a tight domestic market.”
Six-month supply contracts signed by Chinese buyers in February and March are
expiring and aren’t likely to be renewed at the same amounts as global costs
remain high and as domestic supplies rise, said Huang Teng, the general manager
of Beijing LT Consultant Ltd., a coal consultant based in the capital city.
China Prices
Chinese provinces are accelerating the expansion of coal mines, the China Coal
Transport and Distribution Association said in a statement on its Web site
today. The reopening of small mines in regions including Shanxi will increase
supplies and put pressure on prices. The benchmark price at Qinhuangdao port
was unchanged for a third week at 570 yuan ($83.44) a ton on Aug. 24, according
to the government-backed association.
Coal futures for September delivery at Rotterdam, the benchmark for Europe,
have risen 39 percent to $72 a ton on Aug. 21 from this year’s low of $51.75 on
March 12. Prices rebounded from a 35 percent decline last year, when the
recession slowed demand for electricity. Supplies for delivery in January are
trading 7.6 percent higher than the September contract.
Shrinking Premium
That premium for delivery early next year may shrink because China won’t be
buying as much of the world’s surplus, said Amrita Sen, a commodity analyst at
Barclays Capital in London. Coal delivered at Rotterdam will fall to an average
of $67.20 a ton from $72 in the first six months, she said.
“China has been a key factor in providing a floor to prices and any softening
in Chinese buying will pressure coal,” Sen said. “We will see a softening on a
month-on-month basis in Chinese coal imports.”
Prices of coal shipped from South Africa’s Richard’s Bay, which exports to
Europe and Asia, posted a second straight drop last week. Export prices at the
port fell 10 cents, or 0.2 percent, to an average of $64 a metric ton in the
week ended Aug. 21, according to McCloskey Group Ltd.
An end to the global recession may trim the surplus. China has spent 4 trillion
yuan in a stimulus package designed to support its economy. The world’s
third-largest economy grew 7.9 percent in the second quarter from a year
earlier after expanding at the slowest pace in almost a decade the previous
three months, the statistics bureau said July 16.
‘Extraordinary’ Measures
“Price momentum and volume momentum are so strong, it’s difficult to see why
the price should go down,” said Eugen Weinberg, a senior commodity analyst at
Commerzbank AG in Frankfurt. “Measures to initiate demand are extraordinary.”
Drax Group Plc, the owner of western Europe’s biggest coal- fed power plant,
has no plans to sell its surplus inventories of the fuel because the North
Yorkshire, U.K.-based company expects the value of the commodity to increase.
“We see the coal market rising,” Chief Executive Officer Dorothy Thompson said
on an Aug. 4 conference call with reporters. “It does not make sense to sell
coal now.”
China, the world’s largest producer and consumer of coal, ordered the closure
of almost all 10,000 of the country’s small pits during the Spring Festival in
January, and plans to open some were delayed following a deadly accident in
February.
An explosion at a shaft in Shanxi killed 74 and injured as many as 114 miners,
leading to more intense safety checks. Small mines that account for about 25
percent of China’s production were told to merge and those deemed unsafe were
closed.
Most Deadly
The nation’s coal mines are the most deadly in the world, with 3,770 workers
killed in 2007, more than 100 times the number of fatalities in the U.S., the
second-largest producer, according to government data. Suppliers kept old pits
open, ignoring safety rules and forgoing routine checks, to meet surging demand
from the world’s fastest-growing major economy.
The mine closures and lower prices led to an increase in purchases from
overseas. Imports surged to 16 million tons in June, bringing the first-half
total to 48 million, according to customs data. Thermal-coal futures in
Newcastle, Australia, the world’s largest coal port, have rallied 22 percent
from a low in March to $72.90 a ton on Aug. 21, according to ICE Futures.
While most of the world’s output is used near where it is mined, export prices
are determined by the remaining 16 percent bought and sold internationally,
data from the London-based World Coal Institute show. Thermal coal used in
power plants accounts for 92 percent of global production and 72 percent of
international trade, according to the U.S. Energy Department. The rest is
mostly used in steelmaking.
Safety Checks
After completing safety checks and consolidating small pits that had an annual
capacity of 300,000 tons or less, the province of Shanxi is accelerating the
pace of mine openings to revive the worst-performing provincial economy in
China. The region’s gross domestic product contracted 4.4 percent in the first
half, according to government data.
“The province started approving restructuring plans in April and the process of
consolidating mines has started,” said David Fang, the director of the
international department at the China Coal Transport and Distribution
Association. “Small mines are reopening gradually.”
Of the 10,000 small mines in China, about 2,598 are in Shanxi, according to the
China Daily newspaper. Output in Shanxi may rise to 400 million tons in the
second half from 250 million tons in the first six months, said Chen Jianhua,
the president of Huadian Power, the fourth-largest Hong Kong-listed Chinese
electricity generator. Chen expects Shanxi production to reach 650 million tons
in 2009.
China produced 2.6 billion tons last year, according to the national bureau of
statistics, which compiles data for the government. China is likely to cut
imports by 33 percent in the second half of the year to 32 million tons,
according to four analysts and industry officials in a Bloomberg survey.
Swelling Supplies
Reduced demand may swell global supplies that ballooned during the recession.
Stockpiles held by electricity generators in the U.K., Europe’s biggest
importer of coal, rose 68 percent in May from a year earlier to 17.4 million
tons, the most since at least 1995, government data show.
“Europeans are fully stocked, but not reselling because they fear higher prices
with an Asia-led economic recovery,” said Emmanuel Fages, a Paris-based
commodities analyst at Orbeo. “The cost of carry for storing coal is cheaper
than buying the coal for later delivery.”
U.S. Inventories
In the U.S., inventories jumped 15 percent in the first four months of the
year, compared with a 1.1 percent gain in 2008 and 2.4 percent in 2007,
Department of Energy data show. Stockpiles at the end of last year totaled
199.2 million short tons (180.7 million metric tons), the highest since 1991.
Global supply of internationally traded thermal coal is forecast at 633 million
tons next year, exceeding demand by 14 million tons, according to forecasts
from Macquarie Group Ltd., Australia’s largest investment bank.
The rapid increase in Chinese coal output may upset the calculations of
producers in other countries, including the U.S., where exports rose 38 percent
last year.
St. Louis-based Peabody Energy Corp. sold 16 percent of its coal production
outside the U.S. last year, regulatory filings show. The company’s sales
outside the U.S. climbed 30 percent to 40.3 million tons, outpacing total sales
growth of 8.2 percent to 255.5 million.
“China has been an indirect market” for the U.S., said James M. Rollyson, an
energy analyst at Raymond James Financial Inc. “It’s soaked up capacity from
Australia, so it kind of makes waves into other markets.”
For Related News and Information: Coal prices and data: COAL <GO> Energy data,
prices: NRG <GO> Global economic statistics: STAT <GO> Top energy stories: ETOP
<GO> Top China stories: TOP CH <GO>
===
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