China’s imports of coal reached 12.55 million tons in September, rising 6.6% from August’s level and resuming an uptrend that has seen the volume of net imports surge 2200% YoY in Q1-Q309 (see Figure 1). China is on course to become a net importer of coal for the first time this year in the face of production constraints resulting from the rationalization of small-scale mines.
After inflows dipped in August, Chinese buyers again took advantage of a decline in international thermal coal prices from mid-August. Since the end of September, domestic spot prices have gained ~11% to RMB645/ton; we expect prices to trend higher in the fourth quarter as domestic demand – particularly from the power sector – picks up at a faster pace. Coal inventory at Qinhuangdao Port (which represents about half of China’s total seaborne coal volumes) is hovering at about 4 million tons, down substantially from a 1H09 average level of 5.4 million tons. The supply-demand dynamics and pricing trends are favorable for leading Chinese producers such as China Shenhua
Energy and China Coal.
Separately, China’s sovereign wealth fund CIC is investing $500 million in SouthGobi Energy Resources, a Canadian company developing coal reserves in southern Mongolia, through a convertible debenture financing arrangement. This follows recent coal-related investments involving Indonesia’s PT Bumi Resources and Canada’s Teck resources.
We see several factors that point to support for domestic prices in the near-term and higher reliance on imports in the long-term: i) recovery in power demand, ii) supply-side constraints, iii) lower port inventories, iv) low bulk freight rates, v) a structural shortage of coking coal, and vi) railway bottlenecks.
Tidak ada komentar:
Posting Komentar