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China and India compete for strong demand for coal resources, pushing up price expectations
If the two protagonists of China and India are missing, what will the global coking coal market become? “Prices will fall by at least half.†Lin Huijiang, the international manager of Guangxi Wantong Group, recently plans to import coal from South Africa to supplement Vietnam's coal, but suddenly found a large group of Indian competitors. In 2010, the international coal trading volume was around 700 million tons, and China and India accounted for 34%. The continued growth of this figure is almost no doubt – in 2009 this figure was only 27%. Specifically subdivided into coking coal, China and India account for 58% of the world's coking coal demand. “Affected by the Australian floods, the global coking coal supply is tightening.†Zhang Xianfa, deputy director of the transportation department of Yanzhou Coal ( 28.42 , 0.82 , 2.97% ) told reporters that after the winter, the global infrastructure will enter the peak period and the steel mills will fully produce. The international coking coal price will continue to rise in the future imbalance between supply and demand. Australian coking coal accounts for 64% of global coking coal trade, but the flood has caused 35% of the country's coking coal to be paralyzed in production, and even after the floods, the full recovery of production capacity will take several months. If there is no accident, the growth rate of double-digit or more of coking coal imports between China and India will not change. “India’s current strength in the foreign coal industry is not much smaller than that of China, but at least it is not lost to China, and it is mainly concentrated in Australia, Indonesia and Africa, which are close to itself.†Coal expert Huang Teng said that with China’s coking coal With the increase in imports, this area will become the front line for the global energy distribution of China and India. Boiling coking coal prices China's coking coal imports increased by 402% in 2009 to 34.4 million tons, becoming the net importer for the first time; in 2010, coking coal imports increased by 37% to 47.27 million tons. CITIC Securities ( 13.99 , 0.16 , 1.16% ) analyst Luo Zeting said in a report that due to the impact of the Australian floods, the international coking coal contract price in the second quarter is expected to be above $250/ton, while coking coal "2011 annual average price The year-on-year increase is expected to exceed 17%.†Since December last year, the severe weather that lasted for one month has caused the coking coal supply in Australia, Brazil and other countries to be seriously affected, resulting in the explosion of international coking coal prices, and the spot price has exceeded the highest in history. Point $300/ton. At present, Australian coking coal exports to China have soared to US$300-330/ton, up 60-80 US dollars per ton. “International prices have been transmitted back to China. Like the domestic Shanxi Coking Coal Group, the ex-factory price of coking coal has been raised.†Zhang Xianfa said that domestic coking coal demand has been quite strong, and the current East China region has increased by nearly one hundred yuan. The recovery of accumulated water, coal stripping, cleaning and transportation in Australian mines still takes several months. Zhang Xianfa also revealed that the annual coking coal contract of Yancoal has been completed, and the price will not increase in the near future to maintain customer relationship, but there is a price “floating clause†in the contract. If the price of coking coal rises too much, it will be executed. “The price of international coking coal agreement in the second quarter is bound to rise, and may reach around US$260/ton.†Huang Teng predicts that the global increase will not fill the gap in Australia, and the demand for coking coal in Europe, the United States, Japan and South Korea, where the economy is starting to pick up, is The recovery, while China and India, which have been in strong demand for growth, are the thrust of rising coking coal prices in the world. At present, China's coking coal dependence is about 10%. According to the prediction of China Coal Industry Association, from 2011 to 2015, China's coking coal imports were 49 million tons, 52 million tons, 58 million tons, 65 million tons and 75 million tons respectively, which will increase by 53% in five years. In India, the country's coking coal imports increased by 71% in 2004-2008. According to estimates by the Indian coal sector, India will import 82 million tons of coal in the 2010-2011 fiscal year, a 39% increase from 2009. India's coal imports in 2009 were 59 million tons, double the number in 2008. The huge appetite of coal in China and India has caused the international coking coal pricing model to shift from annual pricing to quarterly pricing in 2010, forcing world steel companies to accept higher coking coal prices. Lin Huijiang, for example, BHP Billiton Mitsubishi Corporation (BMA) has reached an agreement with Japanese steel mills recently. The price of high-quality hard coking coal FOB contract in the first quarter of 2011 was US$225/ton, up from US$209/ton FOB price in the fourth quarter of last year. 16 US dollars / ton, an increase of nearly 8%. China and India compete for international coking coal market CITIC Securities estimates that by 2012 India's coal production will reach 605 million tons, demand reached 810 million tons, demand will account for more than 10% of the world. This figure means that the Indian coal gap will reach 205 million tons, an increase of 250% compared to the 2010 gap. “In Indonesia, we have seen more and more Indians.†Xie Shaopeng of Baiying Group confirmed to reporters that Chinese and Indians are the two most important protagonists in the investigation of some coal mine projects in Indonesia. “Indians even want to learn to establish a sovereign fund in China to strengthen investment in global oil and gas and coal resources.†In Australia, Indonesia, the Philippines and other places, India's "global strategy" of coal resources is colliding or intersecting with Chinese coal companies that have traveled here, and India's tentacles have even extended to the United States where China has never been. India’s state-owned coal producer, India’s coal company’s chairman, Badavia, said without hesitation that the company is acquiring coal assets in countries such as the United States, Australia and Indonesia. “There are currently five potential acquisition targets being evaluatedâ€. In the next four years, the Indian coal company is expected to invest 2 billion US dollars to acquire overseas coal assets. In fact, India's coal resources are not scarce, and its output is even ranked among the top three in the world, second only to China and the United States, but India's coal has high ash, low calorific value, and shortage of coking coal resources, which makes the coal industry use coal. Substantial dependence on imports. JPMorgan Chase reminded that Indian steel production is expected to double in the next 10 years, and the demand for coking coal in Asia may lead to increased competition, making long-term supply relatively tight. As an example of the fierce competition between China and India, China’s Meijin Energy ( 15.48 , 0.20 , 1.31% ) and WISCO Group were all acquired by Indian companies in the acquisition of Australian coke companies, Rocklands-Richfield and Riversdale Mining Limited. The strong criticism has forced the acquisition of the two Chinese companies to temporarily stagnate. Huang Teng reminded reporters that Japan, South Korea and Taiwan use blast furnaces of more than 1,500 cubic meters. The coking coal imported from China and India more meets the demand for blast furnaces below 1500 cubic meters. Therefore, there are many cohesive coals imported from China and India. higher. It is estimated that India's coking coal imports are expected to reach 40 million tons in 2011, which further exacerbates the upward pressure on international coking coal prices. “Coke coal prices may be stronger than iron ore in this year.†Lin Huijiang believes that Indian companies have earlier layouts in overseas coking coal industries than domestic companies, such as Mittal and Tata’s self-sufficiency rate has reached more than 30%. And increase year by year. Indian steel management companies even have to build 3 million tons of steel mills in Indonesia in exchange for coking coal resources. Lin Huijiang suggested that Chinese companies cannot always base their resources on importing domestically, "but instead set up factories in different places, jointly hold several companies outside the United Nations, and actively seek stock market trading opportunities and other means."