Coal Trade Market - The end of the coal era, soon or not yet? Contact : Daejin Lee / [email protected]/ www.JinreSearch.com 2016. 10. updated [Compliance Notice] This report has been produced for general information. Whilst care has been taken in the production of this report, no liability or responsibility can be accepted for any loss incurred in any way whatsoever by any person who may seek to rely on the information contained herein.
Transcript
1. Coal Trade Market - The end of the coal era, soon or not
yet? Contact : Daejin Lee / [email protected] /
www.JinreSearch.com 2016. 10. updated [Compliance Notice] This
report has been produced for general information. Whilst care has
been taken in the production of this report, no liability or
responsibility can be accepted for any loss incurred in any way
whatsoever by any person who may seek to rely on the information
contained herein.
2. Presentation structure 1. Energy Mix What drives energy
demand? Worlds changing energy needs 2. Understanding Coal Trade
Market Rank of coal World coal production & consumption World
coal trade 3. The end of the coal era, soon or not yet? Coal demand
from China, India & Korea Freight Forecast 2 Contact : Daejin
Lee / [email protected] / www.JinreSearch.com
3. Summary Coal has been the main energy source as its
stability and cost competitiveness have made the fossil fuel
irreplaceable for decades. However, driven by concerns about
environment and climate change, world is planning to reduce its
reliance on coal. (1) Renewable energy will increase its share in
the total energy mix as their costs continue to fall due to
advanced technology (2) Gas also grows rapidly supported by strong
supply growth of US shale gas and opening of neo panama canal. Is
this The end of the coal era? Stable and cheap coal is still
expected to play a continued role over coming decades. (1)
Basically, the worlds population is projected to increase and GDP
is expected to more than double by 2035 (2) Developing countries
will contribute more than half of global energy growth in line with
their GDP growth over the same period. (3) Unfortunately,
alternative sources such as Solar, Wind are still relatively
expensive for developing countries and greatly affected by weather
and time (4) Hence, if developing countries are to provide their
rapidly growing population with energy, they may have little option
but to focus on cheap and stable coal as the primary source of
electricity. (5) Developing countries need to imports Gas as LNG
which is too expensive, and hydro power is limited by seasonal and
regional characteristics China, world largest coal producer,
reduces domestic coal production (1) Economy becoming less
dependent on coal intensive sectors: and policies encouraging the
use of alternative fuels. (2) Chinese government is set to cut coal
capacity by 500 MT over the next three to five years. As a result,
there was a pronounced reduction in coal mining in 2016. (3)
Interestingly, recent strong Chinese coal imports mainly comes from
tighter domestic supply (4) Increased foreign imports will last as
long as Chinas planned capacity cuts continues In conclusion, The
end of the coal era is coming but not yet 3 Contact : Daejin Lee /
[email protected] / www.JinreSearch.com
4. Chapter 1 4 Energy Mix Worlds changing energy needs What
drives energy demand? Contact : Daejin Lee / [email protected] /
www.JinreSearch.com
5. Contribution to Global GDP growth 5 The worlds population is
projected to increase by around 1.5 billion people to reach nearly
8.8 billion people by 2035. Over the same period, GDP is expected
to more than double; around one-fifth of that increase comes from
population growth and four-fifths from improvements in productivity
(BP) Source: BP Energy Outlook Contact : Daejin Lee /
[email protected] / www.JinreSearch.com
6. Energy Consumption Outlook by fuel 6 Fossil fuels(Coal,
Natural gas, Oil) are expected to provide around 60% of the
additional energy and to be almost 80% of total energy supplies in
2035. Among them, Gas is the fastest growing fossil fuel supported
by :1) strong supply growth, particularly of US shale gas; 2)
opening of new panama canal which makes freight rate for LNG much
lower; most importantly 3) strengthening environmental policies by
governments Source: BP Energy Outlook 0 1,000 2,000 3,000 4,000
5,000 6,000 1990 1995 2000 2005 2010 2014 2015 2020 2025 2030 2035
Milliontonnesofoilequivalent Coal Natural Gas Oil 0 200 400 600 800
1,000 1,200 1,400 1,600 Renewables Hydro Nuclear Contact : Daejin
Lee / [email protected] / www.JinreSearch.com
7. Energy Consumption growth by Region 7 While China
contributes less than 30% of global energy growth in the final
decade of the Outlook, compared with nearly 60% over the past
decade, India accounts for more than a quarter of the growth in
global energy demand between 2025 and 2035, double its contribution
over the past decade Source: BP Energy Outlook 0 500 1,000 1,500
2,000 2,500 3,000 3,500 4,000 4,500 5,000
Milliontonnesofoilequivalent India China US FSU Europe 0 2,000
4,000 6,000 8,000 10,000 12,000 1990 1995 2000 2005 2010 2014 2015
2020 2025 2030 2035 Milliontonnesofoilequivalent Europe FSU US
China India Contact : Daejin Lee / [email protected] /
www.JinreSearch.com
8. Energy Production Cost - Money talks 8 Recently, renewable
energy power generation (wind, solar and hydro etc) have developed
rapidly. However electricity production from these sources is
largely unstable. Solar and wind power are greatly affected by
weather and time and still relatively expensive. Cheap hydro power
is unfortunately limited by seasonal and regional characteristics.
Hence, stable and cheap coal power will play a continued role over
coming decades Source: Goldman Sachs Energy Source Cost per
Kilowatt-hour (kWh) range Hydro 1-4 cents per kWh Coal 2-6 cents
per kWh Nuclear 2-6 cents per kWh Wind 3-7 cents per kWh Natural
gas 5.5-10 cents per kWh Solar 12-35 cents per kWh (most expensive)
1-4 2-6 2-6 3-7 5.5-10 12-35 0 5 10 15 20 25 30 35 40 Hydro Coal
Nuclear Wind Natural gas Solar Cost per Kilowatt-hour(kWh) Contact
: Daejin Lee / [email protected] / www.JinreSearch.com
9. World Energy consumption by fuel 9 Renewables are set to
grow rapidly, as their costs continue to fall and the pledges made
in Paris support their widespread adoption. However, fossil fuel
has been in the past, and will continue to be, the main energy
source for next few decades as its share of Worlds energy is too
dominant, accounting for more than 80% of total energy consumption.
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% US Brazil Total Europe
& Eurasia Total Middle East Total Africa China India Japan
South Korea Total World Coal Oil Natural Gas Nuclear Renewables
Hydro Source: BP Statistical ReviewContact : Daejin Lee /
[email protected] / www.JinreSearch.com
10. Chapter 2 10 Understanding Coal Trade Market - Rank of coal
- World coal production - World coal trade Contact : Daejin Lee /
[email protected] / www.JinreSearch.com
11. Rank of Coal Bituminous coal, also called soft coal, is the
most abundant form of coal 11 Domestic Steelmaking Steaming
Steaming Steaming Anthracite Bituminous Sub-Bituminous Lignite c a
r b o n Coking Contact : Daejin Lee / [email protected] /
www.JinreSearch.com
13. Coal Production & Reserves China has the third largest
proven coal reserves about 114.5 billion tonnes. however, as annual
output (3.5~4 billion) is far greater than any other country,
reserve would last only about 30 years if production were to
continue at same rate 13 Coal Production Coal Reserve 0 100 200 300
400 500 0 50,000 100,000 150,000 200,000 250,000 US Colombia Russia
South Africa Australia China India Indonesia (Years) (Mt)
Anthracite and bituminus Sub-bituminous and lignite R/P ratio () 0
1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 (Mt) Colombia
Russian Federation South Africa Indonesia US Australia India China
Source: BP Statistical ReviewContact : Daejin Lee /
[email protected] / www.JinreSearch.com
14. Coal Consumption outlook by region The sharp slowing in
Chinas coal consumption growth is partially offset by a pickup in
other developing countries, mainly by India. India account for more
than a third of the total increments for next ten years and will be
nearly 60% in the final decade of outlook (2025-2035) 14 Source: BP
Energy outlook Contact : Daejin Lee / [email protected] /
www.JinreSearch.com
15. Steam Coal Trade Major Importers Japan was traditionally
the largest steam coal importer before China started to import
larger portion of steam coal. However, after Chinese government
restricted dirty coal imports to tackle the air pollution, the
title has been taken over by India 15 China Japan Korea India 0 50
100 150 200 250 (Mt) China Steam Coal Japan Steam Coal South Korea
Steam Coal India Steam Coal Source: SSY, HJS Contact : Daejin Lee /
[email protected] / www.JinreSearch.com
16. Steam Coal Trade Major Exporters Reasons for the increase
in coal prices include mine closures in Indonesia, United States,
and China. However, exports from Australia and Russia has been
stable thanks to their geographical advantages; shorter distance to
main Asian market. 16 0 100 200 300 400 500 600 700 800 900 1990
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016e
3.7 5.8 11.8 13.9 19.9 25.9 29.2 34.1 39 45.7 47.4 55.8 61.5 75.7
91.1 111.9 161.9175.6 180 215.5 269.8 306326.7357.2 334 306.1300.2
49.5 54.5 58.3 57.6 59.4 62.1 63.6 73.6 83 79.2 87.1 88.1 99.9
105.1 106.3 111.5 114.2 113.7 126.1 139.6 142.1 148.2 171.2 188.1
200.9 201.6202.7 (Mt) Colombia Steam Coal S. Africa Steam Coal
Others Steam Coal Russia Steam Coal US Steam Coal Australia Steam
Coal Indonesia Steam Coal Source: SSY, HJS Contact : Daejin Lee /
[email protected] / www.JinreSearch.com
17. Coking Coal Trade Major Importers While Japan, the largest
coking importer, has imported coking coal stably around 70-80 Mt
over the last decade, Chinas imports of coking coal has fluctuated
widely over the same period from 0 to 70 Mt. India has increased
imports consistently and became the 2nd largest importer in 2015,
with importing more than 50 Mt. 17 Source: SSY, HJS China Japan
Korea India 0 10 20 30 40 50 60 70 80 90 1990 1991 1992 1993 1994
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
2008 2009 2010 2011 2012 2013 2014 2015 2016e 2017e (Mt) China
Coking Coal Japan Coking Coal South Korea Coking Coal India Coking
Coal Contact : Daejin Lee / [email protected] /
www.JinreSearch.com
18. Coking Coal Trade Major Exporter 0 50 100 150 200 250 300
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
2016e 57.1 65.7 67.9 74.1 71.8 74.7 76.9 83.7 83.6 92.4
99.7106.3104.3 111 116.2122.2 124 137.2 135 134.8 158.9 132.9 145.1
169.6 186.3 185.7 189 53.6 55 49.5 40.8 39.3 43.2 42.6 42.9 38.3
25.3 26.2 19.8 15.1 16.9 20.8 22 20.8 25.9 35.4 31.6 47.8 59.3 59
56.2 53.3 37.9 30.4 (Mt) Russia Coking Coal US Coking Coal Canada
Coking Coal Australia Coking Coal Asian exporters such as Australia
and Russia have increased their share of world coking coal market,
which had a negative impact on ton-mile demand in shipping as it
eventually reduced long-haul North American coal exports volume. 18
Source: SSY, HJS Contact : Daejin Lee / [email protected] /
www.JinreSearch.com
19. Coal Seaborne Trade EC Australia to Fareast Steel making
countries such as Korea, Japan and China have imported coking coal
mainly from East Coast Australia, with using larger gearless bulk
ship (Cape & PMX) rather than smaller geared one (SMX, Handy).
19 0 50 100 150 200 250 300 Capesize Panamax Handymax Handysize
MDwt Aus to Fareast Shipments Source: Platts, HJS Contact : Daejin
Lee / [email protected] / www.JinreSearch.com
20. Coal Seaborne Trade Indonesia to India & Fareast
Indonesian coal is largely exported to India and china for power
generation as it is mostly lower quality bituminous coal or
lignite. As many Indonesian ports have not enough loading
facilities, generally smaller geared bulk ship is preferred. 20
Source: Platts, HJS 0 20 40 60 80 100 E.C.India W.C.India E.C.India
W.C.India E.C.India W.C.India Capesize Panamax Handymax Mdwt
MillionDwt Indo to India Shipments Contact : Daejin Lee /
[email protected] / www.JinreSearch.com
21. Chapter 3 21 The End of the coal era, soon or not yet?
India : Production or imports? China : Still needs coal but where
from? Korea: Coal? Call! Contact : Daejin Lee / [email protected]
/ www.JinreSearch.com
22. China and India Population India is the only country that
can compare with China in terms of the population size. However,
the population pyramid shows two quite different countries as the
Indian population is significantly younger (the Indian median age
is 26.4; China is 36.7) and hence should have better long-term
upside potential for the economic growth. (DNB) Source: DNB, CIA
factbook 22 Contact : Daejin Lee / [email protected] /
www.JinreSearch.com
23. Chinas GDP & Energy growth Chinas energy demand growth
slows by more than its GDP growth. In part this reflects
improvements in energy efficiency, and in part the change pattern
of economic growth; with growth becoming less dependent on highly
energy intensive industrial sectors (BP) 23 Source: BP Energy
outlook Contact : Daejin Lee / [email protected] /
www.JinreSearch.com
24. Chinas energy demand growth 24 Source: BP Energy outlook
China reduces its reliance on coal, driven by its changing economic
structure and environmental and climate policies; the economy
becoming less dependent on coal intensive sectors: and policies
encouraging the use of alternative fuels. Contact : Daejin Lee /
[email protected] / www.JinreSearch.com
25. World proposed coal-fired power generation capacity Source:
WRI, Cornerstone China Power capacity Outlook As world continues
its urbanization over the coming decades, coal-fired power
generation will show robust growth especially in India, and China
is also expected to increase coal power capacity, though at a much
lower rate than previous decades. 25 Contact : Daejin Lee /
[email protected] / www.JinreSearch.com
26. Chinas Energy Mix Change 26 China committed at the UN Paris
Climate Conference in 2015 to cap its coal intake and increase its
usage of renewable energy sources such as wind and solar to 15% by
2020. This will cap the growth of power generated by coal. Oil 18%
Natural Gas 5% Coal 67% Nuclear 1% Hydro 7% Renewables 2% 2012 Oil
19% Natural Gas 6% Coal 64% Nuclear 1% Hydro 8% Renewables 2% 2015
52 32 (5) 14 49 20 (30) 0 30 60 90 120 150 180 210 (1,500) (1,000)
(500) 0 500 1,000 1,500 2,000 2,500 China Consumption by fuel
(Million tonnes oil equivalent) 2012 2015 Differnce(right) Source:
BP Energy outlook Contact : Daejin Lee / [email protected] /
www.JinreSearch.com
27. China coal imports long term -100% 0% 100% 200% 300% 400%
500% 600% 700% 0 5 10 15 20 25 30 35 40 (Mt) China coal imports YoY
Since May 2016, Chinese miners have been ordered to cut their coal
output by about 16%, from a 330-workday basis to a 276-workday
basis. As a result, there was a pronounced reduction in coal mining
in 2016, leading to import 26.6 million tons of coal in August
2016, the highest amount since December 2014. 27 Source: Bloomberg,
HJS Contact : Daejin Lee / [email protected] /
www.JinreSearch.com
28. Domestic Coal production in China China has reduced its
coal production capacity by 150 million tonnes in the first eight
months of the year. Production in the first eight months of 2.17
billion tonnes was down 10.2 percent from the same period last
year. 28 Source: Bloomberg, HJS -20.0% -15.0% -10.0% -5.0% 0.0%
5.0% 10.0% 15.0% 20.0% 0 50 100 150 200 250 300 350 400 Jan-15
Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15
Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16
Aug-16 Production YoY% Contact : Daejin Lee / [email protected] /
www.JinreSearch.com
29. Coal prices The higher the price of domestic coal relative
to the delivered cost of Australian coal, the more coal China
imports. Although domestic coal is for the moment more
competitively priced, Chinas port stocks are seriously low and this
factor could lend some much needed support to the cape market
through the next quarter.(Arrow) 29 Source: Arrow, Bloomberg 40 45
50 55 60 65 70 75 '15.2 '15.5 '15.8 '15.11 '16.2 '16.5 '16.8 Steam
Coal(FOB Newcastle) ($/ton) Contact : Daejin Lee /
[email protected] / www.JinreSearch.com
30. China Raw Coal Output by province 30 China vowed in
February to close 500 million tonnes of coal production in the
coming three to five years in a bid to tackle an annual capacity
surplus amounting to more than 2 billion tonnes. There will be no
approval of greenfield coal mine construction between 2016-2018.
Source: Mysteel Contact : Daejin Lee / [email protected] /
www.JinreSearch.com
31. China coal imports by type China imported 9.31 million mt
of thermal coal in July, rising 30.7% year on year to the highest
level since December 2014. The volume included 7.23 million mt of
bituminous material also a 19-month high and 2.08 million mt of
sub-bituminous coal 31 Source: Platts, HJS 0 5 10 15 20 25 30 35 40
45 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr
May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun July Aug
2014 2015 2016 (Mt) Anthracite Coking Coal Bituminous Steam Coal
Sub-bituminous Steam Coal Lignite Steam Coal (incl Lignite) Contact
: Daejin Lee / [email protected] / www.JinreSearch.com
32. Origin of Chinese Steam coal imports Australia remained the
largest shipper of thermal coal to China in July at 4.61 million
mt,. Indonesia sent 3.23 million mt to China in July, 54% higher on
the year. Chinas imports of Russian thermal coal jumped 57% on the
year to 1.34 million mt 32 Source: Platts, HJS 0 5 10 15 20 25 30 0
20 40 60 80 100 120 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May
Jun July Aug 2014 2015 2016 (Mt)(Index 2014 Jan=100) Others
Indonesia Australia Steam Coal Transport Index Steam Coal Volume
Index Contact : Daejin Lee / [email protected] /
www.JinresSearch.com
33. Origin of Chinese Coking coal imports 33 Source: Platts,
HJS China's coking coal imports posted a second straight monthly
increase to 6.66 million tonnes in July ,up 31.9% on year. Imports
from top supplier Australia surged 92.5% from the previous year.
From Mongolia rose 18.6% on year to 1.32 million tonnes. Canadas
July Exports stood at 1.0 million tonnes, up 32.7% on year, roaring
134.9% from June. 0 1 2 3 4 5 6 7 8 9 10 0 20 40 60 80 100 120 140
160 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr
May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun July Aug
2014 2015 2016 (Mt)(Index 2014 Jan=100) Russia & Mongolia etc
North America Australia Coking Coal Transport Index Coking Coal
Volume Index Contact : Daejin Lee / [email protected] /
www.JinreSearch.com
34. Indias Power capacity 34 Per capita consumption of energy
in India is at the level of late 19th and early 20th century US,
Until an alternative becomes available, India may have little
option but to focus on coal as the primary source of electricity,
if they are to provide their rapidly growing population with
energy. Source: BP Expansion of Indian Power grid Indian coal-fired
power capacity vs. mine output Contact : Daejin Lee /
[email protected] / www.JinreSearch.com
35. Indias Energy Mix Change 35 India target to set up 175
gigawatt (GW) of renewable capacity by 2022. As A coal-based plant
uses 0.6 kg of coal for generating 1 kWh of electricity, 175 GW of
renewable capacity will reduce coal demand by 350(175GW x 2,000hrs)
x 0.6 billion kg of coal, namely, 210 MT of coal Source: BP, HJS
Oil 29% Natural Gas 8% Coal 55% Nuclear 1% Hydro 5% Renewables 2%
2012 Oil 28% Natural Gas 7% Coal 58% Nuclear 1% Hydro 4% Renewables
2% 2015 20 (1) 83 1 (2) 4 (50) (20) 10 40 70 100 130 160 190 220
250 280 310 340 (300) (200) (100) 0 100 200 300 400 500 India
Consumption by fuel (Million tonnes oil equivalent) 2012 2015
Differnce(right) Contact : Daejin Lee / [email protected] /
www.JinreSearch.com
36. India Electricity Generation Hydro plays big role in India
though, it is limited by seasonal and regional Characteristics. On
the other hand, Coal is not just among the cheapest energy sources
available but also largely immune to interference from nature,
economic vagaries and artificial accident. 36 Source: CEA, HJS -5%
0% 5% 10% 15% 20% 25% 0 20 40 60 80 100 120 1-14 4-14 7-14 10-14
1-15 4-15 7-15 10-15 1-16 4-16 Twh Hydro Thermal Nuclear Thermal
YoY(RHS) Contact : Daejin Lee / [email protected] /
www.JinreSearch.com
37. -25% -20% -15% -10% -5% 0% 5% 10% 15% 20% 25% 0 10 20 30 40
50 60 70 1-14 7-14 1-15 7-15 1-16 7-16 (Mt) Coal India Ltd
Production YoY Monsoon India Coal Production Laying down the
government coal production target of 1.5 billion ton by 2020 is to
be realized in this manner: a billion tonnes will come from Coal
India Limited and 500 to 600 million tonnes from the private
sector. Indeed, Coal India boosted output 8.5% to 536 million
metric tons in the year, but need to double its production in 4-5
years 37 Source: Coal India, HJS Coal India produces 80% of total
Indian Coal production Monsoon Contact : Daejin Lee /
[email protected] / www.JinreSearch.com
38. Coal Stocks at Indian Power Stations Over production of
Coal India resulted in coal surplus at almost all coal plants
consistently as well as huge unsold stocks at pit heads. At present
(Sep 2016) total coal stocks has been hovering around 73 million
tonnes, of which 28 Mt(21 days) has been lying with power plants.
The rest at 45 million tonnes is stacked at mine yards 38 Source:
CEA, HJS 0 5 10 15 20 25 30 35 40 45 Jan-13 Mar-13 May-13 Jul-13
Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15
Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16
Sep-16 Coal Stocks at power stations Days' Supply (Mt, Days)
Contact : Daejin Lee / [email protected] /
www.JinreSearch.com
39. India Coal Imports Long term trend Coal India Ltd did
achieved its best ever 8.5% YoY in FY 2015-'16. However, ff Coal
India to reach the 1-billion-tonne target, they will not only need
to grow at an aggregated 15 per cent, but also need to reform land
acquisition ensure enough water, augment logistics infrastructures,
develop coal washeries. 39 Source: SSY, HJS -20% 30% 80% 130% 0 10
20 30 40 50 60 70 1q06 1q07 1q08 1q09 1q10 1q11 1q12 1q13 1q14 1q15
1q16 (Mt) India Coking Coal Imports India Steam Coal Imports Total
Growth YoY Steam Growth YoY Coking Growth YoY Contact : Daejin Lee
/ [email protected] / www.JinreSearch.com
40. Coal Exports to India by type For the first five months of
2016, Indias coal imports were 82.5mt, a drop of 5.4 % over the
same period last year. While Indonesia remained the top supplier,
with 37mt, down almost 20 % from last year, South Africa was the
relative winner, exporting 15mt to India, a gain of 26% from a year
ago, and Australia was stable over the same period. 40 Source:
Platts, SSY, HJS -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60% -5
0 5 10 15 20 25 1-13 3-13 5-13 7-13 9-13 11-13 1-14 3-14 5-14 7-14
9-14 11-14 1-15 3-15 5-15 7-15 9-15 11-15 1-16 3-16 5-16 Mt
Australia Indonesia South Africa Others Steam YoY% Contact : Daejin
Lee / [email protected] / www.JinreSearch.com
41. Korea 7th Power supply plan 41 According to South Koreas
7th basic power supply plan, the countrys total electricity demand
will increase by some 2.2% annually over the next 15 years.
Although the plan aims to raise the ratio of renewable energy
significantly, the stable and cheap coal power will continue to
play major role in energy mix to meet future energy demand. Source:
7 Nuclear, 22% Thermal, 27% Anthracite, 1% LNG, 29% Oil, 4% Hydro,
5% Renewable , 7% Collective, 5% 2015 Nuclear, 23% Thermal, 26%
Anthracite, 0% LNG, 21%Oil, 1% Hydro, 3% Renewable , 20%
Collective, 5% 2029 0 5,000 10,000 15,000 20,000 25,000 30,000
35,000 40,000 45,000 50,000 2015 2029 Contact : Daejin Lee /
[email protected] / www.JinreSearch.com
42. Koreas Power Capacity & Actual generation 42 The fact
that LNG power production have remained smaller than either Nuclear
or Thermal power despite having larger capacity than those
facilities implies falling utilisation rates of LNG power station.
This is because the price competitiveness of coal and nuclear
compared to gas is quite significant. Source: Thermal, 198,813 GWh,
38% LNG, 114,654 GWh, 22% Oil, 24,950 GWh, 5% Nuclear, 156,407 GWh,
30% Renewable, 17,446 GWh, 3% Anthracite, 4,633 GWh, 1% etc, 5,068
GWh, 1% Actual Production 52,191Gwh Thermal, 25,910 MW, 28% LNG,
30,269 MW, 32% Oil, 4,255 MW, 5% Nuclear, 20,716 MW, 22% Hydro,
4,700 MW, 5% Renewable, 6,241 MW, 7% Anthracite, 1,125 MW, 1% Power
Capacity 93,216MW Contact : Daejin Lee / [email protected] /
www.JinreSearch.com
43. Korean Coal imports Monthly by type For the first 7 month,
South Korea imported 58.7Mt of steam coal, down 3.8Mt over the same
period last year, and coking coal imports have also fallen by 1.4Mt
in Jan-July 2016 to 18.2 Mt. 43 Source: Platts, HJS 5.0 5.5 6.0 6.5
7.0 7.5 8.0 8.5 9.0 (Mt) Steam Coal 2014 2015 2016 0.0 0.5 1.0 1.5
2.0 2.5 3.0 3.5 4.0 (Mt) Coking Coal 2014 2015 2016 Contact :
Daejin Lee / [email protected] / www.JinreSearch.com
44. Korean Coal imports - Origin For the first 8 months of
2016, South Koreas coal imports were 76.2mt, a drop of 5.6% over
the same period last year. While Australia remained the top
supplier, with 32.3mt, this was down almost 10 % from 35.8mt
shipped in the first 8 months of 2015, Russia imported 14.0mt,
slightly higher than the 13.6mt in the comparable period. 44
Source: Platts, HJS 0 1 2 3 4 5 6 7 Jan Feb Mar Apr May Jun Jul Aug
Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
Feb Mar Apr May Jun Jul Aug 2014 2015 2016 (Mt) Australia Canada
Indonesia Russia Others Contact : Daejin Lee / [email protected] /
www.JinreSearch.com
45. Korean Coal imports - Volume & Tonne-mile demand A
large proportion of South Korean coal imports are from shorthaul
exporters such as Russia and Indonesia. However recent dramatic
rises in coal prices raise the prospect of increased longer haul
shipment from American continents such US, Canada, or Colombia 45
Source: Platts, HJS 70 100 130 160 190 (5) (3) (1) 1 3 5 7 9 11 13
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug 2014
2015 2016 (2014 Jan=100)(Mt) Australia Canada Indonesia Russia
Others Volume Transport Contact : Daejin Lee / [email protected] /
www.JinreSearch.com
46. Coal Trade & Panamax Earning Historically Chinese
coking coal import volume has been more volatile than steam coal
and correlated with the average earning for Panamax shipments in
pacific basin. Therefore, the recovery of freight rate is likely be
in line with the increase of Chinese coal coal imports and it might
be realized soon as coking coal imports appear to be on the rise
with its soaring prices. 46 Coal Trade Freight Source: Platts, HJS
0 20 40 60 80 100 120 140 0 2,000 4,000 6,000 8,000 10,000 12,000
1-14 3-14 5-14 7-14 9-14 11-14 1-15 3-15 5-15 7-15 9-15 11-15 1-16
3-16 5-16 7-16 9-16 CokingcoalIndex(2014Jan=100)
PanamaxEarning$/day PMX Pacific Earning Coking Coal Trade Index
Steam Coal Trade Index Contact : Daejin Lee / [email protected] /
www.JinreSearch.com
47. Panamax Supply Outlook The severity of the freight market
weakness forced owners to recycle their ships in near record level
last year and is forecast to do so this year. However, considering
the large amount of existing contracts, dry fleet will continue to
expand albeit at a slower pace for next 2-3 years. For now is
forecast to increase modestly around 0~1% across 2016/2017 47
Source: Clarkson, HJS 7% 9% 4% 1% 8% 8% 8% 6% 6% 5% 12% 12% 12% 9%
4% 1% 0% 1% -10% 0% 10% 20% 30% (10) 0 10 20 30 MilliondwtofVessels
PMX PMX Deliveries PMX Demolition Orderbook Growth Removal Delivery
Contact : Daejin Lee / [email protected] /
www.JinreSearch.com
48. Panamax Freight Forecasts 48 Strong Chinese coal imports
could continue in the short term because (1) China is to cut the
domestic coal mining capacity; (2) Chinas port stocks are
relatively low now. Moreover, the fact that (1) Coal imports of
other major countries such as India and Korea have remained stable
and (2) high coal prices increase longer haul shipment; (3) fleet
supply will be limited; could well support the panamax market in
the second half. 8,399 7,049 4,999 6,115 3,991 6,179 5882 0 1,000
2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 1H2014 2H2014
1H2015 2H2015 1H2016 2H2016 ($/day) Panamax Panamax Earning &
FFA Model Forecast FFA & Model Forecast Source: Baltic
Exchange, HJSContact : Daejin Lee / [email protected] /
www.JinreSearch.com
49. Previous Reports : includes freight forecasts (1) Bulk
Supply : The Seeds of Recovery (Korean / English) (2) Tanker Supply
: Oil Prices and Oversupply (Korean) (3) Coal Trade Market : The
end of the coal era, soon or yet? (Korean / English) (4) Iron Ore
Trade Market : Chinese steel market (Korean) (5) Understanding Bulk
Shipping Market (Korean) We invite any comments and/or questions
you may have. if you need bespoke reports & analysis, we would
love to meet specific client needs. To discuss any individual
requirements please contact below Daejin Lee / Commodity Research /
Shipping / FFA Mob: +82-10-3462-5311 Email: / [email protected]
Thank you Contact : Daejin Lee / [email protected] /
www.JinreSearch.com