16 September 2014 | Issue 726 mccloskeycoal.

com
IHS Energy
China Coal Daily
The denitive daily publication on the Chinese coal industry
China sets low quality
coal restrictions
THE CHINESE GOVERNMENT ofcially
announced regulations for coal quality
control on September 15, after a year-and-a-
half of preparation. The rules will come into
efect on January 1, 2015.
Under the rules, the sale and consumption
of coal with ash content higher than 16%,
and sulphur content above 1% will be
restricted in the consuming regions of
Beijing, Tianjin, Hebei, Shanghai, Jiangsu,
Zhejiang, and Guangdong.
This means Australian high-ash coal and
Indonesian low c.v. coal could be prohibited
in these regions in the future. Coal imports
in these regions accounted for 52.1% of
Chinas total of 327.03mt last year.
For all regions across the country, and for
material being transported 600km or more
within China, the c.v. threshold is 3,941kc
NAR for lignite, with ash and sulphur
content capped at 20% and 1%; and for all
other coal the threshold is 4,300kc NAR
with max ash of 30% and max sulphur of 2%.
Under these criteria, maximum limits
have also been set for other chemical
content, including 0.6g/g for mercury,
80g/g for arsenic, 0.15% for phosphorus,
0.3% for chlorine, and 200g/g for uorine.
For low-quality products that are
supplied mainly to users within 600km
distances, the conditions have been eased
to 30% ash for lignite and 40% ash for other
coals, while sulphur limits are set at 1.5%
and 2% respectively.
The new rules may have limited impact on
Chinas imports, according to some analysts,
as they originally anticipated of-spec
Australian high-ash products with 23-35%
ash would be banned.
However, under the newly released rules,
coupled with strengthened government
policies aimed at reining in generator import
thirst, import tonnages are expected to run
at comparatively low levels for a considerable
period of time.
The rules have done little to afect coking
coal imports.
Private importers in
China struggle
CHINAS PRIVATE COAL import companies,
which used to take the lions share of the
countrys import business, have seen their
market shrivel up since last year, after
falls in domestic coal prices dampened the
competitiveness of imports.
The situation has not seen any
improvement despite the stabilising of
domestic prices, as Chinese authorities work
on a series of policies to promote domestic
coal consumption.
Guangdong-based Lanyue suspended
imports last year after severe losses, and the
companys coal products at Fangcheng port
in Guangxi have even been seized by banks,
after it failed to pay back loans.
Lanyue used to import coal from Vietnam,
Australia and Indonesia and supply it to
power plants, steel mills, cement plants
and paper-making plants in Guangdong.
Its import tonnage was 2.63mt in 2011, and
3.29mt in 2012.
Another Guangdong-based trader, Yatai,
also suspended imports after reporting
losses of more than RMB200m ($32.52m).
Last year, the companys import volume
stood at 7.83mt, versus some 12mt/yr in
previous years.
Qinfa, another major trader who trades
10mt/yr, of which imported coal accounts for
70%, saw protability worsen as well.
The companys prots decreased to
RMB22m ($3.6m) in 2013, of from
RMB101m ($16.4m) in 2012, and from
RMB333m ($54.1m) in 2011.
The company sufered losses of RMB356m
($57.9m) in H1 2014, compared to prots of
RMB22.4m ($3.6m) in H1 2013. The company
traded 15.2mt last year, up from 6.5mt in 2011.
Production drops at
China Coal
CHINA COAL ENERGY, the listed arm of the
countrys second largest producer, China
National Coal Group, cut production by
nearly 9% to 9.26mt in August, compared to
the previous month, the company has said.
IHS McCloskey/Xinhua Infolink
Chinese markers
Steam coal
QHD FOB marker ($/t)
29-Aug 5-Sep 12-Sep
5,000kc NAR 66.30 66.61 67.10
or 4,900kc NAR 64.98 65.27 65.75
5,500kc NAR 75.97 76.35 76.92
5,800kc NAR 82.80 83.00 83.69
or 6,000kc NAR 85.66 85.87 86.58
Note: FOB prices include domestic taxes
QHD FOB marker (RMB/t)
5,000kc NAR 408 410 412
or 4,900kc NAR 400 401 404
5,500kc NAR 468 470 473
5,800kc NAR 510 510 514
or 6,000kc NAR 528 528 532
South China CFR marker ($/t)
29-Aug 5-Sep 12-Sep
4,900kc NAR 59.50 59.25 59.15
5,500kc NAR 68.55 67.60 67.30
6,000kc NAR 75.50 74.75 74.70
Note: CFR prices are exclusive of Chinese taxes
Source: IHS Energy, Xinhua Infolink
mccloskeycoal.com 2014 IHS 16 September 2014 China Coal Daily | 1
Coking coal ($/t)
Previous
year
Previous
month
Previous
week
Day
Shanxi Tunlan (FOR)
168.55 166.99 162.55 162.70
Shanxi Xiqu (FOR)
145.86 159.69 152.80 152.94
Hebei Tangshan (CIF)
185.54 161.96 162.39 162.54
Jingtang Port:
Mongolia 168.55 - - -
Australia 174.22 142.67 143.04 143.18
Note: Inclusive of domestic taxes
Domestic coke ($/t)
Hebei Steel (CIF)
226.90 192.93 193.43 193.62
Baosteel (CIF)
226.90 235.08 235.70 235.92
Note: Coke with 12% ash
2 | China Coal Daily 16 September 2014 2014 IHS mccloskeycoal.com
IHS

China Coal Daily

Xinhua Infolink and 2014 IHS
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Freight ($/t)
Previous
year
Previous
month
Previous
week
Day
Domestic
QHD to
Guangzhou
7.18 5.28 5.09 4.82
QHD to
Shanghai
6.26 4.02 3.67 3.48
Freights into China
Indonesia 7.25 5.10 5.70 5.70
Russia 9.00 9.00 9.00 9.00
Australia 15.75 9.50 11.00 11.00
Note: QHD to Shanghai 20-30kt, QHD to GZ 40-50kt
CFR South China ($/t)
Previous
year
Previous
month
Previous
week
Day
Steam coal
At Guangzhou
Indonesian (3,800kc NAR)
50.13 46.50 46.50 46.50
Indonesian (5,000kc NAR)
72.75 59.69 61.17 61.17
Australia (5,500kc NAR)
78.25 66.50 67.50 67.50
Stocks at ports (0,000t)
Previous
year
Previous
month
Previous
week
Day
QHD 637 687 596 620
Guangzhou 274 348 280 255
YTD production amounted to 79.91mt, an
increase of 1.3% year-on-year.
The cuts are part of a government drive
to curb coal consumption and China Coal
Energy wants to impose a 10% reduction
this year, from the yearly target of 165mt.
The companys 2013 actual production
was 157mt.
China Coal Energy sold 14.08mt of coal in
August, climbing by 19.42% from July, and
up 6% year-on-year. Its YTD coal sales were
101mt, up just 0.1%.
Production cuts are also understood to
have begun at Chinas major coal producing
provinces as well.
The key state-owned mines in nine
provinces produced 24.98mt in the rst 10 days
of September, falling 3.49mt from the same
period of August, and down 5.32mt from the
same period of September 2013, according to
the latest gures from the CCTDs release.
Coal sales, however, rose to 20.81mt in the
10-day period, up 1.2% from the level seen
in August 1-10. This has led to a fall in mine
stocks to 34.29mt on September 10, of 2.7%
from end-August.
China power plant
stocks at 7-month high
COAL STOCKS AT Chinas key power plants
have continued to climb, with cooling
weather dragging down consumption.
The coal burn level at key power plants
was 2.99mt/day from September 1-10, down
9.7% from 3.31mt/day in August, to their
lowest of the year.
Coal arrivals at the facilities also
decreased to 3.46mt/day in the period, from
Augusts average of 3.46mt/day, logistics
provider Zhongneng has said.
As a result, coal stocks stood at 82.06mt
on September 10, growing from 76.7mt a
month ago, and are back above 80mt for the
rst time since mid-February. The tonnage is
enough for 26 days of burn, the highest level
since December 2012.
Coal stocks at the six coastal power groups
totalled 14.59mt, or 23 days on September
15, also much higher than the 15-day safety
line, according to port sources.
At the same time coal stocks at
Qinhuangdao, Caofeidian and Jingtang ports
rose to 16.77mt on September 15, up 0.85mt
from the beginning of this month.
Chinas coal railings
up in August
CHINA RAILED 193.81MT of coal in August, a
rise of 4.4% from the previous month and up
2.2% from the same month of last year.
YTD coal railings amounted to 1.53bn
tonnes, climbing 0.8% year-on-year, the
China Railway Corporation (CRC) said.
The major coal outlet of Daqin
transported 38.15mt, or 1.23mt/day in
August, edging down 1.6% from 1.25mt/day
in July, because of its six-day maintenance
earlier in the month.
The lines railings for the rst eight
months of this year reached 301.92mt, up
2.59% year-on-year.
The countrys total cargo railings were
327.71mt in August, up from 311.63mt in
July, with YTD tonnage totalling 2.53bn
tonnes, of 1.9% from the same period of
last year, the CRC added.
Vale, Cosco join hands
on iron ore shipping
BRAZIL-BASED VALE HAS agreed to partner
with China Ocean Shipping Company
(Cosco) to conduct strategic cooperation in
iron ore shipping.
Vale has agreed a 25-year iron ore shipping
contract with Cosco, whereby Cosco will
purchase four existing Valemax ships, each
at 400,000 tonnes deadweight, owned by
Vale, and will build another 10 vessels of a
similar size.
The deal is intended to overcome objections
to Vales use of its eet of 35 Valemax vessels,
to transport iron ore to China.
Chinese authorities had banned the
berthing of the giant vessels after lobbying
by domestic shipping groups. It is estimated
that shipping costs for using the vessels
could be 35% lower than costs with
200,000t vessels.
Vale is expected to export 300mt of iron
ore to China by 2018, doubling the level
in 2013.
Other regional key FOB prices ($/t)
Sep-13 Aug-14 5-Sep 12-Sep
Steam coal
Indonesian Sub-Bit
(4,900kc NAR)* 60.01 53.33 52.65 52.50
Indonesian Bituminous
(5,500kc NAR) 67.64 62.84 62.05 61.75
Australian Off Spec
(5,500kc NAR) 63.58 57.06 56.55 55.65
Coking coal
Premium Australian 149.63 113.71 113.52 113.81
*IHS McCloskey Indonesian Sub-Bituminous FOB marker
Source: IHS Energy
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Untitled-5 1 13/05/2014 15:44