2010 International Thermal Coal Market Outlook DRAFT
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Transcript of 2010 International Thermal Coal Market Outlook DRAFT
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8/3/2019 2010 International Thermal Coal Market Outlook DRAFT
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May 2010
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2009 Overview Oversupply
Price response
Chinese & Indian demand
Market shift Where We Are Now
Continued Chinese restructuring
Still weak demand in Atlantic Basin
2010 Outlook
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At the start of 2009, Atlantic Basin is grosslyoversupplied Macroeconomic factors
Displacement in dispatch order by cheap gas
Monthly coal stocks inthe US as of March 31,2009
Source: Energy VenturesAnalysis, Inc.
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Atlantic and Pacific Basin prices respond
Source: McCloskeys CoalReport
$50
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$90
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$150
$170
$190
Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09
Global Price Benchmarks (Sep 08 - Jun 09)
NWE Marker FOB RBCT FOB Newcastle
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Pacific Basin demand shifts in 2nd half 2009 The story is China (w/ India helping out)
-67.9
-45.6
-25
-2.1 -4.5
104.3
138.5
(140)
(100)
(60)
(20)
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2004 2005 2006 2007 2008 2009 2010e
Chinese Net Imports by Coal Type
steam met totalSource: CRU, SSY
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2009: China restructures domestic miningindustry Improve productivity and safety
Domestic prices soar, imports become competitive
Source: Bloomberg, chart by JP Morgan
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2005 2006 2007 2008 2009 2010e
MMm
etrictonnes
Indian Imports by Coal Type
steam met total
Source: McCloskeys CoalReport, Barclays Capital
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India added 2 gw of coal-fired capacity in2009, after adding 5.6 gw in 2008
Part of 93 gw planned as part of 11
th
FiveYear Plan
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Demand for seaborne coal in Pacific Basin grew 14% from2008 to 2009
Excluding China and India, demand was down 3% y-o-y
$50
$55
$60
$65
$70
$75
$80
$85
$90
Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09
Global Price Benchmarks (Jul 09 - Dec 09)
NWE Marker FOB RBCT FOB Newcastle
Source: McCloskeys Coal
Report
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South Africa accelerates shipments to thePacific Basin to meet China/India demand
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2006 2007 2008 2009 2010e
MMm
etrictons
South African Steam Exports by Basin
Total Exports to Pacific Total Exports to Atlantic Total
Source: McCloskeys CoalReport
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2004 2005 2006 2007 2008 2009 2010e
MMm
etrictonnes
Chinese Imports of Russian Coal
Met Steam Total Source: McCloskey's, DTE estimates
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2009 Overview Oversupply
Price response
Chinese & Indian demand
Market shift Where We Are Now
Chinese restructuring
Chinese imports
Still weak demand in Atlantic Basin 2010 Outlook
Cautiously optimistic
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Chinese mines are in desperate need of thoroughmodernization
Source: Bloomberg, CEIC, BPStatistical Review, chart by JP Morgan
Coal Miner Productivity China Total vs US Underground
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Chinese imports have actually accelerated
Source: Bloomberg, CEIC, BPStatistical Review, chart by JP Morgan
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Tightened global market in early 2010 Result of increased Chinese and Indian coal imports
If not for change in world coal flows, the marketwould still be in oversupply situation
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China and India remain largest growth areasfor demand Governmental and monetary policies continue to
support this
China continues to restructure domestic coalmarket
West to East pull of coal likely to continue
Pacific Basin likely to outperform AtlanticBasin price
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Coal likely to gain back market share inelectricity generation sector
North American & European demand will taketime to recover from high inventory levelsand recovering economies
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Supply bottlenecks in key exporting countries(S. Africa, Australia) not alleviated in 2009and will continue in 2010 Insert timeline of RBCT build out
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Significant changes to the global seaborne coalmarket in 2009big impact of China
China/India demand continue to be strong Chinese demand will be highly sensitive to international
prices in 2010 (highly price-dependent) Will depend on consolidation of Chinese coal industry
New coal flows established in 09 likely to persist
Pacific Basin prices remain stronger than Atlantic
Basin prices US and European prices recover slower
Supply bottlenecks will persist