North China heatwave a boost for coal consumption

Spanish Market: Coal
08/06/20

A heatwave in various parts of north China offers a potential boost to coal consumption, even as heavy rainfall in south China weighs on coal demand by increasing hydropower output.

Temperatures in some parts of north China's provinces such as Jilin, Inner Mongolia, Hebei, Shandong and Liaoning could reach 35-40°C today, according to China's national meteorological centre, which issued a yellow code warning yesterday because of expectations of high temperatures.

If the heatwave is sustained it could potentially boost coal consumption in north China by raising demand for air-conditioning, potentially offsetting a fall in coal consumption in south China where rainfall is lifting hydropower output. But while China's meteorological administration (CMA) forecast on 5 June that it expects overall temperatures to rise this month, it has also said that colder weather could arrive as early as tomorrow to quell the heatwave in north China.

There are few signs of any easing of the heavy rainfall in south China, which has caused flooding in some regions including parts of Guangxi province. This has contributed to a rise in hydropower output, which is weighing on coal use despite the approaching peak summer consumption season. China's river-abundant south typically produces more hydropower than north China.

The CMA is forecasting that heavy rainfall will persist in south China in the coming days, warning that torrential rain can be expected in parts of some coastal provinces such as Zhejiang, Jiangxi and Fujian.

By Kelvin Leong

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08/05/24

New Zealand’s Genesis Energy to resume coal imports

Sydney, 8 May (Argus) — New Zealand's upstream firm and utility Genesis Energy plans to resume thermal coal imports later this year to feed its dual gas- and coal-fired Huntly power plant. The resumption was because of lower domestic gas production and rapidly declining coal stockpiles, and will mark the firm's first coal imports since 2022. Coal inventories at the 953MW Huntly plant, — New Zealand's largest power station by capacity and the country's only coal-fired facility — recently slipped below 500,000t, down from 624,000t at the end of March, and will fall below 350,000t by the end of the winter. This will trigger a need to purchase more coal to maintain a target operational stockpile of around 350,000t ahead of winters in 2025 and 2026, the company said on 8 May. Imports are currently the most efficient option for the quantity the company will need, with a delivery time of around three months, chief executive Malcolm Johns said. Genesis typically imports from Indonesia, the company told Argus . Gas production in New Zealand has dropped at a faster rate than expected, with major field production in April down by 33pc on the year, Genesis said. Lower gas availability typically leads to more coal burn, because the Huntly plant runs on gas and coal. This is in addition to an extended period of low hydropower inflows in recent months, which required higher thermal generation to ensure supply security. A prolonged outage at Huntly's unit 5 gas turbine between June 2023 and January 2024 also led to an even greater need for coal-fired generation, Genesis said. Biomass transition The company — which is 51pc owned by the state — is the second-largest power retailer in New Zealand, behind domestic utility Mercury, according to data from the Electricity Authority. It has a NZ$1.1bn ($659mn) programme for renewable power generation and grid-scale battery storage , which includes a potential replacement of coal with biomass at Huntly. But the transition to biomass "will take some years," Johns said. Genesis has successfully completed a biomass burn trial at Huntly last year and has collaboration agreements with potential New Zealand pellet suppliers, but there is currently no local source for the type of pellets needed for the plant. Genesis is hoping to move to formal agreements "as soon as counterparties are able". The company will not consider importing pellets, it told Argus . "We will only use biomass if we can secure a local New Zealand supply chain that is sustainable and cost-effective," it said. Domestic gas production New Zealand's three-party coalition government said separately on 8 May that the "material decline" in local gas production threatens energy security, blaming the previous Labour party-led government for "policy decisions which have disincentivised investment in gas production." The decisions — which were part of the former government's pledge to achieve a carbon-neutral economy by 2050 — led to a reduction in exploration for new gas resources since 2021, while suppressed maintenance drilling reduced production from existing gas fields, according to a joint release from energy minister Simeon Brown and resources minister Shane Jones. "Due to this significant reduction in gas production, the government has also been advised that some large gas consumers are expressing concern about their ability to secure gas contracts," the government said. Major industrial users such as Canada-based methanol producer Methanex have been forced to reduce production as a result, it noted. "We are working with the sector to increase production, and I will be introducing changes to the Crown Minerals Act to parliament this year that will revitalise the sector and increase production," Jones added. By Juan Weik Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Indonesia’s MBAP sets lower coal output target for 2024

06/05/24

Indonesia’s MBAP sets lower coal output target for 2024

Manila, 6 May (Argus) — Indonesian coal producer Mitrabara Adiperdana (MBAP) has set a lower output target of 2.01mn t for 2024, to focus on developing its mining infrastructure. MBAP plans to improve its mining infrastructure to prepare for higher output in the next two years. It has earmarked $57.8mn for its capital expenditure this year, 49pc of which will be used for infrastructure development. This investment will allow MBAP to increase its output to 2.45mn t/yr in 2025-26, in line with its approved RKAB work plans. The firm aims to produce 2.01mn t in 2024, down by nearly 4pc from its 2023 output. The Indonesian Ministry of Energy and Mineral Resources (ESDM) has approved MBAP's target. But MBAP hopes to sell 2.3mn t of coal in 2024, up from 2.13mn t a year earlier, with sales including deliveries by its coal trading arm. Exports accounted for 73pc of the firm's total sales in 2023 and is expected to remain steady at 72-75pc this year. South Korea is expected to remain MBAP's largest market, with the country accounting for 29pc of total sales in 2023. But sales to China, which were at 18pc last year, are expected to increase this year. By Antonio delos Reyes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

India’s Adani Power raises imported coal use in Jan-Mar

06/05/24

India’s Adani Power raises imported coal use in Jan-Mar

Singapore, 6 May (Argus) — India's leading private sector utility Adani Power more than doubled its use of imported thermal coal during January-March and in the April 2023-March 2024 fiscal year to meet rising power demand. The Bombay Stock Exchange-listed firm used 5.19mn t of imported coal over January-March, more than twice that of 1.99mn t a year earlier. Domestic coal burn also rose by nearly 18pc on the year to 8.83mn t during January-March, following higher availability of local fuel and increased dispatches to utilities. Adani Power consumed 19.44mn t of imported coal over India's April 2023-March 2024 fiscal year. This was also more than double that of 7.66mn t in 2022-23. Its domestic coal burn increased by 10pc on the year to 31.72mn t in 2023-24. Higher imports came on the back of a sharp drop in seaborne prices. The Argus -assessed Indonesian GAR 4,200 kcal/kg coal averaged $57.88/t fob Kalimantan over April 2023-March 2024, down by over 31pc from an average of $84.45/t in the year earlier. The company's fuel cost stood at 3.33 rupees/kWh sold (0.04¢/kWh sold) in January-March, down from Rs5.30/kWh sold a year earlier because of lower blended fuel costs, following a decline in seaborne coal prices. Fuel cost for 2023-24 stood at Rs3.59/kWh compared with Rs4.78/kWh in the previous year. Lower imported coal prices also boosted power offtake under imported coal-based power purchase agreements. The company sold 22.13bn units of electricity in January-March, up significantly from 14.25bn units sold a year earlier. It sold 79.27bn units in 2023-24, up from 53.39bn units in the year earlier. Higher volumes during January-March and the fiscal year were driven by its Mundra, Udupi, Raipur, and Mahan plants — apart from the incremental contribution of the Godda unit — which were commissioned in April 2023. Domestic power sales volumes were driven by growing power demand across the country, the company said. Utility demand could continue to support imports by utilities and lift overall Indian demand for seaborne coal. India imported 14.27mn t of thermal coal in March, up by 8pc from 13.2mn t a year earlier, according to shipping broker Interocean data. Thermal power expansion plans Adani Power operates 15.25GW of thermal generation capacity in the Gujarat and Maharashtra states of west India, Madhya Pradesh and Chhattisgarh in central India, Rajasthan in north India, Karnataka in south India and Jharkhand in eastern India. The firm is eyeing a capacity of more than 24GW by 2029. It is undertaking a brownfield thermal capacity expansion of 1.6GW at its 1.2GW Mahan power project in Madhya Pradesh. It has started developing a 1.6GW expansion at its existing 600MW unit in Chhattisgarh. Adani Power has also emerged as the frontrunner to acquire thermal generation capacity and an under-construction project from domestic debt-ridden Lanco Amarkantak Power. Lanco owned and operated a 600MW thermal power plant in central India's Chhattisgarh state and was planning 1.32GW of generating capacity under the second phase of the project. Adani is in the process of acquiring a 1.2GW debt-ridden thermal power project in south India's Tamil Nadu state. Plant operator Coastal Energen is also having a corporate resolution insolvency process. It is evaluating an organic expansion of 1.6GW, besides considering other inorganic acquisition opportunities, to meet strong demand for thermal power in the coming years, the company said. By Ajay Modi Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Transnet ramps up coal trains in test drive

02/05/24

Transnet ramps up coal trains in test drive

Cape Town, 2 May (Argus) — Transnet Freight Rail (TFR) has increased the number of trains serving the North Corridor, along which most of the coal volumes exported via the port of Richards Bay, in KwaZulu-Natal, are transported. As part of a test trial, trains serving the coal line rose to 28 per week from 21 per week previously, supported by more locomotives. As a result, since 31 March some 106,000 t have been moved from road to rail. In the process, around 3,100 truckloads were transported by train and 6,200 truck movements were eliminated. The test initiative forms part of Transnet's recovery plan and a commitment made to the City of uMhlathuze and other stakeholders during a collaborative meeting on truck congestion at Richards Bay in November. The main objective was to reduce truck loads and migrate volume from road to rail. An estimated 1,200 trucks a day call at Richards Bay, with 1mn t/month of thermal coal exported from the multipurpose and dry bulk terminals. A coal truck can delivery 34t on average, while a train wagon can carry 91t. The local uMhlathuze municipality, which hosts the Richards Bay terminals, wants to impose a R30/t fee on trucks delivering coal to the port to alleviate congestion and recoup losses associated with damage to roads. Prior to the test run, Transnet approached all customers who were transporting cargoes to the port of Richards Bay by truck. The test was also aimed at enabling Transnet and potential rail customers to assess train loading capabilities and the rail friendliness of their cargo. The test focused on assessing: siding capabilities and readiness; cargo suitability for rail loading; status of the network; train handling times; and train turnaround times. The initiative was offered to customers under the clear condition that it does not constitute a long-term commitment as there are structured processes that need to be followed for rail capacity to be allocated. By Elaine Mills Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Canadian rail workers vote to launch strike: Correction

02/05/24

Canadian rail workers vote to launch strike: Correction

Corrects movement of grain loadings from a year earlier in final paragraph. Washington, 2 May (Argus) — Workers at the two major Canadian railroads could go on strike as soon as 22 May now that members of the Teamsters Canada Rail Conference (TCRC) have authorized a strike, potentially causing widespread disruption to shipments of commodities such as crude, coal and grain. A strike could disrupt rail traffic not only in Canada but also in the US and Mexico because trains would not be able to leave, nor could shipments enter into Canada. This labor action could be far more impactful than recent strikes because it would affect Canadian National (CN) and Canadian Pacific Kansas City (CPKC) at the same time. Union members at Canadian railroads have gone on strike individually in the past, which has left one of the two carriers to continue operating and handle some of their competitor's freight. But TCRC members completed a vote yesterday about whether to initiate a strike action at each carrier. The union represents about 9,300 workers employed at the two railroads. Roughly 98pc of union members that participated voted in favor of a strike beginning as early as 22 May, the union said. The union said talks are at an impasse. "After six months of negotiations with both companies, we are no closer to reaching a settlement than when we first began, TCRC president Paul Boucher said. Boucher warned that "a simultaneous work stoppage at both CN and CPKC would disrupt supply chains on a scale Canada has likely never experienced." He added that the union does not want to provoke a rail crisis and wants to avoid a work stoppage. The union has argued that the railroads' proposals would harm safety practices. It has also sought an improved work-life balance. But CN and CPKC said the union continues to reject their proposals. CPKC "is committed to negotiating in good faith and responding to our employees' desire for higher pay and improved work-life balance, while respecting the best interests of all our railroaders, their families, our customers, and the North American economy." CN said it wants a contract that addresses the work life balance and productivity, benefiting the company and employees. But even when CN "proposed a solution that would not touch duty-rest rules, the union has rejected it," the railroad said. Canadian commodity volume has fallen this year with only rail shipments of chemicals, petroleum and petroleum products, and non-metallic minerals rising, Association of American Railroads (AAR) data show. Volume data includes cars loaded in the US by Canadian carriers. Coal traffic dropped by 11pc during the 17 weeks ended on 27 April compared with a year earlier, AAR data show. Loadings of motor vehicles and parts have fallen by 5.2pc. CN and CPKC grain loadings fell by 4.3pc from a year earlier, while shipment of farm products and food fell by 9.3pc. By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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