• 5 minutes USGS Announces Largest Continuous Oil Assessment in Texas and New Mexico
  • 10 minutes Venezuela continues to sink in misery
  • 13 minutes U.S. Senate Advances Resolution To End Military Support For Saudis In Yemen
  • 16 minutes IEA Sees Global Oil Supply Tightening More Quickly In 2019
  • 45 mins Paris Is Burning Over Climate Change Taxes -- Is America Next?
  • 8 hours $867 billion farm bill passed
  • 8 hours Rage Without Proof: Maduro Accuses U.S. Official Of Plotting Venezuela Invasion
  • 7 hours Has Global Peak Diesel Arrived?
  • 1 day OPEC Cuts Deep to Save Cartel
  • 24 hours Sleeping Hydrocarbon Giant
  • 20 hours How High Can Oil Prices Rise? (Part 2 of my previous thread)
  • 2 hours What will the future hold for nations dependent on high oil prices.
  • 1 hour Air-to-Fuels Energy and Cost Calculation
  • 1 day And the War on LNG is Now On
  • 1 day Global Economy-Bad Days Are coming
  • 24 hours Could Tesla Buy GM?
Alt Text

Aramco’s “Acquisition Hit List”

As Saudi Arabia prepares for…

Alt Text

How To Play A Recovery In Oil Prices?

A realistic correction in the…

Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

More Info

Trending Discussions

China Makes Cheap Coal Expensive

China has long benefited from cheap thermal coal imports from Indonesia. But that may be coming to an end.

The Chinese government last week announced it will add a 3% tax to imports of lower-quality lignite coal. The move basically targets Indonesian coal, which accounted for 97% of all Chinese lignite imports through the first seven months of 2013.

It will be interesting to see what effect the new rules--effective as of August 30--have on China's coal import mix.

Indonesian lignite is one of the cheapest thermal coals on the market. Landing in China for about $47 per tonne.

As shown by the Platts chart below on global production costs, $47 puts Indonesian coal (the yellow lines at left) squarely at the low end of the global export supply curve.

Thermal Coal Price

It's not clear whether the few dollars added by China's new tax will reduce the attractiveness of Indonesian coal for importers. Especially since the only nation that might be able to cost-competitively fill the void of lost Indonesian imports would be South Africa (dark red lines at far left). South African costs are, in general, well below $40 per tonne.

But China's "Indonesia tax" comes at a time when South African exports are increasingly being taken up by India. If China really does turn away from Indonesian coal, it may have to look to higher-cost producers like Australia (the grey lines on the chart--generally in the $60 to $80 range).

This could be good news for Pacific thermal coal producers. If low-cost Indonesian production is displaced from the market, the overall cost curve might shift upward. Giving some support to prices within this sphere.

We'll see if the tax actually has such an effect. Or much effect at all.

Here's to the good, the cheap, and the needy,

By. Dave Forest




Back to homepage

Trending Discussions


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News