Talking Points Energy and Resources


In today’s talking points: Increased Chinese import volumes provide welcome relief to Australia’s commodity exporters; China’s current coal power capacity sufficient to meet demand until 2030; China’s State Grid Corporation launches a $13 billion bid for Brazilian utilities; oil prices drop at report of large US crude inventories.

Increased import volumes partially offset lower commodity prices

China has increased import volume of liquefied natural gas (LNG) and iron ore, however low prices mean imports actually declined by 12.5 percent in US dollar terms. According to figures released Monday, Chinese LNG imports rose 20 per cent to 30.5 million tonnes over the first seven months of the year. Despite the pick-up in volume the price paid for these cargos by Chinese entities was down by 20 per cent over the period. The spot price for LNG in Asia has fallen 25 per cent this year to around $US5.60 per million British thermal unit down from prices as high as $US15 – and China is making the most of the low prices. Likewise, Iron ore volumes have been particularly strong over the period, rising 8 per cent to 582 million tonnes. In July China imported 88.4 million tonnes. Australia makes up around two-thirds of China’s imported iron ore.

Source: Australian Financial Review

China’s current coal power capacity can meet demand until 2030

China’s energy demands through 2030 can be met without building additional coal power plants, according to analysis by China Dialogue’s Fu Sha and Zou Jia. China’s pre-existing and under-construction coal power plants, combined with the targeted 15 percent renewable energy target and improvements in operating efficiency will meet anticipated demand until at least 2030. The analysis predicts China’s per-person energy demand will peak between 5500-7000kWh by 2030, in line with OECD countries like Britain, France and Japan. Even at the high end of this scale – based on a strong recovery from the current slowdown – China will only experience a 3 percent energy shortfall with current and under-construction coal power capacity. The analysis follows the Central Government’s decision in April to halt the construction of additional coal power plants.

Source: China Dialogue

China’s State Grid Makes Bid for Brazil’s CPFL Energia

State Grid’s proposal for a $US13 billion dollar investment in Brazil’s CPFL Energia would be the largest Chinese investment in a South American country if it goes ahead. Brazil is currently in the midst of a deep recession and lacking for capital. Further, the vast distances between Brazil’s hydropower resources and its big cities make it well-suited for China’s ultrahigh-voltage, long-distance technology. State Grid is China’s main grid operator, and provides electricity to more than a billion people. With assets totalling more than $450 billion at the end of 2015, State Grid is looking at multiple overseas sites for investment. Brazil’s CPFL was privatised in the 1990s, and is today made up of dozens of power companies, and is one of Brazil’s largest utilities.

Source: Wall Street Journal

Price of Oil Dips on Report of Large US Crude Inventories

Oil prices dropped after markets received word that the United States’ crude inventories had increased to 523.6 million barrels, the highest seasonal level in decades. West Texas Intermediate for September delivery dropped $1.06, or 2.5 per cent, to $US41.71 a barrel. Total volume traded on Wednesday was 25 per cent below the 100-day average. Saudi Arabia pumped 10.67 million barrels of oil a day in July, a record volume compensating for a lower unit price. China’s and India’s market remains strong, despite plateauing demand in established economies. Venezuelan President Nicolas Maduro said he spoke to Saudi Arabia’s king about boosting oil prices

Source: The Age