China Shenhua Energy 1088

[winston]

Vested

DJ MARKET TALK: BNPP Starts China Shenhua At Buy; Target HK$50.15

1150 [Dow Jones] STOCK CALL: BNP Paribas starts China Shenhua (1088.HK) at Buy, sets target at HK$50.15, assuming Shenhua's plan to double sales volume by 2015 is intact.

Notes, Shenhua plans to more than double capacity of its Shuohuang railway and is building Ganquan railway linking important Mongolia border crossing at Ganqimaodou to its Baoshen line.

"Given our expectation of steady and sustained coal price increases, we expect Shenhua to trade high relative to historical averages as margins rise and new production comes online." Stock down 0.3% at HK$33.25.


Source: Dow Jones Newswire

[winston]

Vested

*DJ China Shenhua Energy Tgt Raised To HK$40.81 Vs HK$34.94 - UBS


Source: Dow Jones Newswire

[profittaker]

But due to coal price control, this ticker is under pressure.

Shenhua Coal-To-Fuels Output May Quadruple by 2015

The parent of Hong Kong-listed China Shenhua Energy Co. may also be able to produce 5 million tons of chemicals and 1.2 billion cubic meters of natural gas from coal annually by 2015, Gu said. Output may rise to 10 million tons and 18.3 billion cubic meters by 2020, respectively, according to Gu.

Carbon Capture

A pilot carbon capture and storage facility at the group’s Inner Mongolia coal-to-fuels plant will start operations in January, Gu said.

Carbon dioxide capture and storage is a process whereby CO2 is captured from gases produced by fossil fuel combustion, compressed, transported and injected into deep geologic formations for permanent storage, according to the International Energy Agency.

China, the world’s biggest polluter, may increase its oil product use by 32 percent to 286 million tons in 2015 compared with this year, the official China Daily reported today, citing Cai Xiyou, vice president of China Petroleum & Chemical Corp., the country’s largest refiner known as Sinopec.

http://www.bloomberg.com/news/2010-11-3 ... ate1-.html

[profittaker]

China's Shenhua says CTL plant to begin storing carbon in '11

BEIJING Nov 30 (Reuters) - A pilot carbon capture and storage (CCS) facility built by China's Shenhua Group will begin storing carbon dioxide early next year, an official with the firm said on Tuesday.

Gu Dazhao, general manager of science and technology department told an industry conference that the facility, installed at the firm's coal-to-liquids plant in Inner Mongolia, will start injecting captured CO2 into underground storage facilities in January 2011.

China has already built two small pilot CCS plants in Beijing and Shanghai, but officials remain sceptical about the feasibility of the technology, which is expensive to install and will require about 25 percent more energy to run. CCS technology captures carbon dioxide produced during the coal combustion process and aims to store it underground indefinitely.

Apart from increased fuel and construction costs, experts suggest a plant could also have to pay as much as $70 per tonne to store the CO2 safely, with no guarantee that the gas wouldn't leak out into the atmosphere.

Shenhua's coal-to-liquid plant is the first of its kind to go into operation in China, and Gu said the company plans to produce 3 million tonnes of oil products from coal in 2015, up from 500,000 tonnes this year.

It also aims to produce 11 million tonnes of oil products and 18.3 billion cubic metres of gas from coal by 2020.

China, the world's largest producer of CO2, started pushing for the widespread adoption of coal conversion technologies in 2006 to help cut dependence on expensive foreign oil, but it went cold on coal-to-liquids in 2008, cancelling dozens of projects.

The National Development and Reform Commission said the technology was too expensive, used too much water in already arid regions and also did nothing to resolve the problem of CO2.

It allowed the construction of Shenhua's facility in Inner Mongolia to go ahead, and also permitted research to continue into another CTL plant in Ningxia, jointly invested by Shenhua and the South African energy giant Sasol (SOLJ.J: Quote).

Gu told reporters that the Ningxia plant, with a proposed annual capacity of 3 million tonnes, was still awaiting NDRC approval.

(Reporting by Jim Bai and David Stanway; Editing by Ken Wills)

http://af.reuters.com/article/commoditi ... 2F20101130

[winston]

Vested

TOL:-

With the cap on coal contracts for a year, what would the company be doing to address the issue ? ( This will be the catalyst for the stock price to recover ).

They cant really put everything onto the spot market or export the coal, as they have been asked to ensure adequate supply to their current customers.

I also dont think they will be going the way of the Diesel players a few months ago. (Those Diesel players withdrew supply from the market. And whoever that wanted to buy diesel, would have to pay the black-market rate, which was much higher).

Maybe they'll close some of their mines for "maintenance", to disrupt current supply. Most of the IPPs are holding only a small inventory of coal and any disruption would really create chaos especially during winter.

Do you remember the story of a city in China, who switched off their electricity - homes, hospitals and traffic lights, because BJ directed them to control carbon emissions ?

I think they will probably lobby NDRC to have more flexibility, when renewing their existing contracts. In addition, they have already lost a lot of Market Capitalization and the Chinese Government is actually the one who has lost a lot of money from that NDRC's directive.

Anything else ?

[profittaker]

Thanks for commenting winston.

Meanwhile, this news mentioned spot price is 44% higher than term contract with power producer.

UPDATE 2-China tells state coal producers to freeze prices

The benchmark price agreed between Shenhua and major power plants this year was 570 yuan ($85.55) for coal with a heating value of 5,500 kcal/kg (NAR), a six percent rise from 2009.

China's spot coal price has rallied about 20 percent from the same period last year to hover at 820 yuan per tonne, based on free-on-board prices at its largest Qinhuangdao coal port.

IMPORT BINGE

Traders and analysts said any move to control annual contract prices between China's state-owned miners and utilities was unlikely to end the country's import binge unless it pushed down spot prices.

"If spot prices at Qinhuangdao start to trend down and become cheaper than overseas coal, then it will be less attractive for buyers to import," said Alexander Latzer, an analyst at Daiwa Capital.

But a Singapore-based trader said that the NDRC's order to peg annual prices could drive miners to seek higher profits via the spot market.

"They could bump up spot prices to make up the difference. Even if they were to keep prices stable at current levels, it will still be very attractive for the import market," he said.

http://af.reuters.com/article/energyOil ... 02?sp=true

[winston]

Vested

*DJ China Shenhua H-Shr Target Raised To HK$34 From HK$27 By Daiwa
Dec 7, 2010


Source: Dow Jones Newswire

[profittaker]

Vested

*DJ China Shenhua H-Shr Target Raised To HK$34 From HK$27 By Daiwa Dec 7, 2010

Source: Dow Jones Newswire

price is down, are you buying more?

[winston]

Ha Ha ... better to conserve some bullets first in case Europe, Korea or Chinese Interest Rates create an explosion...

[profittaker]

here is the video from Daiwa

Alex Latzer, head of metals and mining research, Asia ex-Japan at Daiwa Capital Markets, has upgraded China Coal and China Shenhua to 'outperform'. But he also warns of risks ahead. CNBC’s Chloe Cho finds out more.
http://www.cnbc.com/id/15840232?video=1686808141&play=1