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Wednesday, 19 October 11
METALLURGICAL COAL PRICES TO DROP BELOW US$240/TONNE - WOOD MACKENZIE
 Wood Mackenzie Says Metallurgical Coal Prices to Drop Below US$240/tonne by Q4 2012 But Long-term Demand Fundamentals Remain Robust
Wood Mackenzie’s Near-Term Market Outlook cautions of falling metallurgical coal prices from now to Q4 2012, dropping from the current quarterly price of US$285/tonne for premium hard coking coal to under US$240/tonne. However, this price remains significantly above the marginal cost of production and longer-term drivers point to robust metallurgical coal demand in the Asia-Pacific market.
Prakash Sharma, Coal Market Analyst says, “Prices have started to fall from the last quarter and will continue to decline due to softening demand and the recovery of supply from flood-hit basins earlier in the year. The weakening demand is largely attributed to the global macroeconomic slowdown which appears to have accelerated through the summer in much of the developed world. Leading industrial indicators suggest a sharp deterioration in manufacturing activity – reflected by the decline in global steel production.”
Wood Mackenzie’s Senior Economist, Ed Rawle says, “The global economy has entered a period of extreme uncertainty. Wood Mackenzie’s global Gross Domestic Product growth forecast has been revised down from 3.1% to 2.8% in 2011, and 3.7% to 3.6% in 2012. But there are significant downside risks to this outlook. The Eurozone debt crisis remains unresolved and threatens to trigger a European banking crisis. Due to the sheer scale of the European banking sector, this is of major concern since it would likely lead to a global banking crisis with implications for us all.”
Despite near-term downward price movements, Wood Mackenzie says that several factors have the potential to turn this trend. Firstly, some mines have not fully recovered from the 2011 Queensland floods. The approaching wet season could lead to further delays in some mines attaining full production levels. Secondly, persistent worker-strikes at BHP Billiton Mitsubishi Alliance operated mines have the ability to tighten the market as these operations produce 26% of globally traded metallurgical coal. Lastly, US low-volatility supply has been curtailed by mine outages and changes in blending techniques following various mergers.
In the long-term , investors are still energized by the coking coal space with high margins in a current supply-constrained world. Mr. Sharma explains, ”Strong long-term demand is likely to support Mergers & Acquisitions (M&A) activity that has been ongoing since early 2008. Demand growth will be led by emerging markets with Asia accounting for 75% of global metallurgical coal demand by 2030. China and India will be key demand drivers, contributing to 60% of Asia Pacific’s total import demand.”
The growth potential of China and India can be attributed to their economic climate relative to the rest of the world. Mr. Rawle says, “The bright spot amidst the uncertainty continues to be the developing world. Specifically, we see China and much of Asia powering ahead, drawing on growth drivers that have been deliberately de-coupled from troubled developed economies over the past couple of years.”
Wood Mackenzie says that China’s reliance on coking coal imports will increase due to insufficient supply of high quality coking coal in the domestic market. China is forging ahead with plans to close all blast furnaces under 1,000 cubic metres and install new blast furnaces with capacities in excess of 2,000 cubic metres. The larger furnaces need coke produced from high-quality coking coal. As a result, a larger volume of this type of coal will be required and China will have to turn to suppliers of the likes of Australia, Mongolia and, to a lesser extent, Mozambique who are all expanding supply.
In summary, Mr. Sharma says, ”The industry should expect premium metallurgical coal prices to fall to a price below US$240/tonne from now until Q4 2012. Although further downside price risks remain given ongoing macroeconomic uncertainty and new sources of supply entering the market place, the constant threat of additional unpredictable mine outages and the upcoming rainy season in key supply basins should keep them from falling too far. Long-term demand also remains strong in emerging markets.”
Editor’s notes:
Wood Mackenzie is the most comprehensive source of knowledge about the world’s energy and metals industries. We analyse and advise on every stage along the value chain - from discovery to delivery, and beyond - to provide clients with the commercial insight that makes them stronger. For more information visit: www.woodmac.com. Wood Mackenzie is a research consulting company and it is our preference is to be referred to as research consultants.
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Wednesday, 09 September 20
MARKET INSIGHT - INTERMODAL
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Saturday, 05 September 20
INDIA WON'T KICK ITS COAL HABIT SO EASILY - HINDU BUSINESS LINE
India has traditionally considered itself lucky to have been endowed with abundant coal reserves, which it has sought to use to meet its energy nee ...
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Saudi-based ACWA Power on Thursday announced it has completed the signing of all financing agreements for the fifth phase of the Mohammed bin Rashi ...
Saturday, 05 September 20
POLISH COAL DEMAND EXPECTED TO FALL BY 7 MLN TONNES NEXT YEAR: MINISTER - REUTERS
Poland’s demand for coal is expected to fall by around 7 million tonnes next year, or more than 10% of annual hard coal production, after a d ...
Saturday, 05 September 20
PAKISTAN'S NEW 27-YEAR POWER PLAN RISKS LOCKING IN LONG-TERM OVERCAPACITY, LEAVING IMPORTED COAL AND LNG PLANTS STRANDED - IEEFA
Wind and solar, the country’s cheapest source of new generation, also overlooked
Pakistan risks locking itself into building m ...
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- Bhushan Steel Limited - India
- IEA Clean Coal Centre - UK
- Billiton Holdings Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Goldman Sachs - Singapore
- White Energy Company Limited
- Salva Resources Pvt Ltd - India
- ICICI Bank Limited - India
- Singapore Mercantile Exchange
- Kepco SPC Power Corporation, Philippines
- Australian Coal Association
- Therma Luzon, Inc, Philippines
- Larsen & Toubro Limited - India
- IHS Mccloskey Coal Group - USA
- Ambuja Cements Ltd - India
- Jindal Steel & Power Ltd - India
- Kartika Selabumi Mining - Indonesia
- CIMB Investment Bank - Malaysia
- Coalindo Energy - Indonesia
- Anglo American - United Kingdom
- Australian Commodity Traders Exchange
- Port Waratah Coal Services - Australia
- Agrawal Coal Company - India
- Central Java Power - Indonesia
- Xindia Steels Limited - India
- Mjunction Services Limited - India
- Borneo Indobara - Indonesia
- Petron Corporation, Philippines
- The University of Queensland
- Toyota Tsusho Corporation, Japan
- International Coal Ventures Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- London Commodity Brokers - England
- Miang Besar Coal Terminal - Indonesia
- Ministry of Transport, Egypt
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Coal and Oil Company - UAE
- Straits Asia Resources Limited - Singapore
- Coastal Gujarat Power Limited - India
- Interocean Group of Companies - India
- Bahari Cakrawala Sebuku - Indonesia
- Karaikal Port Pvt Ltd - India
- Kumho Petrochemical, South Korea
- European Bulk Services B.V. - Netherlands
- Rashtriya Ispat Nigam Limited - India
- Aboitiz Power Corporation - Philippines
- Energy Link Ltd, New Zealand
- Indika Energy - Indonesia
- GMR Energy Limited - India
- CNBM International Corporation - China
- Commonwealth Bank - Australia
- Planning Commission, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- SMG Consultants - Indonesia
- Formosa Plastics Group - Taiwan
- New Zealand Coal & Carbon
- Merrill Lynch Commodities Europe
- TNB Fuel Sdn Bhd - Malaysia
- Rio Tinto Coal - Australia
- Neyveli Lignite Corporation Ltd, - India
- Holcim Trading Pte Ltd - Singapore
- Lanco Infratech Ltd - India
- LBH Netherlands Bv - Netherlands
- Orica Mining Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bulk Trading Sa - Switzerland
- Orica Australia Pty. Ltd.
- SMC Global Power, Philippines
- Electricity Generating Authority of Thailand
- Asmin Koalindo Tuhup - Indonesia
- Indo Tambangraya Megah - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Marubeni Corporation - India
- PNOC Exploration Corporation - Philippines
- Tata Chemicals Ltd - India
- Ministry of Finance - Indonesia
- Price Waterhouse Coopers - Russia
- Ind-Barath Power Infra Limited - India
- Central Electricity Authority - India
- Petrochimia International Co. Ltd.- Taiwan
- The Treasury - Australian Government
- Eastern Coal Council - USA
- Krishnapatnam Port Company Ltd. - India
- Directorate Of Revenue Intelligence - India
- Attock Cement Pakistan Limited
- Leighton Contractors Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- San Jose City I Power Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Mercuria Energy - Indonesia
- The State Trading Corporation of India Ltd
- OPG Power Generation Pvt Ltd - India
- Cement Manufacturers Association - India
- Africa Commodities Group - South Africa
- Kaltim Prima Coal - Indonesia
- Bharathi Cement Corporation - India
- Chettinad Cement Corporation Ltd - India
- Barasentosa Lestari - Indonesia
- Bangladesh Power Developement Board
- Baramulti Group, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Tamil Nadu electricity Board
- AsiaOL BioFuels Corp., Philippines
- Wood Mackenzie - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Manunggal Multi Energi - Indonesia
- TeaM Sual Corporation - Philippines
- Sojitz Corporation - Japan
- Heidelberg Cement - Germany
- Wilmar Investment Holdings
- Renaissance Capital - South Africa
- PTC India Limited - India
- Bukit Baiduri Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Global Business Power Corporation, Philippines
- Medco Energi Mining Internasional
- Kobexindo Tractors - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Bayan Resources Tbk. - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indogreen Group - Indonesia
- GAC Shipping (India) Pvt Ltd
- Binh Thuan Hamico - Vietnam
- Minerals Council of Australia
- Maheswari Brothers Coal Limited - India
- Edison Trading Spa - Italy
- Trasteel International SA, Italy
- Mintek Dendrill Indonesia
- Banpu Public Company Limited - Thailand
- Bhoruka Overseas - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Mercator Lines Limited - India
- Ministry of Mines - Canada
- Kideco Jaya Agung - Indonesia
- Thiess Contractors Indonesia
- Essar Steel Hazira Ltd - India
- Siam City Cement - Thailand
- Independent Power Producers Association of India
- Jaiprakash Power Ventures ltd
- India Bulls Power Limited - India
- Economic Council, Georgia
- Cigading International Bulk Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Sakthi Sugars Limited - India
- Sree Jayajothi Cements Limited - India
- MS Steel International - UAE
- Electricity Authority, New Zealand
- Latin American Coal - Colombia
- Aditya Birla Group - India
- Makarim & Taira - Indonesia
- Dalmia Cement Bharat India
- Siam City Cement PLC, Thailand
- Gujarat Sidhee Cement - India
- GN Power Mariveles Coal Plant, Philippines
- Energy Development Corp, Philippines
- Uttam Galva Steels Limited - India
- Eastern Energy - Thailand
- Antam Resourcindo - Indonesia
- PowerSource Philippines DevCo
- Sindya Power Generating Company Private Ltd
- Star Paper Mills Limited - India
- Power Finance Corporation Ltd., India
- Videocon Industries ltd - India
- Parry Sugars Refinery, India
- Sical Logistics Limited - India
- GVK Power & Infra Limited - India
- Riau Bara Harum - Indonesia
- Indian Oil Corporation Limited
- Parliament of New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Romanian Commodities Exchange
- McConnell Dowell - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Madhucon Powers Ltd - India
- Timah Investasi Mineral - Indoneisa
- Bukit Makmur.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- Indian Energy Exchange, India
- Thai Mozambique Logistica
- VISA Power Limited - India
- Metalloyd Limited - United Kingdom
- Standard Chartered Bank - UAE
- Alfred C Toepfer International GmbH - Germany
- Malabar Cements Ltd - India
- ASAPP Information Group - India
- Sinarmas Energy and Mining - Indonesia
- Global Green Power PLC Corporation, Philippines
- Posco Energy - South Korea
- Grasim Industreis Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Indonesian Coal Mining Association
- Chamber of Mines of South Africa
- Simpson Spence & Young - Indonesia
- Carbofer General Trading SA - India
- Gujarat Electricity Regulatory Commission - India
- Altura Mining Limited, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- South Luzon Thermal Energy Corporation
- Deloitte Consulting - India
- Semirara Mining Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Oldendorff Carriers - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ceylon Electricity Board - Sri Lanka
- Vizag Seaport Private Limited - India
- Pendopo Energi Batubara - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bhatia International Limited - India
- Vedanta Resources Plc - India
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