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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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Friday, 07 August 20
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- Latin American Coal - Colombia
- Edison Trading Spa - Italy
- VISA Power Limited - India
- Deloitte Consulting - India
- Renaissance Capital - South Africa
- Samtan Co., Ltd - South Korea
- Iligan Light & Power Inc, Philippines
- The State Trading Corporation of India Ltd
- Sarangani Energy Corporation, Philippines
- London Commodity Brokers - England
- Cigading International Bulk Terminal - Indonesia
- Jindal Steel & Power Ltd - India
- Anglo American - United Kingdom
- Heidelberg Cement - Germany
- Riau Bara Harum - Indonesia
- GAC Shipping (India) Pvt Ltd
- TeaM Sual Corporation - Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Ambuja Cements Ltd - India
- Energy Development Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Economic Council, Georgia
- Attock Cement Pakistan Limited
- Carbofer General Trading SA - India
- Minerals Council of Australia
- Wilmar Investment Holdings
- Savvy Resources Ltd - HongKong
- South Luzon Thermal Energy Corporation
- Pendopo Energi Batubara - Indonesia
- Sree Jayajothi Cements Limited - India
- White Energy Company Limited
- Semirara Mining and Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Merrill Lynch Commodities Europe
- The University of Queensland
- Ministry of Mines - Canada
- Central Electricity Authority - India
- Singapore Mercantile Exchange
- Aboitiz Power Corporation - Philippines
- Coal and Oil Company - UAE
- Binh Thuan Hamico - Vietnam
- Mercuria Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Oldendorff Carriers - Singapore
- Intertek Mineral Services - Indonesia
- Altura Mining Limited, Indonesia
- Electricity Authority, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Parliament of New Zealand
- Thai Mozambique Logistica
- Indian Energy Exchange, India
- Toyota Tsusho Corporation, Japan
- Vizag Seaport Private Limited - India
- Straits Asia Resources Limited - Singapore
- Kartika Selabumi Mining - Indonesia
- Planning Commission, India
- Salva Resources Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rashtriya Ispat Nigam Limited - India
- Miang Besar Coal Terminal - Indonesia
- Videocon Industries ltd - India
- Lanco Infratech Ltd - India
- Bhatia International Limited - India
- India Bulls Power Limited - India
- San Jose City I Power Corp, Philippines
- Ministry of Transport, Egypt
- Coalindo Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- ICICI Bank Limited - India
- IEA Clean Coal Centre - UK
- Tamil Nadu electricity Board
- Eastern Coal Council - USA
- Essar Steel Hazira Ltd - India
- Rio Tinto Coal - Australia
- PNOC Exploration Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Bulk Trading Sa - Switzerland
- Sical Logistics Limited - India
- LBH Netherlands Bv - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Meralco Power Generation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Marubeni Corporation - India
- Asmin Koalindo Tuhup - Indonesia
- Trasteel International SA, Italy
- Coastal Gujarat Power Limited - India
- Bhushan Steel Limited - India
- Interocean Group of Companies - India
- Ind-Barath Power Infra Limited - India
- McConnell Dowell - Australia
- Global Coal Blending Company Limited - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Mining Services - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Therma Luzon, Inc, Philippines
- Cement Manufacturers Association - India
- European Bulk Services B.V. - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Kobexindo Tractors - Indoneisa
- Australian Commodity Traders Exchange
- Ministry of Finance - Indonesia
- Malabar Cements Ltd - India
- New Zealand Coal & Carbon
- GMR Energy Limited - India
- Goldman Sachs - Singapore
- Dalmia Cement Bharat India
- Vedanta Resources Plc - India
- Medco Energi Mining Internasional
- Petrochimia International Co. Ltd.- Taiwan
- Tata Chemicals Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Price Waterhouse Coopers - Russia
- Chamber of Mines of South Africa
- Globalindo Alam Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Power Finance Corporation Ltd., India
- Energy Link Ltd, New Zealand
- Bukit Baiduri Energy - Indonesia
- Commonwealth Bank - Australia
- Formosa Plastics Group - Taiwan
- Aditya Birla Group - India
- Electricity Generating Authority of Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Indian Oil Corporation Limited
- Simpson Spence & Young - Indonesia
- Metalloyd Limited - United Kingdom
- CNBM International Corporation - China
- Bukit Makmur.PT - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Madhucon Powers Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Bharathi Cement Corporation - India
- PowerSource Philippines DevCo
- Mjunction Services Limited - India
- Semirara Mining Corp, Philippines
- Indogreen Group - Indonesia
- Kideco Jaya Agung - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ASAPP Information Group - India
- Orica Australia Pty. Ltd.
- Bhoruka Overseas - Indonesia
- Indonesian Coal Mining Association
- Timah Investasi Mineral - Indoneisa
- SMC Global Power, Philippines
- Uttam Galva Steels Limited - India
- Africa Commodities Group - South Africa
- PTC India Limited - India
- Mintek Dendrill Indonesia
- Jaiprakash Power Ventures ltd
- Borneo Indobara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement - Thailand
- SMG Consultants - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Wood Mackenzie - Singapore
- CIMB Investment Bank - Malaysia
- Central Java Power - Indonesia
- Meenaskhi Energy Private Limited - India
- Standard Chartered Bank - UAE
- Petron Corporation, Philippines
- Xindia Steels Limited - India
- Indika Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Ceylon Electricity Board - Sri Lanka
- Agrawal Coal Company - India
- Barasentosa Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Larsen & Toubro Limited - India
- OPG Power Generation Pvt Ltd - India
- Makarim & Taira - Indonesia
- MS Steel International - UAE
- The Treasury - Australian Government
- Neyveli Lignite Corporation Ltd, - India
- Banpu Public Company Limited - Thailand
- Georgia Ports Authority, United States
- Australian Coal Association
- Kepco SPC Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Port Waratah Coal Services - Australia
- Sakthi Sugars Limited - India
- Global Business Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- Sindya Power Generating Company Private Ltd
- Romanian Commodities Exchange
- Baramulti Group, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mercator Lines Limited - India
- Manunggal Multi Energi - Indonesia
- Star Paper Mills Limited - India
- Kaltim Prima Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Maheswari Brothers Coal Limited - India
- Thiess Contractors Indonesia
- Antam Resourcindo - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Independent Power Producers Association of India
- Billiton Holdings Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- Bangladesh Power Developement Board
- GN Power Mariveles Coal Plant, Philippines
- Parry Sugars Refinery, India
- Grasim Industreis Ltd - India
- GVK Power & Infra Limited - India
- Gujarat Sidhee Cement - India
- Sojitz Corporation - Japan
- Eastern Energy - Thailand
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