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Wednesday, 13 June 12
LOW COAL PRICES COULD CHANGE SUPPLY SIDE DYNAMICS - FITCH RATINGS
 Fitch Ratings believes that the weakness seen in thermal coal prices in recent months should reverse once demand from major importers recovers, although there is a risk low prices may persist into 2013, changing the industry's supply side dynamics.
The price of thermal coal (5,500 kcal coal at Newcastle Australia on a free-on-board basis) reached a two-year low of USD87 per metric ton in early June 2012, down from USD142/mt in January 2011. Major reasons for this decline include China's economic slowdown and high coal inventory levels, increased production and exports from Indonesia and Australia, and increased exports by US coal producers due to cheap natural gas displacing coal used in US power generation.
Fitch believes that prices can recover from current lows once demand from key importers - China and India - improves, and the supply side adjusts to reflect the price environment. India depends on coal as its major energy source and is increasingly relying on imported coal as it struggles to increase domestic production. Likewise in China, thermal coal fired power represents more than 70% of the country's energy needs; Fitch believes thermal coal demand from China will lift again post sufficient policy easing by the government, and continue rising over the medium-to-long term in line with the country's strong GDP growth outlook, albeit lower than previous years.
The weak pricing environment is exposing the business risks of high-cost coal producers, as coal prices fall near or below the marginal cost of production. Many Australian producers have high cash costs of production; such operators will be significantly affected if prices remain low for an extended period. At the same time, sustained low coal prices can shift buyers from low-rank coal to higher-grade coals and thus negatively affect both demand and realized prices for low-rank coal.
Fitch notes that many large coal producers have contracts in place with both volumes and prices fixed, typically for a period of one year; such contracts can account for a meaningful share of their total revenues - for example around 65% for Adaro Indonesia ('BB+'/Stable) and around 45% PT Indika Energy ('B+'/Positive). These operators would be insulated from a temporary weakening of coal prices to some extent. However, should low prices persist through 2012 and into 2013, it will negatively affect the prices they negotiate for 2013; such negotiations typically take place in Q4 and Q1 of each calendar year.
Should the current low price environment persist into 2013, Fitch expects high-cost producers in Australia and the US to undertake production cuts, and review expansion projects under consideration. Fitch also believes that production expansion plans by low-cost producing countries like Indonesia may be curtailed. Such actions would limit coal production levels (or growth) and help address oversupply.
In rating companies producing commodities, like coal, Fitch takes a through-the-cycle approach to its ratings; this factors in a reasonable level of rating headroom to accommodate weakening of coal prices. Cash cost of production and cash margins over an industry cycle are given a heavy emphasis and factored into the ratings. Hence, Fitch does not expect any immediate negative rating actions on its rated coal producers in the Asia-Pacific region.
Source: Fitch Ratings
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Friday, 06 September 24
REBOUND IN OIL DEMAND COULD LIFT MARKET IN LATTER HALF OF 2024 - BIMCO
Supply/demand
Based on a strong second half demand, the supply/balance is forecast to strengthen in 2024 but weaken slightly in 2025 as n ...
Friday, 06 September 24
GLOBAL SEABORNE LNG TRADE HAS CONTINUED TO INCREASE LAST YEAR - BANCHERO COSTA
Global seaborne LNG trade has continued to increase last year, helped also by the events in Ukraine which forced Europe to diversify away from Russ ...
Wednesday, 28 August 24
SEABORNE COAL IMPORTS INTO INDIA INCREASED BY +9.9% Y-O-Y TO 146.6 MLN T - BANCHERO COSTA
Global coal trade has really picked up pace over the past year, and is now fully back to pre-Covid levels said Banchero Costa Research in its lates ...
Tuesday, 06 August 24
EXERCISE CAUTION WITH AMMONIA SWITCH - BALTIC EXCHANGE
A new study from the Massachusetts Institute of Technology (MIT) has thrown a spanner into the plan to transition ships from diesel fuel to ammonia ...
Friday, 02 August 24
ENERGY MARKET DEVELOPMENTS: COAL AND NATURAL GAS PRICES REACH RECORD HIGHS - WORLD BANK
The recent surge in natural gas and coal prices has been so swift that the main benchmarks were roughly three times higher in 2022Q2 compared to a ...
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- Deloitte Consulting - India
- Commonwealth Bank - Australia
- MS Steel International - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhoruka Overseas - Indonesia
- Bulk Trading Sa - Switzerland
- Kaltim Prima Coal - Indonesia
- Vedanta Resources Plc - India
- Chettinad Cement Corporation Ltd - India
- Siam City Cement PLC, Thailand
- Wood Mackenzie - Singapore
- Siam City Cement - Thailand
- GMR Energy Limited - India
- Edison Trading Spa - Italy
- Australian Commodity Traders Exchange
- Sree Jayajothi Cements Limited - India
- Mercuria Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Goldman Sachs - Singapore
- GAC Shipping (India) Pvt Ltd
- Mercator Lines Limited - India
- Mjunction Services Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Mintek Dendrill Indonesia
- Power Finance Corporation Ltd., India
- Formosa Plastics Group - Taiwan
- Orica Mining Services - Indonesia
- Cement Manufacturers Association - India
- Jaiprakash Power Ventures ltd
- Iligan Light & Power Inc, Philippines
- Coal and Oil Company - UAE
- AsiaOL BioFuels Corp., Philippines
- PTC India Limited - India
- Merrill Lynch Commodities Europe
- Orica Australia Pty. Ltd.
- Maharashtra Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- International Coal Ventures Pvt Ltd - India
- Interocean Group of Companies - India
- Gujarat Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- TeaM Sual Corporation - Philippines
- Coalindo Energy - Indonesia
- Xindia Steels Limited - India
- Indian Oil Corporation Limited
- Global Green Power PLC Corporation, Philippines
- SMG Consultants - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Sarangani Energy Corporation, Philippines
- Meralco Power Generation, Philippines
- Bayan Resources Tbk. - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Indika Energy - Indonesia
- Electricity Generating Authority of Thailand
- Semirara Mining Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Uttam Galva Steels Limited - India
- India Bulls Power Limited - India
- Posco Energy - South Korea
- Banpu Public Company Limited - Thailand
- Karaikal Port Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Central Java Power - Indonesia
- Ministry of Mines - Canada
- Grasim Industreis Ltd - India
- Thai Mozambique Logistica
- LBH Netherlands Bv - Netherlands
- Maheswari Brothers Coal Limited - India
- IEA Clean Coal Centre - UK
- Kideco Jaya Agung - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Standard Chartered Bank - UAE
- Dalmia Cement Bharat India
- European Bulk Services B.V. - Netherlands
- Therma Luzon, Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Carbofer General Trading SA - India
- Kohat Cement Company Ltd. - Pakistan
- Binh Thuan Hamico - Vietnam
- Australian Coal Association
- Georgia Ports Authority, United States
- Videocon Industries ltd - India
- CIMB Investment Bank - Malaysia
- Sojitz Corporation - Japan
- Africa Commodities Group - South Africa
- Trasteel International SA, Italy
- Oldendorff Carriers - Singapore
- Lanco Infratech Ltd - India
- Kumho Petrochemical, South Korea
- Riau Bara Harum - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Attock Cement Pakistan Limited
- Directorate General of MIneral and Coal - Indonesia
- ICICI Bank Limited - India
- Meenaskhi Energy Private Limited - India
- Salva Resources Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Baramulti Group, Indonesia
- Malabar Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Medco Energi Mining Internasional
- Renaissance Capital - South Africa
- Thiess Contractors Indonesia
- Star Paper Mills Limited - India
- IHS Mccloskey Coal Group - USA
- Bhushan Steel Limited - India
- Cigading International Bulk Terminal - Indonesia
- Parliament of New Zealand
- Metalloyd Limited - United Kingdom
- Independent Power Producers Association of India
- Vijayanagar Sugar Pvt Ltd - India
- Bhatia International Limited - India
- Bharathi Cement Corporation - India
- Bukit Makmur.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Global Coal Blending Company Limited - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Price Waterhouse Coopers - Russia
- Agrawal Coal Company - India
- GN Power Mariveles Coal Plant, Philippines
- Krishnapatnam Port Company Ltd. - India
- Samtan Co., Ltd - South Korea
- Semirara Mining and Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- The State Trading Corporation of India Ltd
- Timah Investasi Mineral - Indoneisa
- Essar Steel Hazira Ltd - India
- McConnell Dowell - Australia
- PetroVietnam Power Coal Import and Supply Company
- Intertek Mineral Services - Indonesia
- The University of Queensland
- Toyota Tsusho Corporation, Japan
- SMC Global Power, Philippines
- Rio Tinto Coal - Australia
- CNBM International Corporation - China
- Savvy Resources Ltd - HongKong
- Gujarat Sidhee Cement - India
- Jindal Steel & Power Ltd - India
- Wilmar Investment Holdings
- Kapuas Tunggal Persada - Indonesia
- Kepco SPC Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Romanian Commodities Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- South Luzon Thermal Energy Corporation
- Marubeni Corporation - India
- Madhucon Powers Ltd - India
- Aboitiz Power Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Ambuja Cements Ltd - India
- PowerSource Philippines DevCo
- The Treasury - Australian Government
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Anglo American - United Kingdom
- Energy Link Ltd, New Zealand
- Globalindo Alam Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Borneo Indobara - Indonesia
- Indonesian Coal Mining Association
- New Zealand Coal & Carbon
- VISA Power Limited - India
- Ministry of Finance - Indonesia
- Parry Sugars Refinery, India
- Singapore Mercantile Exchange
- Manunggal Multi Energi - Indonesia
- Kartika Selabumi Mining - Indonesia
- Petron Corporation, Philippines
- Aditya Birla Group - India
- Electricity Authority, New Zealand
- Tata Chemicals Ltd - India
- Chamber of Mines of South Africa
- Ministry of Transport, Egypt
- SN Aboitiz Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Asam (Persero) Tbk - Indonesia
- Simpson Spence & Young - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Central Electricity Authority - India
- Latin American Coal - Colombia
- Makarim & Taira - Indonesia
- Sakthi Sugars Limited - India
- Planning Commission, India
- Port Waratah Coal Services - Australia
- Pendopo Energi Batubara - Indonesia
- London Commodity Brokers - England
- Larsen & Toubro Limited - India
- White Energy Company Limited
- Minerals Council of Australia
- Bukit Baiduri Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Energy Exchange, India
- Altura Mining Limited, Indonesia
- Eastern Energy - Thailand
- Heidelberg Cement - Germany
- GVK Power & Infra Limited - India
- Bangladesh Power Developement Board
- Kobexindo Tractors - Indoneisa
- Economic Council, Georgia
- Indogreen Group - Indonesia
- PNOC Exploration Corporation - Philippines
- ASAPP Information Group - India
- San Jose City I Power Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Energy Development Corp, Philippines
- Global Business Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Sical Logistics Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
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