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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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Thursday, 25 January 24
THE RED SEA ESCALATION IMPLICATIONS ON GLOBAL SEABORNE TRADE - MARIA BERTZELETOU
In recent days, discussions have intensified about the potential impact on the seaborne trade and ton-miles due to the evolving dynamics of market ...
Thursday, 25 January 24
RED SEA SHIPPING DISRUPTIONS KEEP GEOPOLITICAL PREMIUM FOR COMMODITIES - FITCH RATINGS
Shipping disruptions and re-routing away from the Red Sea will maintain the geopolitical premium in the main commodity markets, including for oil a ...
Friday, 19 January 24
INDONESIA TARGETS 710 MLN METRIC TONS COAL OUTPUT IN 2024 AFTER RECORD 2023 - REUTERS
Indonesia, a major thermal coal exporter, aims to produce 710 million metric tons of coal in 2024, its mining minister said on Monday, after postin ...
Friday, 19 January 24
DRUMMOND COLOMBIA COAL OUTPUT ROSE 7.1% IN 2023 - REUTERS
Coal production from miner Drummond’s Colombia operations rose 7.1% in 2023 to 29.5 million metric tons, while exports declined by 2.6% to 27 ...
Friday, 19 January 24
CHINA'S 2023 COAL OUTPUT HITS RECORD HIGH - REUTERS
China’s coal output reached a record high in 2023, data from the statistics bureau showed on Wednesday, amid an ongoing focus on energy secur ...
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- Meralco Power Generation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- Bhoruka Overseas - Indonesia
- Sree Jayajothi Cements Limited - India
- Lanco Infratech Ltd - India
- Vizag Seaport Private Limited - India
- European Bulk Services B.V. - Netherlands
- Independent Power Producers Association of India
- Toyota Tsusho Corporation, Japan
- CNBM International Corporation - China
- Metalloyd Limited - United Kingdom
- Anglo American - United Kingdom
- Agrawal Coal Company - India
- Vedanta Resources Plc - India
- Petron Corporation, Philippines
- PowerSource Philippines DevCo
- PetroVietnam Power Coal Import and Supply Company
- Directorate General of MIneral and Coal - Indonesia
- Madhucon Powers Ltd - India
- Indika Energy - Indonesia
- London Commodity Brokers - England
- Mercator Lines Limited - India
- Cigading International Bulk Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Essar Steel Hazira Ltd - India
- Eastern Energy - Thailand
- Videocon Industries ltd - India
- Ceylon Electricity Board - Sri Lanka
- Antam Resourcindo - Indonesia
- Barasentosa Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sinarmas Energy and Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- Bulk Trading Sa - Switzerland
- Energy Link Ltd, New Zealand
- Eastern Coal Council - USA
- Romanian Commodities Exchange
- Samtan Co., Ltd - South Korea
- New Zealand Coal & Carbon
- PTC India Limited - India
- Ministry of Transport, Egypt
- Indian Oil Corporation Limited
- Edison Trading Spa - Italy
- Kohat Cement Company Ltd. - Pakistan
- Bharathi Cement Corporation - India
- Africa Commodities Group - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Posco Energy - South Korea
- Ind-Barath Power Infra Limited - India
- Merrill Lynch Commodities Europe
- Global Business Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- South Luzon Thermal Energy Corporation
- Central Electricity Authority - India
- Karbindo Abesyapradhi - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- Orica Mining Services - Indonesia
- Kartika Selabumi Mining - Indonesia
- Wood Mackenzie - Singapore
- Rashtriya Ispat Nigam Limited - India
- Simpson Spence & Young - Indonesia
- Interocean Group of Companies - India
- Singapore Mercantile Exchange
- Medco Energi Mining Internasional
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Aditya Birla Group - India
- Sakthi Sugars Limited - India
- Australian Commodity Traders Exchange
- Standard Chartered Bank - UAE
- Karaikal Port Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Latin American Coal - Colombia
- Directorate Of Revenue Intelligence - India
- Baramulti Group, Indonesia
- IEA Clean Coal Centre - UK
- Iligan Light & Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Price Waterhouse Coopers - Russia
- Siam City Cement PLC, Thailand
- Uttam Galva Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- Renaissance Capital - South Africa
- Ministry of Finance - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- McConnell Dowell - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Timah Investasi Mineral - Indoneisa
- Central Java Power - Indonesia
- Ministry of Mines - Canada
- Minerals Council of Australia
- The Treasury - Australian Government
- The University of Queensland
- Gujarat Mineral Development Corp Ltd - India
- GAC Shipping (India) Pvt Ltd
- SMG Consultants - Indonesia
- Semirara Mining Corp, Philippines
- Coastal Gujarat Power Limited - India
- VISA Power Limited - India
- Salva Resources Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Dalmia Cement Bharat India
- India Bulls Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Tata Chemicals Ltd - India
- Power Finance Corporation Ltd., India
- White Energy Company Limited
- Pendopo Energi Batubara - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Marubeni Corporation - India
- Kumho Petrochemical, South Korea
- Malabar Cements Ltd - India
- GMR Energy Limited - India
- Orica Australia Pty. Ltd.
- Manunggal Multi Energi - Indonesia
- Gujarat Sidhee Cement - India
- Indonesian Coal Mining Association
- SN Aboitiz Power Inc, Philippines
- Sojitz Corporation - Japan
- Vijayanagar Sugar Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Mjunction Services Limited - India
- Banpu Public Company Limited - Thailand
- Attock Cement Pakistan Limited
- Maharashtra Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Kobexindo Tractors - Indoneisa
- Intertek Mineral Services - Indonesia
- Grasim Industreis Ltd - India
- Larsen & Toubro Limited - India
- Sarangani Energy Corporation, Philippines
- Xindia Steels Limited - India
- Indian Energy Exchange, India
- Electricity Generating Authority of Thailand
- Kideco Jaya Agung - Indonesia
- Riau Bara Harum - Indonesia
- Parry Sugars Refinery, India
- Savvy Resources Ltd - HongKong
- Oldendorff Carriers - Singapore
- Parliament of New Zealand
- Heidelberg Cement - Germany
- Bangladesh Power Developement Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Trasteel International SA, Italy
- Australian Coal Association
- Electricity Authority, New Zealand
- Neyveli Lignite Corporation Ltd, - India
- Indo Tambangraya Megah - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Mercuria Energy - Indonesia
- Ambuja Cements Ltd - India
- SMC Global Power, Philippines
- Bhatia International Limited - India
- San Jose City I Power Corp, Philippines
- Jindal Steel & Power Ltd - India
- Cement Manufacturers Association - India
- Meenaskhi Energy Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Carbofer General Trading SA - India
- Tamil Nadu electricity Board
- Altura Mining Limited, Indonesia
- Coal and Oil Company - UAE
- Kapuas Tunggal Persada - Indonesia
- Jaiprakash Power Ventures ltd
- Makarim & Taira - Indonesia
- Energy Development Corp, Philippines
- Economic Council, Georgia
- Thiess Contractors Indonesia
- Formosa Plastics Group - Taiwan
- Commonwealth Bank - Australia
- AsiaOL BioFuels Corp., Philippines
- ASAPP Information Group - India
- Gujarat Electricity Regulatory Commission - India
- Goldman Sachs - Singapore
- IHS Mccloskey Coal Group - USA
- TeaM Sual Corporation - Philippines
- Borneo Indobara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Siam City Cement - Thailand
- Global Green Power PLC Corporation, Philippines
- Deloitte Consulting - India
- Planning Commission, India
- Chamber of Mines of South Africa
- The State Trading Corporation of India Ltd
- Port Waratah Coal Services - Australia
- Holcim Trading Pte Ltd - Singapore
- Semirara Mining and Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- CIMB Investment Bank - Malaysia
- Bahari Cakrawala Sebuku - Indonesia
- Thai Mozambique Logistica
- Bhushan Steel Limited - India
- Wilmar Investment Holdings
- International Coal Ventures Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Indogreen Group - Indonesia
- Coalindo Energy - Indonesia
- Georgia Ports Authority, United States
- Mintek Dendrill Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- LBH Netherlands Bv - Netherlands
- Bayan Resources Tbk. - Indonesia
- Miang Besar Coal Terminal - Indonesia
- GVK Power & Infra Limited - India
- MS Steel International - UAE
- Sical Logistics Limited - India
- Rio Tinto Coal - Australia
- Bukit Baiduri Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- ICICI Bank Limited - India
- Star Paper Mills Limited - India
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