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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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Monday, 08 January 24
KOSPO TO BUY 80000 MT OF INDONESIAN LOW CALORIFIC VALUE COAL FOR FEB 2024
Korea Southern Power Co., Ltd. (KOSPO), is inviting bids for the supply of Indonesian Low Calorific Value Coal from qualified suppliers for Korean ...
Monday, 08 January 24
SEABORNE TRADE REACHES 12.4BN TONNES - CLARKSONS
China will establish a back-up coal production system by 2027 to stabilise prices and secure coal supply, the state planner said on Wednesday, even ...
Monday, 08 January 24
CAPESIZES START THE NEW YEAR ON POSITIVE NOTE - BALTIC EXCHANGE
Capesize
This week the capsize market has been marked by a mix of activities and challenges. Despite a slow start following the Christmas and N ...
Friday, 05 January 24
MORGAN STANLEY SEES LOWER OIL PRICES IN 2024 ON OVERSUPPLY CONCERNS - REUTERS
Morgan Stanley sees Brent crude prices anchored near $80 per barrel in the first half in 2024 before declining towards the end of the year as it ex ...
Friday, 05 January 24
INDIA'S COAL OUTPUT RISES NEARLY 11 PC IN DEC TO 92.87 MT - PTI
India’s coal production increased by 10.75 per cent to 92.87 million tonne in December 2023 as compared to the year-ago period, an official s ...
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- The State Trading Corporation of India Ltd
- Bharathi Cement Corporation - India
- Indo Tambangraya Megah - Indonesia
- Videocon Industries ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Malabar Cements Ltd - India
- Wood Mackenzie - Singapore
- London Commodity Brokers - England
- Meenaskhi Energy Private Limited - India
- Mercator Lines Limited - India
- Bukit Makmur.PT - Indonesia
- Mercuria Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Kobexindo Tractors - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- New Zealand Coal & Carbon
- Vijayanagar Sugar Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Romanian Commodities Exchange
- Central Java Power - Indonesia
- Kumho Petrochemical, South Korea
- India Bulls Power Limited - India
- PowerSource Philippines DevCo
- Parliament of New Zealand
- VISA Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- South Luzon Thermal Energy Corporation
- Larsen & Toubro Limited - India
- Australian Coal Association
- Chamber of Mines of South Africa
- Renaissance Capital - South Africa
- Thai Mozambique Logistica
- Kartika Selabumi Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Bhoruka Overseas - Indonesia
- Semirara Mining Corp, Philippines
- Central Electricity Authority - India
- Parry Sugars Refinery, India
- Agrawal Coal Company - India
- Lanco Infratech Ltd - India
- Maheswari Brothers Coal Limited - India
- Billiton Holdings Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Kepco SPC Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Ministry of Finance - Indonesia
- Merrill Lynch Commodities Europe
- AsiaOL BioFuels Corp., Philippines
- GMR Energy Limited - India
- Goldman Sachs - Singapore
- Grasim Industreis Ltd - India
- LBH Netherlands Bv - Netherlands
- McConnell Dowell - Australia
- Sakthi Sugars Limited - India
- SMG Consultants - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Barasentosa Lestari - Indonesia
- Posco Energy - South Korea
- Karbindo Abesyapradhi - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coal and Oil Company - UAE
- Edison Trading Spa - Italy
- ASAPP Information Group - India
- Kideco Jaya Agung - Indonesia
- Commonwealth Bank - Australia
- Global Coal Blending Company Limited - Australia
- Bukit Baiduri Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indogreen Group - Indonesia
- Siam City Cement PLC, Thailand
- Chettinad Cement Corporation Ltd - India
- GAC Shipping (India) Pvt Ltd
- Trasteel International SA, Italy
- Economic Council, Georgia
- Cement Manufacturers Association - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- CNBM International Corporation - China
- Jaiprakash Power Ventures ltd
- Price Waterhouse Coopers - Russia
- Bhatia International Limited - India
- Carbofer General Trading SA - India
- Bahari Cakrawala Sebuku - Indonesia
- Formosa Plastics Group - Taiwan
- Ministry of Mines - Canada
- Iligan Light & Power Inc, Philippines
- Attock Cement Pakistan Limited
- OPG Power Generation Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- GVK Power & Infra Limited - India
- Africa Commodities Group - South Africa
- Essar Steel Hazira Ltd - India
- Sojitz Corporation - Japan
- Manunggal Multi Energi - Indonesia
- Interocean Group of Companies - India
- Minerals Council of Australia
- Planning Commission, India
- Kapuas Tunggal Persada - Indonesia
- Sical Logistics Limited - India
- Banpu Public Company Limited - Thailand
- Georgia Ports Authority, United States
- Indian Oil Corporation Limited
- Altura Mining Limited, Indonesia
- Eastern Coal Council - USA
- Thiess Contractors Indonesia
- Makarim & Taira - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Savvy Resources Ltd - HongKong
- Gujarat Mineral Development Corp Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Singapore Mercantile Exchange
- Alfred C Toepfer International GmbH - Germany
- Australian Commodity Traders Exchange
- Mjunction Services Limited - India
- Global Business Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- PNOC Exploration Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Power Finance Corporation Ltd., India
- Kaltim Prima Coal - Indonesia
- White Energy Company Limited
- Ambuja Cements Ltd - India
- Tata Chemicals Ltd - India
- Electricity Authority, New Zealand
- Ceylon Electricity Board - Sri Lanka
- Rio Tinto Coal - Australia
- Deloitte Consulting - India
- Standard Chartered Bank - UAE
- Independent Power Producers Association of India
- PTC India Limited - India
- Bhushan Steel Limited - India
- Baramulti Group, Indonesia
- Semirara Mining and Power Corporation, Philippines
- SMC Global Power, Philippines
- Sinarmas Energy and Mining - Indonesia
- Bulk Trading Sa - Switzerland
- The University of Queensland
- Timah Investasi Mineral - Indoneisa
- Energy Development Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Medco Energi Mining Internasional
- Petron Corporation, Philippines
- IEA Clean Coal Centre - UK
- IHS Mccloskey Coal Group - USA
- Globalindo Alam Lestari - Indonesia
- Aditya Birla Group - India
- Wilmar Investment Holdings
- Mintek Dendrill Indonesia
- San Jose City I Power Corp, Philippines
- Ministry of Transport, Egypt
- Leighton Contractors Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- MS Steel International - UAE
- Karaikal Port Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Dalmia Cement Bharat India
- Coalindo Energy - Indonesia
- Orica Mining Services - Indonesia
- Indonesian Coal Mining Association
- Vizag Seaport Private Limited - India
- Salva Resources Pvt Ltd - India
- Star Paper Mills Limited - India
- Oldendorff Carriers - Singapore
- Meralco Power Generation, Philippines
- Sindya Power Generating Company Private Ltd
- Xindia Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Marubeni Corporation - India
- Bangladesh Power Developement Board
- Therma Luzon, Inc, Philippines
- Anglo American - United Kingdom
- Port Waratah Coal Services - Australia
- Riau Bara Harum - Indonesia
- Toyota Tsusho Corporation, Japan
- Borneo Indobara - Indonesia
- Electricity Generating Authority of Thailand
- Sree Jayajothi Cements Limited - India
- Tamil Nadu electricity Board
- Antam Resourcindo - Indonesia
- Coastal Gujarat Power Limited - India
- Energy Link Ltd, New Zealand
- Ind-Barath Power Infra Limited - India
- Siam City Cement - Thailand
- Bayan Resources Tbk. - Indonesia
- CIMB Investment Bank - Malaysia
- TNB Fuel Sdn Bhd - Malaysia
- Madhucon Powers Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Latin American Coal - Colombia
- International Coal Ventures Pvt Ltd - India
- Indika Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- Uttam Galva Steels Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Orica Australia Pty. Ltd.
- Simpson Spence & Young - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Vedanta Resources Plc - India
- Heidelberg Cement - Germany
- Metalloyd Limited - United Kingdom
- Global Green Power PLC Corporation, Philippines
- The Treasury - Australian Government
- Indian Energy Exchange, India
- ICICI Bank Limited - India
- Eastern Energy - Thailand
- Gujarat Sidhee Cement - India
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