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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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Tuesday, 27 October 20
PLN STILL REFUSING TO ADAPT, A MOVE WHICH WILL HURT INVESTORS, CONSUMERS, AND THE GOVERNMENT PURSE - IEEFA
Utility’s latest planning report locks PLN into the past
PLN would be better served restructuring its business to address the current en ...
Monday, 26 October 20
'LONG ASCENT' TO RECOVERY OF GLOBAL GROWTH - BALTIC EXCHANGE
The global economy has so far avoided a “financial catastrophe” but growth projections from the International Monetary Fund’s lat ...
Friday, 23 October 20
SHIPPING LOANS AND COLLATERAL DAMAGE - VICTOR ONYEGBADO, AKABOGU & ASSOCIATES
KNOWLEDGE TO ELEVATE
Shipping finance transactions are characterised by peculiar risk factors principally on account of the shipping asset&rsq ...
Friday, 23 October 20
WHAT WILL THE 2020 ELECTIONS MEAN FOR US ENERGY? - WOOD MACKENZIE
The 2020 elections present American voters with a choice between two radically different visions for the future of energy. President Donald Trump r ...
Wednesday, 21 October 20
BRAZIL EXPORTED 238.7 MLN TONNES OF IRON ORE IN THE FIRST 9 MONTHS OF 2020 - BANCHERO COSTA
Brazil’s iron ore exports have been gradually but steadily recovering following a disastrous winter period of 2019/2020. In the first 9 month ...
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- Oldendorff Carriers - Singapore
- Bhushan Steel Limited - India
- Minerals Council of Australia
- Bukit Baiduri Energy - Indonesia
- Latin American Coal - Colombia
- IHS Mccloskey Coal Group - USA
- Orica Mining Services - Indonesia
- International Coal Ventures Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- ASAPP Information Group - India
- Barasentosa Lestari - Indonesia
- SMG Consultants - Indonesia
- Jaiprakash Power Ventures ltd
- Madhucon Powers Ltd - India
- Agrawal Coal Company - India
- Ministry of Mines - Canada
- Larsen & Toubro Limited - India
- Coal and Oil Company - UAE
- PNOC Exploration Corporation - Philippines
- Electricity Generating Authority of Thailand
- The Treasury - Australian Government
- Star Paper Mills Limited - India
- Billiton Holdings Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- Australian Coal Association
- Coastal Gujarat Power Limited - India
- Parry Sugars Refinery, India
- McConnell Dowell - Australia
- Uttam Galva Steels Limited - India
- Intertek Mineral Services - Indonesia
- Tamil Nadu electricity Board
- Sical Logistics Limited - India
- Siam City Cement - Thailand
- Semirara Mining and Power Corporation, Philippines
- GMR Energy Limited - India
- Thai Mozambique Logistica
- CIMB Investment Bank - Malaysia
- Binh Thuan Hamico - Vietnam
- Central Java Power - Indonesia
- Banpu Public Company Limited - Thailand
- European Bulk Services B.V. - Netherlands
- Commonwealth Bank - Australia
- Gujarat Sidhee Cement - India
- Kepco SPC Power Corporation, Philippines
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- Chettinad Cement Corporation Ltd - India
- PTC India Limited - India
- Energy Development Corp, Philippines
- Ministry of Finance - Indonesia
- Kartika Selabumi Mining - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- GN Power Mariveles Coal Plant, Philippines
- Africa Commodities Group - South Africa
- Planning Commission, India
- Kideco Jaya Agung - Indonesia
- Orica Australia Pty. Ltd.
- OPG Power Generation Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- MS Steel International - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mjunction Services Limited - India
- Petron Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Sakthi Sugars Limited - India
- Eastern Coal Council - USA
- Posco Energy - South Korea
- Pendopo Energi Batubara - Indonesia
- Simpson Spence & Young - Indonesia
- Global Green Power PLC Corporation, Philippines
- Sojitz Corporation - Japan
- Straits Asia Resources Limited - Singapore
- Videocon Industries ltd - India
- Price Waterhouse Coopers - Russia
- Ceylon Electricity Board - Sri Lanka
- Kobexindo Tractors - Indoneisa
- Meralco Power Generation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Grasim Industreis Ltd - India
- Indogreen Group - Indonesia
- Bangladesh Power Developement Board
- Indonesian Coal Mining Association
- CNBM International Corporation - China
- Bulk Trading Sa - Switzerland
- The University of Queensland
- Edison Trading Spa - Italy
- Kalimantan Lumbung Energi - Indonesia
- Thiess Contractors Indonesia
- Bhoruka Overseas - Indonesia
- Interocean Group of Companies - India
- Standard Chartered Bank - UAE
- Makarim & Taira - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Merrill Lynch Commodities Europe
- Maheswari Brothers Coal Limited - India
- Essar Steel Hazira Ltd - India
- Tata Chemicals Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- Manunggal Multi Energi - Indonesia
- Indika Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Global Coal Blending Company Limited - Australia
- New Zealand Coal & Carbon
- Central Electricity Authority - India
- Jorong Barutama Greston.PT - Indonesia
- Deloitte Consulting - India
- Leighton Contractors Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Meenaskhi Energy Private Limited - India
- Independent Power Producers Association of India
- Salva Resources Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Singapore Mercantile Exchange
- Rashtriya Ispat Nigam Limited - India
- Mintek Dendrill Indonesia
- Dalmia Cement Bharat India
- Miang Besar Coal Terminal - Indonesia
- LBH Netherlands Bv - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Commodity Traders Exchange
- Directorate General of MIneral and Coal - Indonesia
- Baramulti Group, Indonesia
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- Altura Mining Limited, Indonesia
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- Bharathi Cement Corporation - India
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- Sarangani Energy Corporation, Philippines
- Goldman Sachs - Singapore
- Energy Link Ltd, New Zealand
- Lanco Infratech Ltd - India
- TeaM Sual Corporation - Philippines
- Borneo Indobara - Indonesia
- Mercator Lines Limited - India
- Bhatia International Limited - India
- The State Trading Corporation of India Ltd
- India Bulls Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Bukit Makmur.PT - Indonesia
- Sree Jayajothi Cements Limited - India
- Vizag Seaport Private Limited - India
- Power Finance Corporation Ltd., India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Aditya Birla Group - India
- Kapuas Tunggal Persada - Indonesia
- GAC Shipping (India) Pvt Ltd
- Aboitiz Power Corporation - Philippines
- VISA Power Limited - India
- PowerSource Philippines DevCo
- Samtan Co., Ltd - South Korea
- SMC Global Power, Philippines
- Wood Mackenzie - Singapore
- Kumho Petrochemical, South Korea
- Therma Luzon, Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Holcim Trading Pte Ltd - Singapore
- Medco Energi Mining Internasional
- Rio Tinto Coal - Australia
- Marubeni Corporation - India
- Cigading International Bulk Terminal - Indonesia
- Toyota Tsusho Corporation, Japan
- Wilmar Investment Holdings
- Anglo American - United Kingdom
- Jindal Steel & Power Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Carbofer General Trading SA - India
- AsiaOL BioFuels Corp., Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Malabar Cements Ltd - India
- London Commodity Brokers - England
- Karaikal Port Pvt Ltd - India
- Renaissance Capital - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Oil Corporation Limited
- Ministry of Transport, Egypt
- Metalloyd Limited - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining Corp, Philippines
- GVK Power & Infra Limited - India
- Riau Bara Harum - Indonesia
- Mercuria Energy - Indonesia
- Eastern Energy - Thailand
- Globalindo Alam Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- Parliament of New Zealand
- SN Aboitiz Power Inc, Philippines
- Savvy Resources Ltd - HongKong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Georgia Ports Authority, United States
- South Luzon Thermal Energy Corporation
- Directorate Of Revenue Intelligence - India
- Electricity Authority, New Zealand
- Xindia Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Vedanta Resources Plc - India
- Economic Council, Georgia
- Indian Energy Exchange, India
- Antam Resourcindo - Indonesia
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- Heidelberg Cement - Germany
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- Cement Manufacturers Association - India
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- Alfred C Toepfer International GmbH - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
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