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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, 02 August 24
COAL MARKET DEVELOPMENTS: FALLING PRICES AMID RECORD-HIGH OUTPUT - WORLD BANK
Coal prices inched up in May (m/m) following an 8 percent decline in 2024Q1. The Australian and South African benchmarks have plummeted more ...
Friday, 26 July 24
FUELEU MARITME IS COMING. IS YOUR CHARTERPARTY READY? - GARD
With less than six months to implementation of FuelEU Maritime in EU and EEA trades, there has been little published advice regarding how to alloca ...
Thursday, 04 July 24
INDIA'S COAL PRODUCTION RISES 14% IN JUNE - PTI
The country’s coal production rose by 14.49% to 84.63 million tonne (MT) in June. The country’s coal output was 73.92 MT in June last f ...
Tuesday, 02 July 24
NTPC CAPTIVE COAL OUTPUT GROWS 15% IN Q1; DESPATCH RISES 17%
State-owned NTPC on Monday reported a 15 per cent year-on-year increase in the production of coal from captives mines to 9.862 metric million tonne ...
Friday, 28 June 24
KOSPO INVITED BIDS FOR 400,000 MT OF MINIMUM 4000 NCV COAL FOR FIVE YEARS
Korea Southern Power Co., Ltd. (KOSPO), is inviting bids for total 400,000 MT of Low Calorific Value Coal for 5 years starting from July 2024 until ...
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- Central Java Power - Indonesia
- Simpson Spence & Young - Indonesia
- Meenaskhi Energy Private Limited - India
- Vizag Seaport Private Limited - India
- Savvy Resources Ltd - HongKong
- San Jose City I Power Corp, Philippines
- MS Steel International - UAE
- Formosa Plastics Group - Taiwan
- Energy Development Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Cement Manufacturers Association - India
- Antam Resourcindo - Indonesia
- Ind-Barath Power Infra Limited - India
- Latin American Coal - Colombia
- Price Waterhouse Coopers - Russia
- Krishnapatnam Port Company Ltd. - India
- McConnell Dowell - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Salva Resources Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Trasteel International SA, Italy
- Sree Jayajothi Cements Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Wilmar Investment Holdings
- Indian Energy Exchange, India
- Georgia Ports Authority, United States
- Deloitte Consulting - India
- Bukit Baiduri Energy - Indonesia
- Indian Oil Corporation Limited
- Larsen & Toubro Limited - India
- Mercator Lines Limited - India
- CIMB Investment Bank - Malaysia
- Riau Bara Harum - Indonesia
- Uttam Galva Steels Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Kideco Jaya Agung - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- GMR Energy Limited - India
- Samtan Co., Ltd - South Korea
- Indika Energy - Indonesia
- Siam City Cement - Thailand
- New Zealand Coal & Carbon
- Indonesian Coal Mining Association
- Commonwealth Bank - Australia
- Straits Asia Resources Limited - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Australian Commodity Traders Exchange
- Tamil Nadu electricity Board
- Bulk Trading Sa - Switzerland
- Aditya Birla Group - India
- Kartika Selabumi Mining - Indonesia
- Grasim Industreis Ltd - India
- The University of Queensland
- Gujarat Sidhee Cement - India
- Directorate Of Revenue Intelligence - India
- Vijayanagar Sugar Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Coal and Oil Company - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Economic Council, Georgia
- Kapuas Tunggal Persada - Indonesia
- Altura Mining Limited, Indonesia
- International Coal Ventures Pvt Ltd - India
- Semirara Mining Corp, Philippines
- The State Trading Corporation of India Ltd
- White Energy Company Limited
- Port Waratah Coal Services - Australia
- PetroVietnam Power Coal Import and Supply Company
- VISA Power Limited - India
- SMG Consultants - Indonesia
- Thiess Contractors Indonesia
- Sinarmas Energy and Mining - Indonesia
- Global Business Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Baramulti Group, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bhatia International Limited - India
- Central Electricity Authority - India
- Aboitiz Power Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- The Treasury - Australian Government
- Electricity Authority, New Zealand
- Bayan Resources Tbk. - Indonesia
- Pendopo Energi Batubara - Indonesia
- Banpu Public Company Limited - Thailand
- PTC India Limited - India
- Independent Power Producers Association of India
- Vedanta Resources Plc - India
- Goldman Sachs - Singapore
- Ministry of Mines - Canada
- Bahari Cakrawala Sebuku - Indonesia
- Parliament of New Zealand
- ASAPP Information Group - India
- Bhushan Steel Limited - India
- Meralco Power Generation, Philippines
- Medco Energi Mining Internasional
- European Bulk Services B.V. - Netherlands
- Mercuria Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Alfred C Toepfer International GmbH - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- Standard Chartered Bank - UAE
- Sojitz Corporation - Japan
- PNOC Exploration Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Metalloyd Limited - United Kingdom
- Videocon Industries ltd - India
- Intertek Mineral Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Africa Commodities Group - South Africa
- Australian Coal Association
- Indo Tambangraya Megah - Indonesia
- ICICI Bank Limited - India
- Chettinad Cement Corporation Ltd - India
- Coalindo Energy - Indonesia
- GVK Power & Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- London Commodity Brokers - England
- Ceylon Electricity Board - Sri Lanka
- Lanco Infratech Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Mintek Dendrill Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Electricity Generating Authority of Thailand
- Timah Investasi Mineral - Indoneisa
- Dalmia Cement Bharat India
- Heidelberg Cement - Germany
- South Luzon Thermal Energy Corporation
- Orica Australia Pty. Ltd.
- Thai Mozambique Logistica
- Rio Tinto Coal - Australia
- Indogreen Group - Indonesia
- Parry Sugars Refinery, India
- Eastern Coal Council - USA
- PowerSource Philippines DevCo
- Renaissance Capital - South Africa
- Carbofer General Trading SA - India
- Posco Energy - South Korea
- Tata Chemicals Ltd - India
- Minerals Council of Australia
- Gujarat Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Madhucon Powers Ltd - India
- Anglo American - United Kingdom
- Kobexindo Tractors - Indoneisa
- TeaM Sual Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Edison Trading Spa - Italy
- Planning Commission, India
- Bharathi Cement Corporation - India
- Asmin Koalindo Tuhup - Indonesia
- Oldendorff Carriers - Singapore
- GAC Shipping (India) Pvt Ltd
- Ministry of Transport, Egypt
- Bank of Tokyo Mitsubishi UFJ Ltd
- India Bulls Power Limited - India
- SMC Global Power, Philippines
- Merrill Lynch Commodities Europe
- Essar Steel Hazira Ltd - India
- Wood Mackenzie - Singapore
- Interocean Group of Companies - India
- Jaiprakash Power Ventures ltd
- Sakthi Sugars Limited - India
- Globalindo Alam Lestari - Indonesia
- Malabar Cements Ltd - India
- Xindia Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kumho Petrochemical, South Korea
- Makarim & Taira - Indonesia
- Ministry of Finance - Indonesia
- Iligan Light & Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Binh Thuan Hamico - Vietnam
- Kaltim Prima Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Energy Link Ltd, New Zealand
- Borneo Indobara - Indonesia
- Power Finance Corporation Ltd., India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Mining Services - Indonesia
- Therma Luzon, Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Toyota Tsusho Corporation, Japan
- Kepco SPC Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Agrawal Coal Company - India
- Billiton Holdings Pty Ltd - Australia
- CNBM International Corporation - China
- Ambuja Cements Ltd - India
- Coastal Gujarat Power Limited - India
- Petron Corporation, Philippines
- Sical Logistics Limited - India
- Bangladesh Power Developement Board
- Star Paper Mills Limited - India
- IEA Clean Coal Centre - UK
- Karaikal Port Pvt Ltd - India
- Chamber of Mines of South Africa
- Kalimantan Lumbung Energi - Indonesia
- Eastern Energy - Thailand
- Jindal Steel & Power Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Sindya Power Generating Company Private Ltd
- OPG Power Generation Pvt Ltd - India
- Singapore Mercantile Exchange
- Mjunction Services Limited - India
- Marubeni Corporation - India
- Sarangani Energy Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Romanian Commodities Exchange
- Gujarat Mineral Development Corp Ltd - India
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