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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, 23 February 24
STRONG OUTLOOK FOR THE TANKER MARKET IN 2024 AND BEYOND - DNV
Several factors have aligned over the past two years to create a robust and profitable market for tanker owners, which is expected to drive newbuil ...
Friday, 23 February 24
AUSTRALIAN COAL FLOWS TO ASIA HOVER ABOVE LAST YEAR’S VOLUME TONNES - SIGNAL GROUP
In the final days of February, the dry bulk freight market appeared to maintain a relatively stable momentum, particularly evident in the large ves ...
Friday, 23 February 24
RUSSIAN COAL SHIPMENTS FALL 14% AS SANCTIONS BITE - BIMCO
During the first seven weeks of 2024, Russian coal shipments have fallen 14% y/y. Volumes have gradually declined since October 2023 when logistica ...
Thursday, 22 February 24
BIMCO PUBLISHES SHIP FINANCING FORMS TO ENSURE UNINTERRUPTED USE OF SHIPS
BIMCO has published two standard Quiet Enjoyment Letters (QELs), the first standard form QELs available to the industry, to offer a tool that can e ...
Monday, 19 February 24
METALS INVESTMENT: THE DARKEST HOUR IS JUST BEFORE THE DAWN - WOOD MACKENZIE
Things often seem at their worst just before they get better. In terms of meeting our net zero 2050 scenario, we’ve reached a watershed momen ...
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- European Bulk Services B.V. - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sarangani Energy Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Holcim Trading Pte Ltd - Singapore
- Global Business Power Corporation, Philippines
- Ministry of Mines - Canada
- Goldman Sachs - Singapore
- Metalloyd Limited - United Kingdom
- Sindya Power Generating Company Private Ltd
- Sical Logistics Limited - India
- Minerals Council of Australia
- Global Coal Blending Company Limited - Australia
- Makarim & Taira - Indonesia
- Rio Tinto Coal - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Romanian Commodities Exchange
- San Jose City I Power Corp, Philippines
- Meralco Power Generation, Philippines
- SN Aboitiz Power Inc, Philippines
- Bangladesh Power Developement Board
- Wilmar Investment Holdings
- Energy Development Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Antam Resourcindo - Indonesia
- Thai Mozambique Logistica
- IHS Mccloskey Coal Group - USA
- South Luzon Thermal Energy Corporation
- Timah Investasi Mineral - Indoneisa
- Maheswari Brothers Coal Limited - India
- Indika Energy - Indonesia
- Semirara Mining Corp, Philippines
- Madhucon Powers Ltd - India
- Parry Sugars Refinery, India
- Petron Corporation, Philippines
- Siam City Cement - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Anglo American - United Kingdom
- Energy Link Ltd, New Zealand
- Mercator Lines Limited - India
- Ambuja Cements Ltd - India
- Indian Oil Corporation Limited
- Coastal Gujarat Power Limited - India
- Cement Manufacturers Association - India
- GVK Power & Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- Sakthi Sugars Limited - India
- Kumho Petrochemical, South Korea
- Posco Energy - South Korea
- GAC Shipping (India) Pvt Ltd
- Leighton Contractors Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- The Treasury - Australian Government
- Directorate General of MIneral and Coal - Indonesia
- Planning Commission, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Banpu Public Company Limited - Thailand
- Thiess Contractors Indonesia
- Sree Jayajothi Cements Limited - India
- Baramulti Group, Indonesia
- Bukit Baiduri Energy - Indonesia
- Tata Chemicals Ltd - India
- Directorate Of Revenue Intelligence - India
- Xindia Steels Limited - India
- ICICI Bank Limited - India
- Billiton Holdings Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Siam City Cement PLC, Thailand
- Essar Steel Hazira Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Bukit Makmur.PT - Indonesia
- Grasim Industreis Ltd - India
- Marubeni Corporation - India
- GMR Energy Limited - India
- Uttam Galva Steels Limited - India
- Bhoruka Overseas - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Samtan Co., Ltd - South Korea
- Medco Energi Mining Internasional
- OPG Power Generation Pvt Ltd - India
- Standard Chartered Bank - UAE
- Eastern Coal Council - USA
- Bhatia International Limited - India
- Australian Commodity Traders Exchange
- Formosa Plastics Group - Taiwan
- Indogreen Group - Indonesia
- Eastern Energy - Thailand
- Georgia Ports Authority, United States
- Tamil Nadu electricity Board
- Renaissance Capital - South Africa
- Central Java Power - Indonesia
- Port Waratah Coal Services - Australia
- Larsen & Toubro Limited - India
- International Coal Ventures Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Merrill Lynch Commodities Europe
- Riau Bara Harum - Indonesia
- Attock Cement Pakistan Limited
- Kartika Selabumi Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- TeaM Sual Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- CNBM International Corporation - China
- GN Power Mariveles Coal Plant, Philippines
- Bharathi Cement Corporation - India
- PNOC Exploration Corporation - Philippines
- Lanco Infratech Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Africa Commodities Group - South Africa
- Mjunction Services Limited - India
- Singapore Mercantile Exchange
- Borneo Indobara - Indonesia
- Oldendorff Carriers - Singapore
- Vedanta Resources Plc - India
- Savvy Resources Ltd - HongKong
- Chettinad Cement Corporation Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- SMG Consultants - Indonesia
- Global Green Power PLC Corporation, Philippines
- Interocean Group of Companies - India
- Vizag Seaport Private Limited - India
- Intertek Mineral Services - Indonesia
- Karaikal Port Pvt Ltd - India
- Sojitz Corporation - Japan
- Commonwealth Bank - Australia
- Iligan Light & Power Inc, Philippines
- Economic Council, Georgia
- Bhushan Steel Limited - India
- Power Finance Corporation Ltd., India
- Semirara Mining and Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Gujarat Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- The University of Queensland
- Price Waterhouse Coopers - Russia
- Toyota Tsusho Corporation, Japan
- Pendopo Energi Batubara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Wood Mackenzie - Singapore
- Kaltim Prima Coal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- IEA Clean Coal Centre - UK
- Maharashtra Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Rashtriya Ispat Nigam Limited - India
- LBH Netherlands Bv - Netherlands
- Ministry of Transport, Egypt
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Videocon Industries ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- ASAPP Information Group - India
- Simpson Spence & Young - Indonesia
- Agrawal Coal Company - India
- The State Trading Corporation of India Ltd
- Jaiprakash Power Ventures ltd
- Orica Mining Services - Indonesia
- Mintek Dendrill Indonesia
- Altura Mining Limited, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Chamber of Mines of South Africa
- Kepco SPC Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Indian Energy Exchange, India
- Gujarat Sidhee Cement - India
- Heidelberg Cement - Germany
- Salva Resources Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Jindal Steel & Power Ltd - India
- Straits Asia Resources Limited - Singapore
- India Bulls Power Limited - India
- Trasteel International SA, Italy
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- PowerSource Philippines DevCo
- Ind-Barath Power Infra Limited - India
- Therma Luzon, Inc, Philippines
- Central Electricity Authority - India
- Karbindo Abesyapradhi - Indoneisa
- Meenaskhi Energy Private Limited - India
- Edison Trading Spa - Italy
- Independent Power Producers Association of India
- McConnell Dowell - Australia
- Miang Besar Coal Terminal - Indonesia
- Coal and Oil Company - UAE
- White Energy Company Limited
- Barasentosa Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Deloitte Consulting - India
- Malabar Cements Ltd - India
- MS Steel International - UAE
- Latin American Coal - Colombia
- Electricity Generating Authority of Thailand
- SMC Global Power, Philippines
- Aditya Birla Group - India
- Aboitiz Power Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- VISA Power Limited - India
- PTC India Limited - India
- Parliament of New Zealand
- Dalmia Cement Bharat India
- Ministry of Finance - Indonesia
- London Commodity Brokers - England
- Indonesian Coal Mining Association
- Star Paper Mills Limited - India
- Australian Coal Association
- Electricity Authority, New Zealand
- New Zealand Coal & Carbon
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