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Tuesday, 17 March 15
NEARLY 17% OF US COAL PRODUCTION UNECONOMIC AT CURRENT MARKET PRICING - WOOD MACKENZIE
 COALspot.com: Close to 17% of forecast 2015 US coal production is at risk of idling or closure, totalling 162 million short tons (Mst), as these mine's total cash costs plus sustaining capital expenditures exceed current market pricing, according to Wood Mackenzie's latest coal market outlook.
Wood Mackenzie says that the majority of the coal at risk is produced in Central Appalachia where approximately 72% of the total output is unprofitable. Years of declining productivity, thinning seams, increasing strip ratios, more stringent government regulations, and a high paid workforce have taken their toll and made Central Appalachia the highest cost region within the US. Other US regions also have substantial amounts of coal at risk, ranging from 47% of production in Southern Appalachia to a low of eight percent in both the Western Bituminous and Powder River Basin. In aggregate, this equates to approximately 14% of US thermal coal production and 58% of metallurgical coal production being at risk.
Dale Hazelton, Senior Research Analyst at Wood Mackenzie explains, "Based on current economics there are a significant number of mines unable to cover their operating costs plus sustaining capital. Despite this, mine closures, while not rare, certainly aren't happening frequently. Part of the reason for this is the amount of thermal coal sold on the open market is very small compared to that sold under contract. Contracts can cover multiple years, and prices may have been agreed well before the current market's lows. A producer may also be able to beat the market prices as they have a valuable niche-quality coal, such as stoker coal, or the location of the mine is near an end-user providing a transportation advantage over competitors."
According to Wood Mackenzie, there are other reasons for not idling or closing a mine: "It is possible the company is actively shopping the assets and having them currently in operation is more attractive to buyers. A company may also need to generate certain levels of revenue or cashflow to avoid triggering debt covenants that result in accelerated debt payments or higher interest rates. Some companies may also be willing to temporarily lose a certain amount of money on some mines where the losses from operating are less than not yet high enough to require idling or closing the operation.
"This is particularly true for some of the assets recently purchased by new mining companies or private equity firms. In those cases, the companies understand that there will be some period of losses as management gets costs under control. The end-game here is to maintain operations and customer relationships until the eventual recovery," notes Hazelton.
However, Wood Mackenzie emphasizes that for prices to rise, fundamentally one of two things must happen: either the global demand for steel and power must increase or the supply of coal must decrease. Hazelton adds, "The growth prospects for steel demand remain tenuous at best as many countries’ economies remain fragile. The recent strength of the US dollar also encourages non-US producers to grow their production as a strengthening US dollar compared to their local currency effectively lowers their costs of production when denominated in US dollars."
Furthermore, natural gas prices in the US remain at very low levels, resulting in higher levels of coal-to-gas switching in power generation. Wood Mackenzie's outlook notes that additional cost cutting measures are starting to reach limits as producers globally have already cut costs significantly, serving to suppress coal prices further. Therefore, the only practical way for the market to get back into balance is for producers to cut production. "This needs to happen sooner rather than later, either voluntarily or involuntarily through bankruptcy, as the losses these mines are generating cannot be sustained," concludes Hazelton.
About Wood Mackenzie:
Wood Mackenzie is a global leader in commercial intelligence for the energy, metals and mining industries. We provide objective analysis and advice on assets, companies and markets, giving clients the insights they need to make better strategic decisions.
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Wednesday, 03 November 21
MARKET INSIGHT - INTERMODAL
November is here and soon the all time seasonal favorite “all I want or Christmas is you” by Mariah Carey will be played in radio stati ...
Monday, 01 November 21
COAL PRICES HAVE FURTHER ROOM TO DROP: TOP ECONOMIC PLANNER - GLOBAL TIMES
China’s top economic planner said coal prices have further room to drop on Friday, as the most traded coal futures dropped to below 1,000 yua ...
Saturday, 30 October 21
CHINA'S COAL PRICES SEE BIGGEST WEEKLY FALL IN MORE THAN 5 YEARS - REUTERS
China’s coal futures prices saw their biggest fall in more than five years after the powerful state planner said there is still room to adjus ...
Saturday, 30 October 21
G-20 LEADERS PREPARE STATEMENT TO STOP FUNDING FOREIGN COAL PLANTS - BLOOMBERG
Leaders of the Group of 20 wealthy economies are preparing to pledge to stop funding foreign coal-fired plants, but are still wrangling over climat ...
Friday, 29 October 21
APAC THERMAL COAL SUPPLY TO REMAIN TIGHT AS WINTER LOOMS - FITCH RATINGS
APAC thermal coal prices have surged, hitting historically high levels. The benchmark Newcastle 6,000kcal/kg grade coal reached USD228/tonne in mid ...
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- Ceylon Electricity Board - Sri Lanka
- Bukit Asam (Persero) Tbk - Indonesia
- Indo Tambangraya Megah - Indonesia
- Electricity Authority, New Zealand
- Simpson Spence & Young - Indonesia
- Independent Power Producers Association of India
- Alfred C Toepfer International GmbH - Germany
- European Bulk Services B.V. - Netherlands
- Energy Link Ltd, New Zealand
- Ambuja Cements Ltd - India
- Star Paper Mills Limited - India
- Bukit Baiduri Energy - Indonesia
- Australian Coal Association
- Mercuria Energy - Indonesia
- Siam City Cement - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Madhucon Powers Ltd - India
- Mjunction Services Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Coalindo Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- GMR Energy Limited - India
- The Treasury - Australian Government
- Marubeni Corporation - India
- Holcim Trading Pte Ltd - Singapore
- Aboitiz Power Corporation - Philippines
- Carbofer General Trading SA - India
- Grasim Industreis Ltd - India
- Indonesian Coal Mining Association
- Baramulti Group, Indonesia
- Jindal Steel & Power Ltd - India
- Sojitz Corporation - Japan
- Kapuas Tunggal Persada - Indonesia
- Attock Cement Pakistan Limited
- MS Steel International - UAE
- ASAPP Information Group - India
- Electricity Generating Authority of Thailand
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Finance - Indonesia
- Central Java Power - Indonesia
- SMC Global Power, Philippines
- Indian Energy Exchange, India
- Vizag Seaport Private Limited - India
- Ministry of Transport, Egypt
- Riau Bara Harum - Indonesia
- SN Aboitiz Power Inc, Philippines
- IEA Clean Coal Centre - UK
- Semirara Mining and Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Thai Mozambique Logistica
- San Jose City I Power Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Barasentosa Lestari - Indonesia
- Sical Logistics Limited - India
- Salva Resources Pvt Ltd - India
- Larsen & Toubro Limited - India
- Bulk Trading Sa - Switzerland
- Medco Energi Mining Internasional
- Petron Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Standard Chartered Bank - UAE
- Cement Manufacturers Association - India
- Kepco SPC Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- PNOC Exploration Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Mines - Canada
- Intertek Mineral Services - Indonesia
- Karaikal Port Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- ICICI Bank Limited - India
- OPG Power Generation Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Sidhee Cement - India
- Wilmar Investment Holdings
- Kumho Petrochemical, South Korea
- Australian Commodity Traders Exchange
- TeaM Sual Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Oldendorff Carriers - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Coal Blending Company Limited - Australia
- Global Green Power PLC Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Bayan Resources Tbk. - Indonesia
- Parliament of New Zealand
- Indian Oil Corporation Limited
- Trasteel International SA, Italy
- Iligan Light & Power Inc, Philippines
- Straits Asia Resources Limited - Singapore
- VISA Power Limited - India
- Planning Commission, India
- Africa Commodities Group - South Africa
- Eastern Energy - Thailand
- New Zealand Coal & Carbon
- SMG Consultants - Indonesia
- Georgia Ports Authority, United States
- Gujarat Electricity Regulatory Commission - India
- Parry Sugars Refinery, India
- Agrawal Coal Company - India
- Pendopo Energi Batubara - Indonesia
- Ind-Barath Power Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- Sakthi Sugars Limited - India
- Economic Council, Georgia
- Samtan Co., Ltd - South Korea
- Orica Mining Services - Indonesia
- Lanco Infratech Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Price Waterhouse Coopers - Russia
- Meralco Power Generation, Philippines
- The University of Queensland
- Altura Mining Limited, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Savvy Resources Ltd - HongKong
- Singapore Mercantile Exchange
- Indika Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Aditya Birla Group - India
- Mercator Lines Limited - India
- Banpu Public Company Limited - Thailand
- Sarangani Energy Corporation, Philippines
- Merrill Lynch Commodities Europe
- Orica Australia Pty. Ltd.
- Petrochimia International Co. Ltd.- Taiwan
- PowerSource Philippines DevCo
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indogreen Group - Indonesia
- Energy Development Corp, Philippines
- Goldman Sachs - Singapore
- Bangladesh Power Developement Board
- Meenaskhi Energy Private Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kobexindo Tractors - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Timah Investasi Mineral - Indoneisa
- Videocon Industries ltd - India
- CNBM International Corporation - China
- India Bulls Power Limited - India
- Xindia Steels Limited - India
- Makarim & Taira - Indonesia
- Rio Tinto Coal - Australia
- Mintek Dendrill Indonesia
- Central Electricity Authority - India
- Bhoruka Overseas - Indonesia
- Wood Mackenzie - Singapore
- LBH Netherlands Bv - Netherlands
- Power Finance Corporation Ltd., India
- Metalloyd Limited - United Kingdom
- Thiess Contractors Indonesia
- Minerals Council of Australia
- Coastal Gujarat Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Kartika Selabumi Mining - Indonesia
- London Commodity Brokers - England
- Miang Besar Coal Terminal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Semirara Mining Corp, Philippines
- GVK Power & Infra Limited - India
- Kaltim Prima Coal - Indonesia
- PTC India Limited - India
- Renaissance Capital - South Africa
- Deloitte Consulting - India
- Coal and Oil Company - UAE
- Borneo Indobara - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- Maheswari Brothers Coal Limited - India
- Tamil Nadu electricity Board
- Eastern Coal Council - USA
- Anglo American - United Kingdom
- Global Business Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Bharathi Cement Corporation - India
- Globalindo Alam Lestari - Indonesia
- Bhatia International Limited - India
- Manunggal Multi Energi - Indonesia
- Chamber of Mines of South Africa
- Formosa Plastics Group - Taiwan
- Kideco Jaya Agung - Indonesia
- Interocean Group of Companies - India
- Toyota Tsusho Corporation, Japan
- Edison Trading Spa - Italy
- White Energy Company Limited
- Tata Chemicals Ltd - India
- Sree Jayajothi Cements Limited - India
- Siam City Cement PLC, Thailand
- Binh Thuan Hamico - Vietnam
- Latin American Coal - Colombia
- McConnell Dowell - Australia
- South Luzon Thermal Energy Corporation
- Krishnapatnam Port Company Ltd. - India
- Heidelberg Cement - Germany
- Cigading International Bulk Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- Vedanta Resources Plc - India
- Directorate Of Revenue Intelligence - India
- Vijayanagar Sugar Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhushan Steel Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Jaiprakash Power Ventures ltd
- Sinarmas Energy and Mining - Indonesia
- Commonwealth Bank - Australia
- Dalmia Cement Bharat India
- The State Trading Corporation of India Ltd
- Posco Energy - South Korea
- Romanian Commodities Exchange
- Malabar Cements Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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