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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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Tuesday, 26 October 21
AUSTRALIA EXPORTED 51.6 MLN TONNES OF COAL TO INDIA IN FIRST 10 MONTHS, 19% OF ALL AUSTRALIAN COAL EXPORTS; CHINA WAS THE DESTINATION FOR JUST 0.7% - BANCHERO COSTA
2020 proved to be a truly terrible year for global seaborne coal trade. In 2021 things started pretty badly, but we are seeing increasing signs of ...
Monday, 25 October 21
A QUESTION OF POSSESSION - THE BALTIC EXCHANGE
Possession and tangibility are closely related concepts long established under English law. Yet a change to these concepts is around the corner. Th ...
Monday, 25 October 21
CHINA VOWS TO SEVERELY PUNISH MARKET VIOLATIONS AMID LOW COAL FUTURES PRICES - GLOBAL TIMES
Domestic coal futures had plunged for three consecutive trading days after the government vowed to crack down on soaring prices, and China’s ...
Monday, 25 October 21
FARMERS MAY JOIN THE COAL COMMODITY MARKET TO REDUCE RISKS - GLOBAL TIMES
A recent trip to by the Global Times to East China’s Shandong Province to get a glimpse of China’s coal supply chain revealed a surpris ...
Monday, 25 October 21
CHINA COAL PRICES MARK WORST WEEK SINCE MAY ON GOVERNMENT INTERVENTION - REUTERS
China’s thermal coal futures plunged on Friday and turned in their worst week in five months, following Beijing’s strongest interventio ...
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- Ceylon Electricity Board - Sri Lanka
- The Treasury - Australian Government
- Pendopo Energi Batubara - Indonesia
- Rio Tinto Coal - Australia
- Makarim & Taira - Indonesia
- Interocean Group of Companies - India
- PetroVietnam Power Coal Import and Supply Company
- Posco Energy - South Korea
- Marubeni Corporation - India
- Parliament of New Zealand
- Kepco SPC Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Ministry of Finance - Indonesia
- Deloitte Consulting - India
- European Bulk Services B.V. - Netherlands
- Indonesian Coal Mining Association
- International Coal Ventures Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Electricity Authority, New Zealand
- VISA Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Global Green Power PLC Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Romanian Commodities Exchange
- Central Electricity Authority - India
- Asmin Koalindo Tuhup - Indonesia
- IHS Mccloskey Coal Group - USA
- GMR Energy Limited - India
- Chettinad Cement Corporation Ltd - India
- Globalindo Alam Lestari - Indonesia
- Larsen & Toubro Limited - India
- Coal and Oil Company - UAE
- Neyveli Lignite Corporation Ltd, - India
- Tamil Nadu electricity Board
- Baramulti Group, Indonesia
- Holcim Trading Pte Ltd - Singapore
- Indika Energy - Indonesia
- Energy Development Corp, Philippines
- Wilmar Investment Holdings
- Electricity Generating Authority of Thailand
- Australian Commodity Traders Exchange
- PTC India Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Power Finance Corporation Ltd., India
- Mercuria Energy - Indonesia
- MS Steel International - UAE
- Ministry of Mines - Canada
- Meralco Power Generation, Philippines
- Savvy Resources Ltd - HongKong
- Therma Luzon, Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Eastern Energy - Thailand
- Latin American Coal - Colombia
- CIMB Investment Bank - Malaysia
- Star Paper Mills Limited - India
- Ministry of Transport, Egypt
- Jindal Steel & Power Ltd - India
- Thai Mozambique Logistica
- Indo Tambangraya Megah - Indonesia
- Sakthi Sugars Limited - India
- Madhucon Powers Ltd - India
- Minerals Council of Australia
- Orica Australia Pty. Ltd.
- Siam City Cement - Thailand
- Gujarat Sidhee Cement - India
- Barasentosa Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- New Zealand Coal & Carbon
- Simpson Spence & Young - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Kobexindo Tractors - Indoneisa
- Wood Mackenzie - Singapore
- Agrawal Coal Company - India
- Kohat Cement Company Ltd. - Pakistan
- Uttam Galva Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Bhushan Steel Limited - India
- Jaiprakash Power Ventures ltd
- Billiton Holdings Pty Ltd - Australia
- Medco Energi Mining Internasional
- Oldendorff Carriers - Singapore
- Bhoruka Overseas - Indonesia
- GVK Power & Infra Limited - India
- Planning Commission, India
- ASAPP Information Group - India
- Metalloyd Limited - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- The State Trading Corporation of India Ltd
- Orica Mining Services - Indonesia
- Altura Mining Limited, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bangladesh Power Developement Board
- Chamber of Mines of South Africa
- ICICI Bank Limited - India
- Heidelberg Cement - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Iligan Light & Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- PowerSource Philippines DevCo
- Maheswari Brothers Coal Limited - India
- Cigading International Bulk Terminal - Indonesia
- Malabar Cements Ltd - India
- Parry Sugars Refinery, India
- Essar Steel Hazira Ltd - India
- Binh Thuan Hamico - Vietnam
- Sree Jayajothi Cements Limited - India
- Price Waterhouse Coopers - Russia
- Aboitiz Power Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Georgia Ports Authority, United States
- Kumho Petrochemical, South Korea
- Cement Manufacturers Association - India
- Tata Chemicals Ltd - India
- Sindya Power Generating Company Private Ltd
- Global Business Power Corporation, Philippines
- Sojitz Corporation - Japan
- London Commodity Brokers - England
- Ind-Barath Power Infra Limited - India
- Anglo American - United Kingdom
- IEA Clean Coal Centre - UK
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mintek Dendrill Indonesia
- Economic Council, Georgia
- Lanco Infratech Ltd - India
- CNBM International Corporation - China
- Aditya Birla Group - India
- Sical Logistics Limited - India
- India Bulls Power Limited - India
- Africa Commodities Group - South Africa
- Carbofer General Trading SA - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Baiduri Energy - Indonesia
- SMC Global Power, Philippines
- Energy Link Ltd, New Zealand
- GAC Shipping (India) Pvt Ltd
- Goldman Sachs - Singapore
- Mercator Lines Limited - India
- Bukit Makmur.PT - Indonesia
- San Jose City I Power Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Attock Cement Pakistan Limited
- OPG Power Generation Pvt Ltd - India
- Independent Power Producers Association of India
- Offshore Bulk Terminal Pte Ltd, Singapore
- SMG Consultants - Indonesia
- Karaikal Port Pvt Ltd - India
- Petron Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Petrochimia International Co. Ltd.- Taiwan
- Bharathi Cement Corporation - India
- Australian Coal Association
- Kalimantan Lumbung Energi - Indonesia
- LBH Netherlands Bv - Netherlands
- Sarangani Energy Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Riau Bara Harum - Indonesia
- Borneo Indobara - Indonesia
- Eastern Coal Council - USA
- Xindia Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- Central Java Power - Indonesia
- Indogreen Group - Indonesia
- The University of Queensland
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Grasim Industreis Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Krishnapatnam Port Company Ltd. - India
- Standard Chartered Bank - UAE
- Ambuja Cements Ltd - India
- Videocon Industries ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Straits Asia Resources Limited - Singapore
- Bayan Resources Tbk. - Indonesia
- TeaM Sual Corporation - Philippines
- Port Waratah Coal Services - Australia
- Singapore Mercantile Exchange
- Thiess Contractors Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Directorate Of Revenue Intelligence - India
- Antam Resourcindo - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Timah Investasi Mineral - Indoneisa
- South Luzon Thermal Energy Corporation
- Samtan Co., Ltd - South Korea
- Mjunction Services Limited - India
- Coastal Gujarat Power Limited - India
- Salva Resources Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Semirara Mining Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Indian Oil Corporation Limited
- Merrill Lynch Commodities Europe
- Indian Energy Exchange, India
- Edison Trading Spa - Italy
- Bhatia International Limited - India
- Renaissance Capital - South Africa
- Gujarat Mineral Development Corp Ltd - India
- Trasteel International SA, Italy
- Kaltim Prima Coal - Indonesia
- McConnell Dowell - Australia
- White Energy Company Limited
- Dalmia Cement Bharat India
- Miang Besar Coal Terminal - Indonesia
- Vedanta Resources Plc - India
- Directorate General of MIneral and Coal - Indonesia
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