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Monday, 07 February 11
COAL PRICES ON RISE: DEMAND FROM INDIA AND CHINA - ANALYZED SUNIL K KUMBHAT
 INDONESIA IS HEART OF ASIAN COAL BOOM
COALspot.com - Rising demand of Coal from India and China, coupled with global financial recovery, is driving thermal coal prices that have appreciated in the recent past few months and it is expected that the global prices of Coal shall remain firm and go up further.
Power generation is what is driving the demand of Coal in India and China . In India new coal-fired power plants, ranging in the size from 50 MW to 4,000 MW, are being built throughout India. Power plants are symbol of how rapidly India's economy is expanding.
Similarly China, shall remain a net importer of thermal coal for coming few years as it's economy is growing at firm speed and is expected to deliver mind-boggling growth in 2011. China's coal imports more than doubled to 150 million tonnes from the previous year. Closure of smaller mines, coupled with increased demand from power sector, has triggered China's demand for imported coal.
India has also emerged as one of the major importer of coal. The imports are likely to be around 100-150 million tonnes for the current year as it adds new thermal capacities. India imports about three-fourths of its coal requirement from Indonesia, while South Africa and Australia accounts for the rest.
The quality of Indonesian coal is much better than Indian coal. The gross calorific value of Indonesian coal ranges between 5,000 and 6,500 kilo calories per kilogram (kcl/kg); while for Indian coal it is only 3,000-4,500 kcl/kg- with high ash contents. Bulk of the imported coal in India is used by power companies, which use it to blend with the local coal to improve calorific value. The coal prices also depend upon the ash content and the calorific value .Indonesia’s strategic geographic location makes it the most preferred country for Indian companies for its proximity to the country, which means lower ocean freight charges and better timing compared to other countries such as Australia.
Indonesia's coal Industry has transformed itself from being an minor player in Asia's Coal market to the world's largest Exporter of Steam Coal .Indonesia has come from nowhere to challenge Australia as the world’s largest exporter of thermal coal and is expected soon to topple Australia as the largest coal exporter.
The higher energy demand in India would drive up import of coal .The overall energy generated in India could double within a decade.
Indian power sector will be heavily depend on coal for decades to come. At the same time, India's steel industry, also dependent on coal, is expected to treble its output within a decade.
But there is growing concern about where all the coal is going to come from. India has significant coal reserves suitable for power generation and boasts the world's biggest coal company - the government-owned Coal India Limited. But the expansion of the Indian economy has been so rapid, demand is outstripping domestic supply.
The government wants the economy to expand at 9-10 per cent a year to help lift millions of poor families out of poverty. But an energy supply crunch could compromise that growth target.
India has theoretically significant reserves but it will take a long time to get into actual production, There is a urgent need to re-examine the regulations and policies associated with exploration, exploitation and production. India is still not fully encouraging commercial coal mining by the private sector.
India's coal reserves are concentrated in the eastern states of Orissa, Jharkhand, Chhattisgarh, West Bengal and Madhya Pradesh, where basic logistics infrastructure (such as ports and railways) is lacking. Various government regulation concerning forestry and environmental restrictions are also hindering mine development. Unless such bottlenecks are addressed, growth in domestic coal production could be difficult.'
Due to government regulatory delays, infrastructure bottlenecks and security risks are encouraging Indian firms to look overseas to secure coal supply especially in Indonesia, South Africa, Mozambique, Australia etc. for their ambitious power projects in India.
Indonesia's thermal coal mines have a comparative advantage over Australia's because they are nearer to India but Australia's reputation as a reliable supplier is attractive to Indian buyers.’ Australian mines might be more expensive but they are reliable. Australia’s advantages are that the coal is good and the infrastructure is good'
In spit of all , Australia will face stiff competition from Indonesia - which has lower transport costs. A significant proportion of coal transport in Indonesia is water based, which allows for coal to be transported along rivers via barges to the open sea for loading onto larger vessels. Indonesia’s coal suppliers rely heavily on floating transhipment facilities due to economic reasons.
Indonesia's coal Industry has transformed itself from being an minor player in Asia's Coal market to the world's largest Exporter of Steam Coal .Indonesia has come from nowhere to challenge Australia as the world’s largest exporter of thermal coal and is expected soon to topple Australia as the largest coal exporter.
Indonesia’s government needs to accelerate reforms for foreign direct investment (FDI) in mining and energy sector to give direct control to foreign investors, in order to win confidence and attract/invite major international companies into Indonesia. There is need of more coordination between Ministry of Energy and Mineral Resources Deptt , Indonesian Investment Co-ordination Board (BKPM) ,and Various Regional administrations.
The phenomenal growth in Indonesia’s coal exports in last five years reflects the ability of its coal industry to respond to the rapid growth in Asian demand for thermal coal.
Indonesia has huge coal reserves and exporting coal to many countries for use in power plants for generating energy but it is paradoxical that Indonesia is short of energy. Many Indian companies (Tata , Reliance,Jindal ,L&T, Monnet, Adani ,Essar etc) are capable of sharing power technology and setting up mega power plants in Indonesia
Indonesian private companies can buy equity stakes in Indian power plants in exchange / barter for long-term coal supply. Since India is today one of the fastest growing economies and also has a shortage of power supply then such deals can be beneficial to both parties .Indonesian government or Indonesian companies can invite Coal barter bids (CBB) ,where from foreign companies for development of ports , Roads , Railway lines , Power Plants etc. In Coal barter bids , coal will be supplied to party who will set up Power plants or develop infrastructure etc. Coal mining in Indonesia can be an extremely lucrative sector for overall economic growth. Indonesian government should make single window clearance system to operate business in Indonesia to encourage foreign enterprises and Investment for Coal barter bids. Indonesian Coal companies are fully aware that India is a market into which they can export or thru barter transactions, its major share of Coal Production.
Today Indonesia has stable economic outlook and if reform efforts towards basic infrastructures continues it may become Economic Tiger of Asia by 2020.
Today Indonesia is the heart of the Asian Coal boom.
Analyst - Sunil K Kumbhat , Jodhpur (Rajasthan), India
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Saturday, 18 March 23
HEDGE TO OFFSET LNG VOLATILITY, TRADERS TOLD - BALTIC EXCHANGE
A shift in imports from Asia to Europe led to significant volatility in liquefied natural gas shipping last year, prompting industry experts to urg ...
Friday, 17 March 23
INDONESIAN COAL PRICE REFERENCE UP AROUND 2.17% IN MARCH 2023
COALspot.com: Indonesian Coal Price Reference up around 2.17% in March 2023.
According to the new HBA regulation No. 41.K/MB.0 ...
Saturday, 11 March 23
MARKET INSIGHT - INTERMODAL
Uncertainty over the recovery of Chinese demand, demand destruction in Europe, as well as weather conditions will pivot the LNG market this summer. ...
Wednesday, 08 March 23
INDONESIAN COAL REFERENCE PRICE FORMULA HAS OFFICIALLY CHANGED
Indonesian Minister of Energy and Mineral Resources has officially changed the guideline for determining the benchmark price for the sale of coal c ...
Thursday, 02 March 23
INDIA'S SEABORNE CRUDE OIL IMPORTS IN 2022 INCREASED BY 11.5% YOY - BANCHERO COSTA
2022 has turned out to be a very positive year for crude oil trade, despite the surging oil prices and risks of economic recession, Banchero Costa ...
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- Mjunction Services Limited - India
- Energy Link Ltd, New Zealand
- The Treasury - Australian Government
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- Holcim Trading Pte Ltd - Singapore
- VISA Power Limited - India
- Ministry of Finance - Indonesia
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- Altura Mining Limited, Indonesia
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- Siam City Cement - Thailand
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- Pendopo Energi Batubara - Indonesia
- Rashtriya Ispat Nigam Limited - India
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- Globalindo Alam Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Latin American Coal - Colombia
- Independent Power Producers Association of India
- Kepco SPC Power Corporation, Philippines
- Parliament of New Zealand
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- Bukit Asam (Persero) Tbk - Indonesia
- Mercator Lines Limited - India
- TeaM Sual Corporation - Philippines
- Sojitz Corporation - Japan
- Africa Commodities Group - South Africa
- Timah Investasi Mineral - Indoneisa
- McConnell Dowell - Australia
- Grasim Industreis Ltd - India
- Planning Commission, India
- Dalmia Cement Bharat India
- Sinarmas Energy and Mining - Indonesia
- Chamber of Mines of South Africa
- Sical Logistics Limited - India
- Sree Jayajothi Cements Limited - India
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- Bhatia International Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Australian Coal Association
- Price Waterhouse Coopers - Russia
- Meralco Power Generation, Philippines
- Romanian Commodities Exchange
- Simpson Spence & Young - Indonesia
- Heidelberg Cement - Germany
- Ceylon Electricity Board - Sri Lanka
- Eastern Coal Council - USA
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- PTC India Limited - India
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- White Energy Company Limited
- Videocon Industries ltd - India
- Posco Energy - South Korea
- International Coal Ventures Pvt Ltd - India
- Standard Chartered Bank - UAE
- GAC Shipping (India) Pvt Ltd
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- Directorate General of MIneral and Coal - Indonesia
- Riau Bara Harum - Indonesia
- The University of Queensland
- Billiton Holdings Pty Ltd - Australia
- Gujarat Sidhee Cement - India
- Commonwealth Bank - Australia
- Kartika Selabumi Mining - Indonesia
- Carbofer General Trading SA - India
- Karaikal Port Pvt Ltd - India
- Economic Council, Georgia
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- Trasteel International SA, Italy
- Indo Tambangraya Megah - Indonesia
- India Bulls Power Limited - India
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- Thiess Contractors Indonesia
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- Coal and Oil Company - UAE
- AsiaOL BioFuels Corp., Philippines
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- The State Trading Corporation of India Ltd
- Kideco Jaya Agung - Indonesia
- Singapore Mercantile Exchange
- Rio Tinto Coal - Australia
- Global Business Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Iligan Light & Power Inc, Philippines
- IEA Clean Coal Centre - UK
- Manunggal Multi Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Siam City Cement PLC, Thailand
- Malabar Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- Edison Trading Spa - Italy
- Indonesian Coal Mining Association
- London Commodity Brokers - England
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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- Meenaskhi Energy Private Limited - India
- Cigading International Bulk Terminal - Indonesia
- Bhoruka Overseas - Indonesia
- Wilmar Investment Holdings
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- Merrill Lynch Commodities Europe
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Java Power - Indonesia
- Borneo Indobara - Indonesia
- Wood Mackenzie - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Madhucon Powers Ltd - India
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- SMC Global Power, Philippines
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