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Wednesday, 19 October 11
METALLURGICAL COAL PRICES TO DROP BELOW US$240/TONNE - WOOD MACKENZIE
 Wood Mackenzie Says Metallurgical Coal Prices to Drop Below US$240/tonne by Q4 2012 But Long-term Demand Fundamentals Remain Robust
Wood Mackenzie’s Near-Term Market Outlook cautions of falling metallurgical coal prices from now to Q4 2012, dropping from the current quarterly price of US$285/tonne for premium hard coking coal to under US$240/tonne. However, this price remains significantly above the marginal cost of production and longer-term drivers point to robust metallurgical coal demand in the Asia-Pacific market.
Prakash Sharma, Coal Market Analyst says, “Prices have started to fall from the last quarter and will continue to decline due to softening demand and the recovery of supply from flood-hit basins earlier in the year. The weakening demand is largely attributed to the global macroeconomic slowdown which appears to have accelerated through the summer in much of the developed world. Leading industrial indicators suggest a sharp deterioration in manufacturing activity – reflected by the decline in global steel production.”
Wood Mackenzie’s Senior Economist, Ed Rawle says, “The global economy has entered a period of extreme uncertainty. Wood Mackenzie’s global Gross Domestic Product growth forecast has been revised down from 3.1% to 2.8% in 2011, and 3.7% to 3.6% in 2012. But there are significant downside risks to this outlook. The Eurozone debt crisis remains unresolved and threatens to trigger a European banking crisis. Due to the sheer scale of the European banking sector, this is of major concern since it would likely lead to a global banking crisis with implications for us all.”
Despite near-term downward price movements, Wood Mackenzie says that several factors have the potential to turn this trend. Firstly, some mines have not fully recovered from the 2011 Queensland floods. The approaching wet season could lead to further delays in some mines attaining full production levels. Secondly, persistent worker-strikes at BHP Billiton Mitsubishi Alliance operated mines have the ability to tighten the market as these operations produce 26% of globally traded metallurgical coal. Lastly, US low-volatility supply has been curtailed by mine outages and changes in blending techniques following various mergers.
In the long-term , investors are still energized by the coking coal space with high margins in a current supply-constrained world. Mr. Sharma explains, ”Strong long-term demand is likely to support Mergers & Acquisitions (M&A) activity that has been ongoing since early 2008. Demand growth will be led by emerging markets with Asia accounting for 75% of global metallurgical coal demand by 2030. China and India will be key demand drivers, contributing to 60% of Asia Pacific’s total import demand.”
The growth potential of China and India can be attributed to their economic climate relative to the rest of the world. Mr. Rawle says, “The bright spot amidst the uncertainty continues to be the developing world. Specifically, we see China and much of Asia powering ahead, drawing on growth drivers that have been deliberately de-coupled from troubled developed economies over the past couple of years.”
Wood Mackenzie says that China’s reliance on coking coal imports will increase due to insufficient supply of high quality coking coal in the domestic market. China is forging ahead with plans to close all blast furnaces under 1,000 cubic metres and install new blast furnaces with capacities in excess of 2,000 cubic metres. The larger furnaces need coke produced from high-quality coking coal. As a result, a larger volume of this type of coal will be required and China will have to turn to suppliers of the likes of Australia, Mongolia and, to a lesser extent, Mozambique who are all expanding supply.
In summary, Mr. Sharma says, ”The industry should expect premium metallurgical coal prices to fall to a price below US$240/tonne from now until Q4 2012. Although further downside price risks remain given ongoing macroeconomic uncertainty and new sources of supply entering the market place, the constant threat of additional unpredictable mine outages and the upcoming rainy season in key supply basins should keep them from falling too far. Long-term demand also remains strong in emerging markets.”
Editor’s notes:
Wood Mackenzie is the most comprehensive source of knowledge about the world’s energy and metals industries. We analyse and advise on every stage along the value chain - from discovery to delivery, and beyond - to provide clients with the commercial insight that makes them stronger. For more information visit: www.woodmac.com. Wood Mackenzie is a research consulting company and it is our preference is to be referred to as research consultants.
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Wednesday, 12 October 11
CAPESIZE - A SURPRISE JUMP IN RATES - BRS
There was a surge across all sizes last week, resulting in the BDI gaining 101 points to end the week at 2,000 points (+5.3%). The BCI reached 3,218 ...
Wednesday, 12 October 11
CAPESIZE FREIGHT RATES BOUND TO RETREAT FROM 2011 HIGHS ON THE BACK OF TONNAGE OVERSUPPLY SAYS BIMCO
According to Nikos Roussanoglou, Hellenic Shipping, with the BDI (Baltic Dry Index) breaking yet another 2011 high yesterday and ending the se ...
Tuesday, 11 October 11
GLENCORE, SUITOR FOR BUMI PLC? - INSIDER STORIES
Insider Stories reported that, the largest commodities trader in the world, Glencore International Plc, is considering an opportunity to acquire a m ...
Tuesday, 11 October 11
RENUKA COALINDO BUYS JAMBI COAL
PT Renuka Coalindo Tbk, formerly PT Allbond Makmur Usaha Tbk plans to acquire PT Jambi Prima Coal holder of mining concession in Pauh, Sa ...
Monday, 10 October 11
MOZAMBIQUE CHANNEL TO BE THE NEW PIRACY HOTSPOT FOR THIS YEAR SAYS MARITIME SECURITY EXPERT - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The Mozambique Channel, as well as the entrance to the Persian Gulf, are expected to become some of the new pirate hotspots for piracy, says Richard ...
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- Tamil Nadu electricity Board
- Alfred C Toepfer International GmbH - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cigading International Bulk Terminal - Indonesia
- Cement Manufacturers Association - India
- Bangladesh Power Developement Board
- Merrill Lynch Commodities Europe
- Borneo Indobara - Indonesia
- Global Coal Blending Company Limited - Australia
- SMC Global Power, Philippines
- Aboitiz Power Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Antam Resourcindo - Indonesia
- Romanian Commodities Exchange
- Malabar Cements Ltd - India
- Formosa Plastics Group - Taiwan
- OPG Power Generation Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Singapore Mercantile Exchange
- Port Waratah Coal Services - Australia
- Wilmar Investment Holdings
- Global Business Power Corporation, Philippines
- ASAPP Information Group - India
- Ministry of Mines - Canada
- Neyveli Lignite Corporation Ltd, - India
- Bharathi Cement Corporation - India
- Chettinad Cement Corporation Ltd - India
- Pendopo Energi Batubara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Savvy Resources Ltd - HongKong
- Manunggal Multi Energi - Indonesia
- Siam City Cement - Thailand
- Altura Mining Limited, Indonesia
- Posco Energy - South Korea
- Holcim Trading Pte Ltd - Singapore
- Riau Bara Harum - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Indogreen Group - Indonesia
- Rio Tinto Coal - Australia
- Aditya Birla Group - India
- Kartika Selabumi Mining - Indonesia
- Therma Luzon, Inc, Philippines
- India Bulls Power Limited - India
- Marubeni Corporation - India
- Parliament of New Zealand
- Salva Resources Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Thiess Contractors Indonesia
- Videocon Industries ltd - India
- Sarangani Energy Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Bukit Makmur.PT - Indonesia
- Bukit Baiduri Energy - Indonesia
- Ambuja Cements Ltd - India
- Eastern Coal Council - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CNBM International Corporation - China
- ICICI Bank Limited - India
- Bulk Trading Sa - Switzerland
- TeaM Sual Corporation - Philippines
- Heidelberg Cement - Germany
- Siam City Cement PLC, Thailand
- Xindia Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- GAC Shipping (India) Pvt Ltd
- Petrochimia International Co. Ltd.- Taiwan
- New Zealand Coal & Carbon
- Bayan Resources Tbk. - Indonesia
- Planning Commission, India
- Rashtriya Ispat Nigam Limited - India
- Jaiprakash Power Ventures ltd
- Coalindo Energy - Indonesia
- Bhushan Steel Limited - India
- Edison Trading Spa - Italy
- South Luzon Thermal Energy Corporation
- Toyota Tsusho Corporation, Japan
- GVK Power & Infra Limited - India
- Goldman Sachs - Singapore
- Global Green Power PLC Corporation, Philippines
- Thai Mozambique Logistica
- Commonwealth Bank - Australia
- Bhoruka Overseas - Indonesia
- LBH Netherlands Bv - Netherlands
- Anglo American - United Kingdom
- Kaltim Prima Coal - Indonesia
- Trasteel International SA, Italy
- Mintek Dendrill Indonesia
- The Treasury - Australian Government
- Deloitte Consulting - India
- Petron Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Electricity Authority, New Zealand
- Australian Coal Association
- Indonesian Coal Mining Association
- Star Paper Mills Limited - India
- VISA Power Limited - India
- Binh Thuan Hamico - Vietnam
- Mjunction Services Limited - India
- Orica Australia Pty. Ltd.
- Parry Sugars Refinery, India
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Mineral Development Corp Ltd - India
- Karaikal Port Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Mercuria Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Electricity Generating Authority of Thailand
- SN Aboitiz Power Inc, Philippines
- MS Steel International - UAE
- Sojitz Corporation - Japan
- Bhatia International Limited - India
- Kideco Jaya Agung - Indonesia
- PTC India Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Minerals Council of Australia
- Price Waterhouse Coopers - Russia
- Directorate General of MIneral and Coal - Indonesia
- Wood Mackenzie - Singapore
- IHS Mccloskey Coal Group - USA
- IEA Clean Coal Centre - UK
- McConnell Dowell - Australia
- Ind-Barath Power Infra Limited - India
- Chamber of Mines of South Africa
- Economic Council, Georgia
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining Corp, Philippines
- PowerSource Philippines DevCo
- Leighton Contractors Pty Ltd - Australia
- Jindal Steel & Power Ltd - India
- Central Electricity Authority - India
- GN Power Mariveles Coal Plant, Philippines
- San Jose City I Power Corp, Philippines
- Interocean Group of Companies - India
- Medco Energi Mining Internasional
- Georgia Ports Authority, United States
- Energy Development Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Meenaskhi Energy Private Limited - India
- GMR Energy Limited - India
- Eastern Energy - Thailand
- Miang Besar Coal Terminal - Indonesia
- Oldendorff Carriers - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Sical Logistics Limited - India
- Essar Steel Hazira Ltd - India
- Energy Link Ltd, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- Coal and Oil Company - UAE
- Sinarmas Energy and Mining - Indonesia
- White Energy Company Limited
- International Coal Ventures Pvt Ltd - India
- Power Finance Corporation Ltd., India
- TNB Fuel Sdn Bhd - Malaysia
- Vizag Seaport Private Limited - India
- Independent Power Producers Association of India
- Samtan Co., Ltd - South Korea
- Ministry of Transport, Egypt
- Latin American Coal - Colombia
- Australian Commodity Traders Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Madhucon Powers Ltd - India
- Carbofer General Trading SA - India
- Makarim & Taira - Indonesia
- Uttam Galva Steels Limited - India
- Baramulti Group, Indonesia
- Agrawal Coal Company - India
- Simpson Spence & Young - Indonesia
- Indian Energy Exchange, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Mining Services - Indonesia
- Meralco Power Generation, Philippines
- CIMB Investment Bank - Malaysia
- Directorate Of Revenue Intelligence - India
- Larsen & Toubro Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- London Commodity Brokers - England
- Bahari Cakrawala Sebuku - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Sidhee Cement - India
- Standard Chartered Bank - UAE
- Tata Chemicals Ltd - India
- The State Trading Corporation of India Ltd
- Metalloyd Limited - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Indika Energy - Indonesia
- The University of Queensland
- Mercator Lines Limited - India
- Africa Commodities Group - South Africa
- Lanco Infratech Ltd - India
- Dalmia Cement Bharat India
- Renaissance Capital - South Africa
- Straits Asia Resources Limited - Singapore
- Vedanta Resources Plc - India
- Maheswari Brothers Coal Limited - India
- Indian Oil Corporation Limited
- Grasim Industreis Ltd - India
- Attock Cement Pakistan Limited
- Banpu Public Company Limited - Thailand
- AsiaOL BioFuels Corp., Philippines
- Kumho Petrochemical, South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Krishnapatnam Port Company Ltd. - India
- Ministry of Finance - Indonesia
- Central Java Power - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- SMG Consultants - Indonesia
- Asmin Koalindo Tuhup - Indonesia
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