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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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Thursday, 08 September 11
PETROSEA ADDS US$730 MIO CONTRACT
Coal mining contractor PT Petrosea Tbk (PTRO), a majority owned subsidiary of energy integrated company PT Indika Energy Tbk (INDY), has secured a U ...
Wednesday, 07 September 11
ANOTHER EXCEPTIONALLY STRONG WEEK FOR THE CAPESIZE MARKET - BRS
The very strong rise in Cape rates pushed through an overall improvement in the BDI this week, although relatively little benefit from the Capes has ...
Wednesday, 07 September 11
INDIA HIT BY INDONESIAS COAL PRICE - TEMPO INTERACTIVE
TEMPO Interactive, an Indonesian online news portal reported that, The Indian government has complained about the price increase of Indonesian coal, ...
Wednesday, 07 September 11
SAMPUR POWER AGREEMENT SIGNED - DAILY NEWS
Daily News, Sri Lank's national news paper reported that, the agreement for the setting up of a 500 MW coal-fired power plant at Sampur, Trincomale ...
Tuesday, 06 September 11
INDONESIAS PROPOSED COAL EXPORT BAN MAY HAVE IMPACT ON THE INDIAN POWER SECTOR - DIPESH DIPU
COALspot.com - This is a special interview about Indonesian proposed coal export ban by 2014, with Mr. Dipesh Dipu, Director of Deloitte Touche Tohm ...
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- Latin American Coal - Colombia
- Billiton Holdings Pty Ltd - Australia
- Vizag Seaport Private Limited - India
- Romanian Commodities Exchange
- Antam Resourcindo - Indonesia
- Maheswari Brothers Coal Limited - India
- Tamil Nadu electricity Board
- Cigading International Bulk Terminal - Indonesia
- Carbofer General Trading SA - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- PetroVietnam Power Coal Import and Supply Company
- Global Green Power PLC Corporation, Philippines
- Thai Mozambique Logistica
- Indian Oil Corporation Limited
- Global Coal Blending Company Limited - Australia
- OPG Power Generation Pvt Ltd - India
- VISA Power Limited - India
- SMG Consultants - Indonesia
- Marubeni Corporation - India
- Lanco Infratech Ltd - India
- Mintek Dendrill Indonesia
- Planning Commission, India
- Port Waratah Coal Services - Australia
- Leighton Contractors Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Sakthi Sugars Limited - India
- Straits Asia Resources Limited - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Parliament of New Zealand
- Iligan Light & Power Inc, Philippines
- Grasim Industreis Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Bhushan Steel Limited - India
- Kartika Selabumi Mining - Indonesia
- Star Paper Mills Limited - India
- Aditya Birla Group - India
- Chamber of Mines of South Africa
- Therma Luzon, Inc, Philippines
- Meenaskhi Energy Private Limited - India
- White Energy Company Limited
- Africa Commodities Group - South Africa
- Renaissance Capital - South Africa
- Mercator Lines Limited - India
- Bukit Baiduri Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Uttam Galva Steels Limited - India
- Trasteel International SA, Italy
- Ministry of Transport, Egypt
- TeaM Sual Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- IHS Mccloskey Coal Group - USA
- PowerSource Philippines DevCo
- San Jose City I Power Corp, Philippines
- Bharathi Cement Corporation - India
- Deloitte Consulting - India
- Siam City Cement PLC, Thailand
- Manunggal Multi Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Coastal Gujarat Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Indika Energy - Indonesia
- Altura Mining Limited, Indonesia
- Ministry of Mines - Canada
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The University of Queensland
- Bahari Cakrawala Sebuku - Indonesia
- PNOC Exploration Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Metalloyd Limited - United Kingdom
- Independent Power Producers Association of India
- Attock Cement Pakistan Limited
- Miang Besar Coal Terminal - Indonesia
- Meralco Power Generation, Philippines
- European Bulk Services B.V. - Netherlands
- MS Steel International - UAE
- Sree Jayajothi Cements Limited - India
- Gujarat Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Eastern Coal Council - USA
- Kapuas Tunggal Persada - Indonesia
- CIMB Investment Bank - Malaysia
- South Luzon Thermal Energy Corporation
- Baramulti Group, Indonesia
- Sarangani Energy Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Siam City Cement - Thailand
- Bukit Makmur.PT - Indonesia
- Rio Tinto Coal - Australia
- Kaltim Prima Coal - Indonesia
- CNBM International Corporation - China
- Binh Thuan Hamico - Vietnam
- Electricity Generating Authority of Thailand
- Intertek Mineral Services - Indonesia
- Vedanta Resources Plc - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Agrawal Coal Company - India
- Pendopo Energi Batubara - Indonesia
- Sojitz Corporation - Japan
- Economic Council, Georgia
- Ceylon Electricity Board - Sri Lanka
- Indonesian Coal Mining Association
- Orica Australia Pty. Ltd.
- Videocon Industries ltd - India
- Kumho Petrochemical, South Korea
- The Treasury - Australian Government
- Gujarat Sidhee Cement - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GMR Energy Limited - India
- Malabar Cements Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Samtan Co., Ltd - South Korea
- Formosa Plastics Group - Taiwan
- Bulk Trading Sa - Switzerland
- Directorate General of MIneral and Coal - Indonesia
- McConnell Dowell - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Global Business Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Ambuja Cements Ltd - India
- Singapore Mercantile Exchange
- LBH Netherlands Bv - Netherlands
- Larsen & Toubro Limited - India
- Edison Trading Spa - Italy
- Maharashtra Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Orica Mining Services - Indonesia
- Central Java Power - Indonesia
- Goldman Sachs - Singapore
- Energy Development Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Dalmia Cement Bharat India
- Price Waterhouse Coopers - Russia
- Alfred C Toepfer International GmbH - Germany
- Oldendorff Carriers - Singapore
- Semirara Mining and Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Parry Sugars Refinery, India
- Simpson Spence & Young - Indonesia
- Anglo American - United Kingdom
- Petron Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Tata Chemicals Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Minerals Council of Australia
- Pipit Mutiara Jaya. PT, Indonesia
- The State Trading Corporation of India Ltd
- Jaiprakash Power Ventures ltd
- Mercuria Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Coalindo Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Central Electricity Authority - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Makarim & Taira - Indonesia
- Eastern Energy - Thailand
- Indian Energy Exchange, India
- Jindal Steel & Power Ltd - India
- Sical Logistics Limited - India
- Medco Energi Mining Internasional
- Timah Investasi Mineral - Indoneisa
- Thiess Contractors Indonesia
- Georgia Ports Authority, United States
- Savvy Resources Ltd - HongKong
- Sinarmas Energy and Mining - Indonesia
- IEA Clean Coal Centre - UK
- India Bulls Power Limited - India
- Barasentosa Lestari - Indonesia
- Electricity Authority, New Zealand
- PTC India Limited - India
- Energy Link Ltd, New Zealand
- GVK Power & Infra Limited - India
- Sindya Power Generating Company Private Ltd
- Bhatia International Limited - India
- Cement Manufacturers Association - India
- Madhucon Powers Ltd - India
- Borneo Indobara - Indonesia
- Indogreen Group - Indonesia
- Wilmar Investment Holdings
- Commonwealth Bank - Australia
- Rashtriya Ispat Nigam Limited - India
- Bangladesh Power Developement Board
- ICICI Bank Limited - India
- Directorate Of Revenue Intelligence - India
- GAC Shipping (India) Pvt Ltd
- Merrill Lynch Commodities Europe
- Xindia Steels Limited - India
- Standard Chartered Bank - UAE
- Coal and Oil Company - UAE
- Ind-Barath Power Infra Limited - India
- London Commodity Brokers - England
- Toyota Tsusho Corporation, Japan
- Power Finance Corporation Ltd., India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mjunction Services Limited - India
- Kepco SPC Power Corporation, Philippines
- SMC Global Power, Philippines
- Globalindo Alam Lestari - Indonesia
- Interocean Group of Companies - India
- New Zealand Coal & Carbon
- Petrochimia International Co. Ltd.- Taiwan
- Aboitiz Power Corporation - Philippines
- Posco Energy - South Korea
- Heidelberg Cement - Germany
- Salva Resources Pvt Ltd - India
- ASAPP Information Group - India
- Indo Tambangraya Megah - Indonesia
- Kideco Jaya Agung - Indonesia
- Wood Mackenzie - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Finance - Indonesia
- Australian Coal Association
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