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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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Monday, 19 December 11
PLN WILL NO LONGER BUY COAL FROM TRADERS
COALspot.com - Indonesia's state electricity company PT Perusahaan Listrik Negara will no longer allow traders to become their suppliers, said, its ...
Saturday, 17 December 11
THE FREIGHT MARKET SEEMS TO HAVE ALMOST BOTTOMED OUT AND MAY REMAIN STEADY AT THESE LEVELS CAPT REDDY
COALspot.com - The BDI and Cape index closed lower this week with BDI closing at 1,888 points (down by 1.76 pct) and Cape index at 3,572 points (dow ...
Friday, 16 December 11
DRY BULK MARKET LOSES TRACK ON CAPESIZE LOSSES, SHIP FINANCING REMAINS TROUBLESOME - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market didn’t manage to sustain earlier gains, losing track yesterday, on reduced Capesize demand and persisting troubles in smal ...
Thursday, 15 December 11
BERAU SEES INDIA AS POTENTIAL MARKET FOR LOW-CALORIE COAL - THE JAKARTA POST
The Jakarta Post reported that, Publicly listed coal mining company PT Berau Coal Energy (BRAU), the fifth largest coal producer in Indonesia, sees ...
Thursday, 15 December 11
PANAMAX HARDLY AFFECTED BY THE RECENT FIRMER TENDENCY FOR THE BIG SISTERS - FEARNBULK
Handy
The rates are more or less the same as last week. Continent/US Gulf fixing at tick below USD 10k and Gulf/Continent levels at USD 25k. Trips ...
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- Africa Commodities Group - South Africa
- Holcim Trading Pte Ltd - Singapore
- Energy Link Ltd, New Zealand
- Indian Oil Corporation Limited
- Maharashtra Electricity Regulatory Commission - India
- Heidelberg Cement - Germany
- Semirara Mining Corp, Philippines
- Bharathi Cement Corporation - India
- Dalmia Cement Bharat India
- Posco Energy - South Korea
- Altura Mining Limited, Indonesia
- CNBM International Corporation - China
- SMG Consultants - Indonesia
- Borneo Indobara - Indonesia
- CIMB Investment Bank - Malaysia
- Directorate General of MIneral and Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Interocean Group of Companies - India
- Edison Trading Spa - Italy
- Gujarat Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- Renaissance Capital - South Africa
- Price Waterhouse Coopers - Russia
- Makarim & Taira - Indonesia
- Essar Steel Hazira Ltd - India
- Ministry of Finance - Indonesia
- Rio Tinto Coal - Australia
- MS Steel International - UAE
- Straits Asia Resources Limited - Singapore
- ICICI Bank Limited - India
- Intertek Mineral Services - Indonesia
- Simpson Spence & Young - Indonesia
- Globalindo Alam Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Sindya Power Generating Company Private Ltd
- Chettinad Cement Corporation Ltd - India
- Petron Corporation, Philippines
- GVK Power & Infra Limited - India
- Romanian Commodities Exchange
- Bukit Makmur.PT - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sarangani Energy Corporation, Philippines
- Ministry of Mines - Canada
- The University of Queensland
- Electricity Authority, New Zealand
- Sical Logistics Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sakthi Sugars Limited - India
- Tata Chemicals Ltd - India
- TeaM Sual Corporation - Philippines
- Parliament of New Zealand
- McConnell Dowell - Australia
- Samtan Co., Ltd - South Korea
- Meralco Power Generation, Philippines
- ASAPP Information Group - India
- Barasentosa Lestari - Indonesia
- Thai Mozambique Logistica
- Formosa Plastics Group - Taiwan
- Uttam Galva Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- Indika Energy - Indonesia
- South Luzon Thermal Energy Corporation
- SMC Global Power, Philippines
- PNOC Exploration Corporation - Philippines
- Malabar Cements Ltd - India
- Parry Sugars Refinery, India
- Economic Council, Georgia
- Power Finance Corporation Ltd., India
- Larsen & Toubro Limited - India
- Standard Chartered Bank - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coastal Gujarat Power Limited - India
- Coalindo Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Aboitiz Power Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Ambuja Cements Ltd - India
- India Bulls Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Therma Luzon, Inc, Philippines
- Attock Cement Pakistan Limited
- Jindal Steel & Power Ltd - India
- Directorate Of Revenue Intelligence - India
- PetroVietnam Power Coal Import and Supply Company
- Goldman Sachs - Singapore
- San Jose City I Power Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Alfred C Toepfer International GmbH - Germany
- IEA Clean Coal Centre - UK
- Aditya Birla Group - India
- Maheswari Brothers Coal Limited - India
- Bangladesh Power Developement Board
- New Zealand Coal & Carbon
- Leighton Contractors Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
- Timah Investasi Mineral - Indoneisa
- Mercuria Energy - Indonesia
- GMR Energy Limited - India
- Bhushan Steel Limited - India
- Anglo American - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Karaikal Port Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- Toyota Tsusho Corporation, Japan
- Kaltim Prima Coal - Indonesia
- White Energy Company Limited
- Mintek Dendrill Indonesia
- Billiton Holdings Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- Metalloyd Limited - United Kingdom
- Kideco Jaya Agung - Indonesia
- Pendopo Energi Batubara - Indonesia
- Bulk Trading Sa - Switzerland
- Baramulti Group, Indonesia
- Eastern Coal Council - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coal and Oil Company - UAE
- Eastern Energy - Thailand
- Energy Development Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- PTC India Limited - India
- Vedanta Resources Plc - India
- Binh Thuan Hamico - Vietnam
- Vizag Seaport Private Limited - India
- IHS Mccloskey Coal Group - USA
- Orica Australia Pty. Ltd.
- Kumho Petrochemical, South Korea
- Global Green Power PLC Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- VISA Power Limited - India
- Medco Energi Mining Internasional
- Indo Tambangraya Megah - Indonesia
- Carbofer General Trading SA - India
- Australian Coal Association
- Merrill Lynch Commodities Europe
- Latin American Coal - Colombia
- Bukit Baiduri Energy - Indonesia
- Singapore Mercantile Exchange
- Ministry of Transport, Egypt
- OPG Power Generation Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Central Java Power - Indonesia
- Banpu Public Company Limited - Thailand
- Manunggal Multi Energi - Indonesia
- Lanco Infratech Ltd - India
- The State Trading Corporation of India Ltd
- Thiess Contractors Indonesia
- Australian Commodity Traders Exchange
- Cigading International Bulk Terminal - Indonesia
- London Commodity Brokers - England
- Grasim Industreis Ltd - India
- Mjunction Services Limited - India
- Central Electricity Authority - India
- Asmin Koalindo Tuhup - Indonesia
- Madhucon Powers Ltd - India
- Sree Jayajothi Cements Limited - India
- Marubeni Corporation - India
- Indogreen Group - Indonesia
- Wood Mackenzie - Singapore
- Rashtriya Ispat Nigam Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Independent Power Producers Association of India
- Electricity Generating Authority of Thailand
- Kapuas Tunggal Persada - Indonesia
- Xindia Steels Limited - India
- Georgia Ports Authority, United States
- Iligan Light & Power Inc, Philippines
- Jaiprakash Power Ventures ltd
- Indian Energy Exchange, India
- Star Paper Mills Limited - India
- Miang Besar Coal Terminal - Indonesia
- Wilmar Investment Holdings
- Bhatia International Limited - India
- Planning Commission, India
- Trasteel International SA, Italy
- Neyveli Lignite Corporation Ltd, - India
- Kohat Cement Company Ltd. - Pakistan
- Videocon Industries ltd - India
- Mercator Lines Limited - India
- Savvy Resources Ltd - HongKong
- Meenaskhi Energy Private Limited - India
- Orica Mining Services - Indonesia
- Agrawal Coal Company - India
- Sojitz Corporation - Japan
- European Bulk Services B.V. - Netherlands
- Indonesian Coal Mining Association
- Oldendorff Carriers - Singapore
- Tamil Nadu electricity Board
- Global Coal Blending Company Limited - Australia
- Salva Resources Pvt Ltd - India
- Chamber of Mines of South Africa
- Cement Manufacturers Association - India
- Karbindo Abesyapradhi - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Deloitte Consulting - India
- Minerals Council of Australia
- Global Business Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- PowerSource Philippines DevCo
- The Treasury - Australian Government
- GAC Shipping (India) Pvt Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement PLC, Thailand
- Siam City Cement - Thailand
- Gujarat Sidhee Cement - India
- Bhoruka Overseas - Indonesia
- Port Waratah Coal Services - Australia
- Commonwealth Bank - Australia
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