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Tuesday, 11 June 13
COAL: NO SIGN OF RECOVERY - GABRIELLA
 COALspot.com: We attended the 19th Annual Coaltrans Asia Conference, where we found most of the speakers were not very optimistic on the outlook for coal mining in the months ahead. The main concern is abundant supply outreaching demand growth.
We maintain an UNDERWEIGHT recommendation on the sector.
However, for investors still seeking some exposure to the coal mining sector, PTBA is a solid defensive play given:
1) its low cost structure and defensive earnings,
2) its abundant reserves supporting strong production growth and
3) its strong balance sheet. Going forward, we foresee further declines in EPS due to continued depressed coal prices which will result in lower Target Prices from current levels. Below are some key takeaways:
Coal Mining Conditions in Indonesia as the biggest exporter
As of May 2013, Indonesia’s coal resources amounted to 159bn tons with coal reserves of 32bn tons – about 3% of the world’s coal reserves. Presently, there are 76 Coal Agreements (PKP2B) and 3,892 coal licenses (IUP). Most of them are for operations in Kalimantan and Sumatra. The majority are in Kalimantan which has 61 PKP2B (80%) and 2,670 IUP (69%). All in all, Kalimantan accounts for around 90% of the total national coal production. Most of the IUP (around 80%) are at the exploration stage with the rest in the production stage. There are problems with around 400 IUP. Most of the coal production is undertaken by coal agreement holders and SOE (which account for around 70% of the national coal production).
Fuelling Indonesia’s domestic coal demand: an additional 55GW of power generation capacity
Indonesia’s electricity demand growth is still high (9.4% per year), with PLN, the state electricity company as the biggest coal buyer in Indonesia (66mn tons in 2013). PLN has stated that electricity supply in Indonesia will continue to rely on coal fired power plants (CFPP) for at least the next 10 years given the relatively cheap production costs involved. By 2020, PLN expects total additional power generation capacity to reach 55GW (PLN: 31GW, IPP: 24GW). Of this amount, 35GW or 65% is expected to come from coal power plants translating into additional coal demand of around 100mn tons p.a.
China’s Coal Import Restrictions: 50mn tons from Indonesia
From 2010 to 2012, China’s thermal coal imports increased each year, more than doubling from 71mn tons to 155mn tons, with Indonesia’s thermal coal amounting to 54% of the total in 2012. This year, China is expected to import 380mn tons of coal in total (+31% or half last year’s growth rate). One of the hot issues being discussed was China’s coal import restrictions stipulating: 1) a minimum CV of 3,750kcal/kg (NAR), 2) maximum sulphur content of 2% and 3) maximum ash content of 25%. Around 30% of China’s steam coal imports - or about 50mn tons coming from Indonesia - were lignite. India would benefit from China implementing an imports ban as it would mean lower prices. In 1Q13, however, China’s coal imports still showed an increase of 30% yoy.
Future of Indonesia’s low rank coal
The government seeks a greater role for domestic coal, especially in LRC (mine mouth power plants, gasification, liquefaction). Indonesia has abundant low rank coal resources, accounting for 40% of Indonesia’s total resources, with medium and high rank coal accounting for about 50% and 10%, respectively. There is a need to foster greater international cooperation to develop the technology for the utilization of low rank coal for domestic needs by implementing Clean Coal Technologies with build operate transfer schemes (BOT schemes) to improve calorific value and efficiency.
A Challenging Outlook
The outlook for coal mining will remain challenging, in our view, given the currently depressed coal prices (down 5% average YTD) and persistent global economic headwinds. China and India combined account for more than 30% of the world’s seaborne import volume. Their dominance is expected to continue with potential growth seen in India. Environmental and Regulatory issues will limit coal imports growth, however, as reflected in China’s draft proposal for a ban on imports and the current development of Hydropower and Nuclear generation.
Adding to the woes, Indonesia’s new draft regulation (increasing coal royalties, export quotas) has worsened the investment climate for coal producers in the country.
The author of this article Ms. Maureen Natasha, an equity analyst in PT Danareksa Sekuritas. Danareksa is a pioneering Indonesian financial institution and was the first to introduce mutual funds in Indonesia. It was also the first to launch a US Dollar-denominated fixed-income fund and promote syariah-based investments. Today, Danareksa is the only local company to offer direct market access services to clients worldwide and has grown to become the company that has underwritten the most equity and debt placements in Indonesia.
Views and opinions / conclusion expressed herein are personal views of the author and not that of COALspot.com. This article is subject to disclaimer terms of PT. Danareksa Sekuritas.
If you believe an article violates your rights or the rights of others, please contact us.
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Thursday, 20 June 13
CAPESIZE : FINALLY A SUBSTANTIAL IMPROVEMENT IN RATES! - FEARNLEYS A.S
Handy
Atlantic market kept a steady curve from last week. US Gulf positions fetched tick above USD 21k for Cont/Skaw direction, and vessels fixed f ...
Wednesday, 19 June 13
NEWCASTLE SHIPPED 16.05 PERCENT LESS COAL W/E 17 JUNE 2013
COALspot.com - Newcastle port in Australia has loaded 2,606,071 tons of coal for the week ended 0700 hours 17 June 2013, Newcastle Port Corp. ...
Sunday, 16 June 13
WEAK DEMAND KEEPS COAL PRICES LOW
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average July 2013 delivery have lost 2.94 percent week on week but gained 0.06 percent ...
Saturday, 15 June 13
S7 AND S8 ROUTES ARE EXPECTED TO BE STEADY NEXT WEEK - VISTAAR
COALspot.com - This week freight movement was fairly firm with news of China is rebuilding iron ore stockpiles, and ease import rules. Cape and Pana ...
Saturday, 15 June 13
SHIPPING CONFIDENCE REACHES HIGHEST LEVEL FOR TWO AND A HALF YEARS - MOORE STEPHENS
Overall confidence levels in the shipping industry rose to their highest level for two and a half years in the three months ended May 2013, accordin ...
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- Simpson Spence & Young - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Mercator Lines Limited - India
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement PLC, Thailand
- Sree Jayajothi Cements Limited - India
- Uttam Galva Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Bhoruka Overseas - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Formosa Plastics Group - Taiwan
- Karaikal Port Pvt Ltd - India
- Indika Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Grasim Industreis Ltd - India
- Therma Luzon, Inc, Philippines
- Indian Energy Exchange, India
- Planning Commission, India
- Power Finance Corporation Ltd., India
- Iligan Light & Power Inc, Philippines
- Videocon Industries ltd - India
- Alfred C Toepfer International GmbH - Germany
- Interocean Group of Companies - India
- TeaM Sual Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Larsen & Toubro Limited - India
- Romanian Commodities Exchange
- VISA Power Limited - India
- Wood Mackenzie - Singapore
- ASAPP Information Group - India
- Australian Commodity Traders Exchange
- Karbindo Abesyapradhi - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Singapore Mercantile Exchange
- McConnell Dowell - Australia
- Star Paper Mills Limited - India
- MS Steel International - UAE
- Africa Commodities Group - South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- New Zealand Coal & Carbon
- Mjunction Services Limited - India
- Directorate General of MIneral and Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Lanco Infratech Ltd - India
- ICICI Bank Limited - India
- Latin American Coal - Colombia
- Barasentosa Lestari - Indonesia
- Heidelberg Cement - Germany
- Orica Australia Pty. Ltd.
- Holcim Trading Pte Ltd - Singapore
- Sinarmas Energy and Mining - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bangladesh Power Developement Board
- Mintek Dendrill Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Price Waterhouse Coopers - Russia
- Banpu Public Company Limited - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Sidhee Cement - India
- Leighton Contractors Pty Ltd - Australia
- Kalimantan Lumbung Energi - Indonesia
- Tata Chemicals Ltd - India
- Bukit Makmur.PT - Indonesia
- Central Java Power - Indonesia
- Semirara Mining Corp, Philippines
- Oldendorff Carriers - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Indogreen Group - Indonesia
- Bulk Trading Sa - Switzerland
- Malabar Cements Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Sical Logistics Limited - India
- Attock Cement Pakistan Limited
- Kobexindo Tractors - Indoneisa
- IHS Mccloskey Coal Group - USA
- Coastal Gujarat Power Limited - India
- Commonwealth Bank - Australia
- Bayan Resources Tbk. - Indonesia
- Binh Thuan Hamico - Vietnam
- Semirara Mining and Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Electricity Authority, New Zealand
- PowerSource Philippines DevCo
- Bhushan Steel Limited - India
- Maheswari Brothers Coal Limited - India
- Salva Resources Pvt Ltd - India
- Agrawal Coal Company - India
- Vijayanagar Sugar Pvt Ltd - India
- Australian Coal Association
- Merrill Lynch Commodities Europe
- Sojitz Corporation - Japan
- Jaiprakash Power Ventures ltd
- Independent Power Producers Association of India
- Straits Asia Resources Limited - Singapore
- Electricity Generating Authority of Thailand
- Global Coal Blending Company Limited - Australia
- Ministry of Transport, Egypt
- Metalloyd Limited - United Kingdom
- Riau Bara Harum - Indonesia
- Marubeni Corporation - India
- Savvy Resources Ltd - HongKong
- Parry Sugars Refinery, India
- Miang Besar Coal Terminal - Indonesia
- Indonesian Coal Mining Association
- Standard Chartered Bank - UAE
- Gujarat Mineral Development Corp Ltd - India
- Rashtriya Ispat Nigam Limited - India
- GVK Power & Infra Limited - India
- Kumho Petrochemical, South Korea
- Sindya Power Generating Company Private Ltd
- Ambuja Cements Ltd - India
- Aditya Birla Group - India
- Carbofer General Trading SA - India
- Kideco Jaya Agung - Indonesia
- Jindal Steel & Power Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- PNOC Exploration Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- PTC India Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Bhatia International Limited - India
- Economic Council, Georgia
- Samtan Co., Ltd - South Korea
- Sarangani Energy Corporation, Philippines
- Bharathi Cement Corporation - India
- Baramulti Group, Indonesia
- CNBM International Corporation - China
- Siam City Cement - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Antam Resourcindo - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Anglo American - United Kingdom
- Thiess Contractors Indonesia
- Coal and Oil Company - UAE
- South Luzon Thermal Energy Corporation
- Medco Energi Mining Internasional
- Global Business Power Corporation, Philippines
- Xindia Steels Limited - India
- Tamil Nadu electricity Board
- White Energy Company Limited
- GN Power Mariveles Coal Plant, Philippines
- Petron Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- London Commodity Brokers - England
- San Jose City I Power Corp, Philippines
- Orica Mining Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Energy Link Ltd, New Zealand
- Global Green Power PLC Corporation, Philippines
- The University of Queensland
- Deloitte Consulting - India
- Toyota Tsusho Corporation, Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- Altura Mining Limited, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Wilmar Investment Holdings
- Kartika Selabumi Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- CIMB Investment Bank - Malaysia
- GMR Energy Limited - India
- Ind-Barath Power Infra Limited - India
- Chamber of Mines of South Africa
- Borneo Indobara - Indonesia
- The State Trading Corporation of India Ltd
- European Bulk Services B.V. - Netherlands
- Rio Tinto Coal - Australia
- Parliament of New Zealand
- Chettinad Cement Corporation Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Renaissance Capital - South Africa
- Aboitiz Power Corporation - Philippines
- Vedanta Resources Plc - India
- Dalmia Cement Bharat India
- Thai Mozambique Logistica
- Manunggal Multi Energi - Indonesia
- The Treasury - Australian Government
- Energy Development Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Mines - Canada
- Eastern Coal Council - USA
- SMG Consultants - Indonesia
- Mercuria Energy - Indonesia
- India Bulls Power Limited - India
- Indian Oil Corporation Limited
- Georgia Ports Authority, United States
- Posco Energy - South Korea
- Directorate Of Revenue Intelligence - India
- Timah Investasi Mineral - Indoneisa
- Eastern Energy - Thailand
- Makarim & Taira - Indonesia
- Minerals Council of Australia
- Madhucon Powers Ltd - India
- Goldman Sachs - Singapore
- Essar Steel Hazira Ltd - India
- Edison Trading Spa - Italy
- Cement Manufacturers Association - India
- LBH Netherlands Bv - Netherlands
- SMC Global Power, Philippines
- Ministry of Finance - Indonesia
- Port Waratah Coal Services - Australia
- Trasteel International SA, Italy
- Meralco Power Generation, Philippines
- Central Electricity Authority - India
- Kaltim Prima Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- IEA Clean Coal Centre - UK
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