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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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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Parliament of New Zealand
- Kohat Cement Company Ltd. - Pakistan
- New Zealand Coal & Carbon
- SMC Global Power, Philippines
- TeaM Sual Corporation - Philippines
- Dalmia Cement Bharat India
- Posco Energy - South Korea
- Makarim & Taira - Indonesia
- Karaikal Port Pvt Ltd - India
- Marubeni Corporation - India
- Videocon Industries ltd - India
- Ministry of Finance - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Australian Coal Association
- Orica Mining Services - Indonesia
- Coastal Gujarat Power Limited - India
- Planning Commission, India
- Sakthi Sugars Limited - India
- Global Business Power Corporation, Philippines
- Indonesian Coal Mining Association
- Jorong Barutama Greston.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Siam City Cement - Thailand
- The State Trading Corporation of India Ltd
- Manunggal Multi Energi - Indonesia
- Minerals Council of Australia
- Heidelberg Cement - Germany
- Therma Luzon, Inc, Philippines
- Savvy Resources Ltd - HongKong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- Oldendorff Carriers - Singapore
- Cement Manufacturers Association - India
- Kumho Petrochemical, South Korea
- Lanco Infratech Ltd - India
- Chettinad Cement Corporation Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Iligan Light & Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The University of Queensland
- Aboitiz Power Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Interocean Group of Companies - India
- Bukit Makmur.PT - Indonesia
- Attock Cement Pakistan Limited
- Globalindo Alam Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- IHS Mccloskey Coal Group - USA
- Indian Energy Exchange, India
- Port Waratah Coal Services - Australia
- GAC Shipping (India) Pvt Ltd
- Essar Steel Hazira Ltd - India
- McConnell Dowell - Australia
- Kapuas Tunggal Persada - Indonesia
- Kepco SPC Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Ind-Barath Power Infra Limited - India
- Straits Asia Resources Limited - Singapore
- Kideco Jaya Agung - Indonesia
- Altura Mining Limited, Indonesia
- Coal and Oil Company - UAE
- PNOC Exploration Corporation - Philippines
- Merrill Lynch Commodities Europe
- Simpson Spence & Young - Indonesia
- ICICI Bank Limited - India
- Price Waterhouse Coopers - Russia
- Indo Tambangraya Megah - Indonesia
- South Luzon Thermal Energy Corporation
- Siam City Cement PLC, Thailand
- European Bulk Services B.V. - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- Medco Energi Mining Internasional
- Aditya Birla Group - India
- Chamber of Mines of South Africa
- Sarangani Energy Corporation, Philippines
- White Energy Company Limited
- Indogreen Group - Indonesia
- Power Finance Corporation Ltd., India
- Xindia Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Maheswari Brothers Coal Limited - India
- Wood Mackenzie - Singapore
- Romanian Commodities Exchange
- SN Aboitiz Power Inc, Philippines
- Bharathi Cement Corporation - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Coal Council - USA
- Thiess Contractors Indonesia
- IEA Clean Coal Centre - UK
- Mjunction Services Limited - India
- Star Paper Mills Limited - India
- Baramulti Group, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Commonwealth Bank - Australia
- Australian Commodity Traders Exchange
- Georgia Ports Authority, United States
- Orica Australia Pty. Ltd.
- Intertek Mineral Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Miang Besar Coal Terminal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining Corp, Philippines
- Agrawal Coal Company - India
- Sojitz Corporation - Japan
- SMG Consultants - Indonesia
- Bukit Baiduri Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Deloitte Consulting - India
- Wilmar Investment Holdings
- Gujarat Sidhee Cement - India
- CNBM International Corporation - China
- Thai Mozambique Logistica
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Electricity Authority, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Jaiprakash Power Ventures ltd
- Bayan Resources Tbk. - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Energy Development Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Eastern Energy - Thailand
- Singapore Mercantile Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Vizag Seaport Private Limited - India
- Mintek Dendrill Indonesia
- Alfred C Toepfer International GmbH - Germany
- Anglo American - United Kingdom
- Petron Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Renaissance Capital - South Africa
- Billiton Holdings Pty Ltd - Australia
- GVK Power & Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Larsen & Toubro Limited - India
- International Coal Ventures Pvt Ltd - India
- GMR Energy Limited - India
- MS Steel International - UAE
- Economic Council, Georgia
- Pendopo Energi Batubara - Indonesia
- Coalindo Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Ambuja Cements Ltd - India
- Madhucon Powers Ltd - India
- Energy Link Ltd, New Zealand
- Sree Jayajothi Cements Limited - India
- Edison Trading Spa - Italy
- Trasteel International SA, Italy
- ASAPP Information Group - India
- Tata Chemicals Ltd - India
- Sical Logistics Limited - India
- Mercuria Energy - Indonesia
- Independent Power Producers Association of India
- Carbofer General Trading SA - India
- Binh Thuan Hamico - Vietnam
- London Commodity Brokers - England
- Riau Bara Harum - Indonesia
- Central Java Power - Indonesia
- Antam Resourcindo - Indonesia
- LBH Netherlands Bv - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Kartika Selabumi Mining - Indonesia
- Vedanta Resources Plc - India
- India Bulls Power Limited - India
- Central Electricity Authority - India
- Meenaskhi Energy Private Limited - India
- Mercator Lines Limited - India
- Kaltim Prima Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Parry Sugars Refinery, India
- Meralco Power Generation, Philippines
- Barasentosa Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Grasim Industreis Ltd - India
- Bhatia International Limited - India
- PowerSource Philippines DevCo
- Bulk Trading Sa - Switzerland
- CIMB Investment Bank - Malaysia
- Rio Tinto Coal - Australia
- San Jose City I Power Corp, Philippines
- Indian Oil Corporation Limited
- Tamil Nadu electricity Board
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Transport, Egypt
- Bhoruka Overseas - Indonesia
- Timah Investasi Mineral - Indoneisa
- Samtan Co., Ltd - South Korea
- Holcim Trading Pte Ltd - Singapore
- Bangladesh Power Developement Board
- PTC India Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Latin American Coal - Colombia
- Goldman Sachs - Singapore
- Ministry of Mines - Canada
- Bhushan Steel Limited - India
- Formosa Plastics Group - Taiwan
- Africa Commodities Group - South Africa
- PetroVietnam Power Coal Import and Supply Company
- VISA Power Limited - India
- The Treasury - Australian Government
- Toyota Tsusho Corporation, Japan
- Vijayanagar Sugar Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Indika Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Malabar Cements Ltd - India
- Standard Chartered Bank - UAE
- Borneo Indobara - Indonesia
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