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Thursday, 30 January 14
JPU SETTLEMENT PRICE AS A BENCHMARK WILL DECLINE IN IMPORTANCE BUT REMAIN RELEVANT, SAYS WOOD MACKENZIE
 JPU price will remain above spot, trending closer to spot till 2015 then increasing to 2035.
Japanese Power Utilities (JPU) are approaching a crucial negotiation period with Australian coal producers in March, when large volumes are contracted annually. Wood Mackenzie says market players can expect JPU prices to remain above market prices for the foreseeable future. As for price trends, JPUs will have to pay high premiums till 2015, before dipping from 2016 to 2020. Post-2020 to the longer term, premium over spot prices will trend upwards again. This is a result of a move away from JPU-type coal in key demand markets, which also acts to reduce the significance of JPU price as a benchmark, although not negating it altogether.
In the next few years the JPU premium over market price will remain high, settling below US$7 per tonne ($/t) by 2015. Mr Prakash Sharma, Asia Pacific Coal Market Analyst for Wood Mackenzie says, "Although global oversupply persists in the overall seaborne thermal coal market, for the highly specific JPU-type coal supply, the market will be progressively tight as other customers increase their consumption of this type of coal.”
In the medium term from 2016 to 2020, Wood Mackenzie forecasts a period where the JPU premium will decline to as low as US$3.80/t over market price as additional JPU-type supply is set to come online and producers seek to gain market share by competitively pricing their product. However, growth in demand for lower quality coal in key markets is impacting producers' product mix strategies; thus reducing the availability of JPU-type coal. This combined with a longer-term decline in JPU-type supply capacity is projected to support the premium over spot prices.
Mr Rory Simington, Coal Supply Research Analyst for Wood Mackenzie elaborates, "Fast growing demand markets of China, India and South Korea, to some degree are turning away from higher priced JPU-type low ash coal towards a more inexpensive higher ash product available on the spot market. Producers who have experienced low prices throughout 2013, and have had their margins squeezed, have reduced production costs by switching much of their incremental production towards this higher ash 5,500kcal/kg NAR market. This leaves the supply growth picture for JPU-type coal fairly flat."
Japanese power plants cannot absorb a higher ash product due to their ash disposal concerns and have only used relatively small amounts of low-ash sub-bituminous coal from Indonesia. Therefore JPUs will likely still demand predominantly JPU-type coal. However, Japan's role in the Asia Pacific coal market place will diminish as its proportion of the thermal market declines from 31% to only ten percent by 2035. Consequently, this reduces the significance of JPU price as a benchmark.
Mr Sharma says, "With the fairly flat supply growth outlook for JPU-type coal, a tighter market will result for Japanese procurement. JPUs are acutely aware of this development. Since Japan is completely reliant on coal imports, JPUs are willing to pay a premium over spot prices to lock-in the price for twelve months rather than risk supply availability by switching to index-linked pricing. This is crucial as we believe nuclear capacity in Japan will not return to pre-Fukushima levels. As such, other fuels including coal will need to play a larger role."
"Even if headlines suggest Japan is increasing imports from North America to reduce reliance on Australian producers, the negotiations are still of great importance to Japan as we do not foresee North American supply satisfying their requirements to the same extent Australian producers can." North America currently supplies two percent of Japan's thermal coal requirements. By 2025, Wood Mackenzie estimates North America will still only make up less than ten percent of Japan's thermal coal requirements.
For the longer term past 2020, Wood Mackenzie forecasts premia rising steadily again as the availability of JPU-type coal continues to decline. The margin between JPU settlement price and cost of JPU-type coal production will support the development of new projects. Therefore, JPUs will have to recognise the need to offer higher premiums in order to incentivise new supply. The steadily rising premium will reach US$5.50/t by 2027 and US$10/t in 2035 as higher cost coal projects are developed.
In summary, Mr Sharma says, "Japan recognises the need to secure supply and price stability. Therefore, JPUs favour contracts to the spot market, even at a premium. This will keep JPU pricing relevant albeit playing a diminishing role as a benchmark due to the growing market proportion of higher-ash coal in the region. In the longer term post-2020, this need will translate to JPUs having to pay higher premiums so as to incentivise Australian producers to maintain supply capacity. Hence, the JPU benchmark may lose the status of price-setter but will not likely become a price-taker even if it means that the premium will persist."
Wood Mackenzie's Editor’s notes:
JPU-type coal refers to the coal type imported by Japanese Power Utilities which is prime quality bituminous thermal coal (6322kcal/kg GAR) from Australia under term contracts.
Market prices refers to New FOB Newcastle Market Price @6000kcal/kg NAR. It is used interchangeably with the term 'spot price' in this news release.
About Wood Mackenzie
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
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Wednesday, 22 November 23
INDIA: GOVERNMENT PLANS 1.4 BILLION TONNE COAL OUTPUT BY 2027 - LIVEMINT
The Union coal ministry on Monday announced plans to increase India’s coal production to 1.404 billion tonne by 2027, with an eye to further ...
Wednesday, 22 November 23
OBLIGATION. INDONESIA AIMS TO START COLLECTING LEVIES FROM COAL MINERS IN JANUARY - REUTERS
Indonesia plans to start collecting levies from coal miners in January to be used to compensate miners who sell coal to the state utility at lower ...
Tuesday, 21 November 23
INDIAN COAL POWER PLANTS’ CAPACITY UTILISATION WILL IMPROVE TO 65% THIS FISCAL: - CRISIL
Coal-based thermal power units’ plant load factor (PLF) or capacity utilisation will improve to 65 percent in the current fiscal year despite ...
Tuesday, 14 November 23
CAPITAL PRODUCT PARTNERS L.P. ANNOUNCES TRANSFORMATIVE TRANSACTION INCLUDING THE ACQUISITION OF 11 NEWBUILD LNG CARRIERS FOR $3.1 BILLION
Capital Product Partners L.P. announced that it has entered into an umbrella agreement (the “Umbrella Agreement”) with Capital Maritime ...
Tuesday, 14 November 23
COAL INDIA BEATS Q2 PROFIT VIEW ON HIGH POWER DEMAND AMID WEAK MONSOON - REUTERS
Coal India on Friday reported better-than-expected second-quarter profit, helped by high power demand and boosted production amid a weak monsoon.
...
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- Gujarat Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Borneo Indobara - Indonesia
- Bhatia International Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Standard Chartered Bank - UAE
- Price Waterhouse Coopers - Russia
- Dalmia Cement Bharat India
- Ministry of Transport, Egypt
- Rio Tinto Coal - Australia
- Savvy Resources Ltd - HongKong
- Sical Logistics Limited - India
- SMC Global Power, Philippines
- LBH Netherlands Bv - Netherlands
- Therma Luzon, Inc, Philippines
- Bhushan Steel Limited - India
- Meralco Power Generation, Philippines
- Singapore Mercantile Exchange
- Videocon Industries ltd - India
- TeaM Sual Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Xindia Steels Limited - India
- Uttam Galva Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Ministry of Mines - Canada
- Sakthi Sugars Limited - India
- Sree Jayajothi Cements Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Indonesian Coal Mining Association
- Interocean Group of Companies - India
- Larsen & Toubro Limited - India
- Port Waratah Coal Services - Australia
- Jaiprakash Power Ventures ltd
- Mercator Lines Limited - India
- Jorong Barutama Greston.PT - Indonesia
- European Bulk Services B.V. - Netherlands
- Independent Power Producers Association of India
- Madhucon Powers Ltd - India
- Orica Mining Services - Indonesia
- Makarim & Taira - Indonesia
- Kideco Jaya Agung - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Cement Manufacturers Association - India
- Indian Energy Exchange, India
- Intertek Mineral Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Chamber of Mines of South Africa
- Mintek Dendrill Indonesia
- Thiess Contractors Indonesia
- Bayan Resources Tbk. - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Latin American Coal - Colombia
- Mercuria Energy - Indonesia
- Economic Council, Georgia
- Krishnapatnam Port Company Ltd. - India
- Kumho Petrochemical, South Korea
- Manunggal Multi Energi - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Cigading International Bulk Terminal - Indonesia
- Tamil Nadu electricity Board
- Sarangani Energy Corporation, Philippines
- Goldman Sachs - Singapore
- Attock Cement Pakistan Limited
- Mjunction Services Limited - India
- Anglo American - United Kingdom
- Banpu Public Company Limited - Thailand
- SMG Consultants - Indonesia
- Power Finance Corporation Ltd., India
- Simpson Spence & Young - Indonesia
- Parry Sugars Refinery, India
- Formosa Plastics Group - Taiwan
- Minerals Council of Australia
- Electricity Authority, New Zealand
- Rashtriya Ispat Nigam Limited - India
- Marubeni Corporation - India
- Straits Asia Resources Limited - Singapore
- South Luzon Thermal Energy Corporation
- White Energy Company Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Coal Council - USA
- Globalindo Alam Lestari - Indonesia
- CNBM International Corporation - China
- Deloitte Consulting - India
- Edison Trading Spa - Italy
- Aboitiz Power Corporation - Philippines
- Posco Energy - South Korea
- Billiton Holdings Pty Ltd - Australia
- Neyveli Lignite Corporation Ltd, - India
- Australian Commodity Traders Exchange
- Jindal Steel & Power Ltd - India
- Karaikal Port Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Central Electricity Authority - India
- Trasteel International SA, Italy
- Toyota Tsusho Corporation, Japan
- The University of Queensland
- Heidelberg Cement - Germany
- Meenaskhi Energy Private Limited - India
- India Bulls Power Limited - India
- PowerSource Philippines DevCo
- Bharathi Cement Corporation - India
- New Zealand Coal & Carbon
- Medco Energi Mining Internasional
- Binh Thuan Hamico - Vietnam
- ASAPP Information Group - India
- The Treasury - Australian Government
- The State Trading Corporation of India Ltd
- Pendopo Energi Batubara - Indonesia
- Star Paper Mills Limited - India
- Coalindo Energy - Indonesia
- Renaissance Capital - South Africa
- Indian Oil Corporation Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Africa Commodities Group - South Africa
- Holcim Trading Pte Ltd - Singapore
- Wood Mackenzie - Singapore
- Salva Resources Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Georgia Ports Authority, United States
- Timah Investasi Mineral - Indoneisa
- Global Coal Blending Company Limited - Australia
- San Jose City I Power Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Sojitz Corporation - Japan
- Petrochimia International Co. Ltd.- Taiwan
- Romanian Commodities Exchange
- Coal and Oil Company - UAE
- Electricity Generating Authority of Thailand
- Orica Australia Pty. Ltd.
- Iligan Light & Power Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Semirara Mining Corp, Philippines
- Malabar Cements Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Sidhee Cement - India
- ICICI Bank Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- OPG Power Generation Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Kobexindo Tractors - Indoneisa
- Kepco SPC Power Corporation, Philippines
- GMR Energy Limited - India
- Maheswari Brothers Coal Limited - India
- Vizag Seaport Private Limited - India
- Global Business Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Sindya Power Generating Company Private Ltd
- GVK Power & Infra Limited - India
- Essar Steel Hazira Ltd - India
- Merrill Lynch Commodities Europe
- Thai Mozambique Logistica
- Maharashtra Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- Antam Resourcindo - Indonesia
- London Commodity Brokers - England
- Altura Mining Limited, Indonesia
- Chettinad Cement Corporation Ltd - India
- McConnell Dowell - Australia
- Australian Coal Association
- Petron Corporation, Philippines
- Siam City Cement PLC, Thailand
- VISA Power Limited - India
- Indogreen Group - Indonesia
- SN Aboitiz Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Planning Commission, India
- Kapuas Tunggal Persada - Indonesia
- IEA Clean Coal Centre - UK
- Energy Link Ltd, New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhoruka Overseas - Indonesia
- Energy Development Corp, Philippines
- Lanco Infratech Ltd - India
- Baramulti Group, Indonesia
- International Coal Ventures Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Central Java Power - Indonesia
- MS Steel International - UAE
- PNOC Exploration Corporation - Philippines
- Vedanta Resources Plc - India
- Bangladesh Power Developement Board
- PTC India Limited - India
- Eastern Energy - Thailand
- Bukit Baiduri Energy - Indonesia
- Grasim Industreis Ltd - India
- Kaltim Prima Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Tata Chemicals Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Agrawal Coal Company - India
- Ind-Barath Power Infra Limited - India
- Bulk Trading Sa - Switzerland
- Ambuja Cements Ltd - India
- Carbofer General Trading SA - India
- Oldendorff Carriers - Singapore
- Coastal Gujarat Power Limited - India
- Riau Bara Harum - Indonesia
- Aditya Birla Group - India
- Wilmar Investment Holdings
- Ministry of Finance - Indonesia
- Metalloyd Limited - United Kingdom
- Parliament of New Zealand
- Indika Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Miang Besar Coal Terminal - Indonesia
- CIMB Investment Bank - Malaysia
- Commonwealth Bank - Australia
- Asmin Koalindo Tuhup - Indonesia
- Leighton Contractors Pty Ltd - Australia
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