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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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Tuesday, 23 May 23
INDIA: COAL OUTPUT UP 8.9%, SUPPLY RISES 11.7% IN APRIL - FINANCIAL EXPRESS
India’s coal production jumped 8.85% to 73.14 million tonne (MT) in April 2023 and the total coal despatch during the month went up 11.66% to ...
Tuesday, 23 May 23
CHINA COAL OUTPUT UP 4.5 PCT IN APRIL - XINHUA
China’s raw coal output posted stable expansion in April, official data showed.
The country produced 380 million tonnes of raw ...
Saturday, 20 May 23
NON-OPEC OIL SUPPLY DEVELOPMENT - OPEC
In 2022, non-OPEC supply is estimated to have increased by 1.9 mb/d y-o-y. Out of this, US liquids production increased by 1.2 mb/d, mainly on the ...
Saturday, 20 May 23
GLOBAL COAL TRADE HAS REALLY PICKED UP PACE IN RECENT MONTHS, NOW FULLY BACK TO PRE-COVID LEVELS - BANCHERO COSTA
Global coal trade has really picked up pace in recent months, and is now fully back to pre-Covid levels. In Jan-Apr 2023, total global seaborne coa ...
Saturday, 20 May 23
MARKET INSIGHT - INTERMODAL
India is one of the world's largest coal producers and one of the world's largest importers of coal. The country uses coal mainly for power ...
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Showing 101 to 105 news of total 6871 |
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- Straits Asia Resources Limited - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Global Business Power Corporation, Philippines
- Edison Trading Spa - Italy
- Sakthi Sugars Limited - India
- London Commodity Brokers - England
- Energy Link Ltd, New Zealand
- Ministry of Finance - Indonesia
- Power Finance Corporation Ltd., India
- Rashtriya Ispat Nigam Limited - India
- Meralco Power Generation, Philippines
- Pendopo Energi Batubara - Indonesia
- Mjunction Services Limited - India
- Goldman Sachs - Singapore
- GAC Shipping (India) Pvt Ltd
- ICICI Bank Limited - India
- Energy Development Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Antam Resourcindo - Indonesia
- Kartika Selabumi Mining - Indonesia
- Thai Mozambique Logistica
- Kumho Petrochemical, South Korea
- Merrill Lynch Commodities Europe
- Standard Chartered Bank - UAE
- Independent Power Producers Association of India
- Binh Thuan Hamico - Vietnam
- Carbofer General Trading SA - India
- Parry Sugars Refinery, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vedanta Resources Plc - India
- South Luzon Thermal Energy Corporation
- Petron Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Price Waterhouse Coopers - Russia
- Intertek Mineral Services - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Ambuja Cements Ltd - India
- Bangladesh Power Developement Board
- Electricity Authority, New Zealand
- Alfred C Toepfer International GmbH - Germany
- PetroVietnam Power Coal Import and Supply Company
- Directorate General of MIneral and Coal - Indonesia
- Tamil Nadu electricity Board
- Minerals Council of Australia
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- Wood Mackenzie - Singapore
- Jaiprakash Power Ventures ltd
- Jorong Barutama Greston.PT - Indonesia
- Economic Council, Georgia
- Indonesian Coal Mining Association
- Coalindo Energy - Indonesia
- IEA Clean Coal Centre - UK
- Anglo American - United Kingdom
- Aboitiz Power Corporation - Philippines
- Mercuria Energy - Indonesia
- White Energy Company Limited
- Kapuas Tunggal Persada - Indonesia
- Chamber of Mines of South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sree Jayajothi Cements Limited - India
- Deloitte Consulting - India
- Salva Resources Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Cigading International Bulk Terminal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Heidelberg Cement - Germany
- Rio Tinto Coal - Australia
- Central Electricity Authority - India
- Maharashtra Electricity Regulatory Commission - India
- Bukit Makmur.PT - Indonesia
- Ministry of Transport, Egypt
- Borneo Indobara - Indonesia
- Indo Tambangraya Megah - Indonesia
- Eastern Coal Council - USA
- Savvy Resources Ltd - HongKong
- Bukit Asam (Persero) Tbk - Indonesia
- Altura Mining Limited, Indonesia
- GMR Energy Limited - India
- Toyota Tsusho Corporation, Japan
- The University of Queensland
- TNB Fuel Sdn Bhd - Malaysia
- Aditya Birla Group - India
- PowerSource Philippines DevCo
- Posco Energy - South Korea
- Bayan Resources Tbk. - Indonesia
- Gujarat Sidhee Cement - India
- Madhucon Powers Ltd - India
- Riau Bara Harum - Indonesia
- Meenaskhi Energy Private Limited - India
- Planning Commission, India
- Bhoruka Overseas - Indonesia
- Tata Chemicals Ltd - India
- VISA Power Limited - India
- Banpu Public Company Limited - Thailand
- Dalmia Cement Bharat India
- Metalloyd Limited - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- Global Green Power PLC Corporation, Philippines
- Medco Energi Mining Internasional
- Chettinad Cement Corporation Ltd - India
- Formosa Plastics Group - Taiwan
- Timah Investasi Mineral - Indoneisa
- Wilmar Investment Holdings
- Manunggal Multi Energi - Indonesia
- Mintek Dendrill Indonesia
- PTC India Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Baramulti Group, Indonesia
- Kaltim Prima Coal - Indonesia
- Africa Commodities Group - South Africa
- Bukit Baiduri Energy - Indonesia
- Siam City Cement PLC, Thailand
- PNOC Exploration Corporation - Philippines
- MS Steel International - UAE
- Sinarmas Energy and Mining - Indonesia
- Australian Coal Association
- Romanian Commodities Exchange
- Agrawal Coal Company - India
- Videocon Industries ltd - India
- Interocean Group of Companies - India
- Latin American Coal - Colombia
- Larsen & Toubro Limited - India
- Essar Steel Hazira Ltd - India
- Coastal Gujarat Power Limited - India
- Iligan Light & Power Inc, Philippines
- SMC Global Power, Philippines
- Sical Logistics Limited - India
- ASAPP Information Group - India
- Oldendorff Carriers - Singapore
- AsiaOL BioFuels Corp., Philippines
- Leighton Contractors Pty Ltd - Australia
- CNBM International Corporation - China
- Holcim Trading Pte Ltd - Singapore
- San Jose City I Power Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Australian Commodity Traders Exchange
- Orica Australia Pty. Ltd.
- New Zealand Coal & Carbon
- Ministry of Mines - Canada
- Renaissance Capital - South Africa
- Sojitz Corporation - Japan
- Indian Energy Exchange, India
- Vizag Seaport Private Limited - India
- Georgia Ports Authority, United States
- Star Paper Mills Limited - India
- LBH Netherlands Bv - Netherlands
- Kepco SPC Power Corporation, Philippines
- McConnell Dowell - Australia
- Indika Energy - Indonesia
- Coal and Oil Company - UAE
- The State Trading Corporation of India Ltd
- SMG Consultants - Indonesia
- Parliament of New Zealand
- Ind-Barath Power Infra Limited - India
- Grasim Industreis Ltd - India
- Uttam Galva Steels Limited - India
- Trasteel International SA, Italy
- Thiess Contractors Indonesia
- Indogreen Group - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- European Bulk Services B.V. - Netherlands
- Karaikal Port Pvt Ltd - India
- Mercator Lines Limited - India
- Lanco Infratech Ltd - India
- Attock Cement Pakistan Limited
- Bulk Trading Sa - Switzerland
- India Bulls Power Limited - India
- Barasentosa Lestari - Indonesia
- International Coal Ventures Pvt Ltd - India
- Xindia Steels Limited - India
- Port Waratah Coal Services - Australia
- Sindya Power Generating Company Private Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Bhatia International Limited - India
- Global Coal Blending Company Limited - Australia
- Therma Luzon, Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Energy - Thailand
- Malabar Cements Ltd - India
- Singapore Mercantile Exchange
- Makarim & Taira - Indonesia
- Central Java Power - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Indian Oil Corporation Limited
- Bharathi Cement Corporation - India
- Electricity Generating Authority of Thailand
- GVK Power & Infra Limited - India
- Marubeni Corporation - India
- Globalindo Alam Lestari - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Sarangani Energy Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Siam City Cement - Thailand
- Jindal Steel & Power Ltd - India
- Directorate Of Revenue Intelligence - India
- Cement Manufacturers Association - India
- Bhushan Steel Limited - India
- IHS Mccloskey Coal Group - USA
- TeaM Sual Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Billiton Holdings Pty Ltd - Australia
- The Treasury - Australian Government
- Kobexindo Tractors - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Orica Mining Services - Indonesia
- Commonwealth Bank - Australia
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