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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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Saturday, 25 March 23
COAL INDIA HAS STRONG CASE TO INCREASE PRICES, TALKS ON: CMD AGRAWAL - BUSINESS STANDARD
Coal India (CIL) Chairman and Managing Director Pramod Agrawal said on Monday there is a “strong case” for increasing coal prices, and ...
Saturday, 25 March 23
ASIAN CRUDE PALM OIL WATCH 1Q23 - FITCH RATINGS
Malaysian benchmark crude palm oil (CPO) spot prices have averaged around USD915 per tonne (t) so far in 1Q23, sharply lower than the average of ar ...
Saturday, 25 March 23
INDONESIA’S COAL EXPORT INCREASED BY 21.0% YOY TO 388.4 MLN T IN 2022 - BANCHERO COSTA
After a slow start in the first quarter, global coal trade has really picked up pace last year, and is now fully back to pre-Covid levels. In the f ...
Saturday, 25 March 23
GLOBAL LNG-ASIA SPOT PRICES SLIP AS WEAK NORTHERN DEMAND REMAINS - REUTERS
Asian spot prices of liquefied natural gas (LNG) declined this week, falling to a 21-month low, as weak demand in the northeast Asia region continu ...
Wednesday, 22 March 23
OIL PRICE FALL SPECULATIVE, TO HIT $140 BY YEAR-END -ANDURAND: REUTERS
The recent fall in oil prices due to banking jitters is speculative and oil will hit $140 a barrel by the end of the year, hedge fund manager Pierr ...
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- LBH Netherlands Bv - Netherlands
- Renaissance Capital - South Africa
- Thai Mozambique Logistica
- Marubeni Corporation - India
- Borneo Indobara - Indonesia
- Larsen & Toubro Limited - India
- Global Green Power PLC Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Sidhee Cement - India
- Global Coal Blending Company Limited - Australia
- Xindia Steels Limited - India
- Australian Commodity Traders Exchange
- Independent Power Producers Association of India
- Baramulti Group, Indonesia
- Wood Mackenzie - Singapore
- Merrill Lynch Commodities Europe
- Sarangani Energy Corporation, Philippines
- Electricity Generating Authority of Thailand
- The State Trading Corporation of India Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Coalindo Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- European Bulk Services B.V. - Netherlands
- Mjunction Services Limited - India
- Latin American Coal - Colombia
- Eastern Energy - Thailand
- Siam City Cement PLC, Thailand
- Bukit Makmur.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Chettinad Cement Corporation Ltd - India
- Tamil Nadu electricity Board
- Mercator Lines Limited - India
- PowerSource Philippines DevCo
- Aditya Birla Group - India
- Sree Jayajothi Cements Limited - India
- Bangladesh Power Developement Board
- Krishnapatnam Port Company Ltd. - India
- Sojitz Corporation - Japan
- Thiess Contractors Indonesia
- Directorate Of Revenue Intelligence - India
- Makarim & Taira - Indonesia
- Mintek Dendrill Indonesia
- Siam City Cement - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Salva Resources Pvt Ltd - India
- Australian Coal Association
- PNOC Exploration Corporation - Philippines
- Bhushan Steel Limited - India
- Planning Commission, India
- Energy Development Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sindya Power Generating Company Private Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Chamber of Mines of South Africa
- White Energy Company Limited
- Mercuria Energy - Indonesia
- Interocean Group of Companies - India
- Meenaskhi Energy Private Limited - India
- Energy Link Ltd, New Zealand
- Cement Manufacturers Association - India
- Maharashtra Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- Indian Energy Exchange, India
- Vizag Seaport Private Limited - India
- IEA Clean Coal Centre - UK
- Vedanta Resources Plc - India
- Central Java Power - Indonesia
- Ministry of Mines - Canada
- Power Finance Corporation Ltd., India
- Romanian Commodities Exchange
- Bulk Trading Sa - Switzerland
- Barasentosa Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- Wilmar Investment Holdings
- Riau Bara Harum - Indonesia
- Lanco Infratech Ltd - India
- The Treasury - Australian Government
- McConnell Dowell - Australia
- Price Waterhouse Coopers - Russia
- Port Waratah Coal Services - Australia
- Indian Oil Corporation Limited
- GAC Shipping (India) Pvt Ltd
- Indogreen Group - Indonesia
- Africa Commodities Group - South Africa
- SN Aboitiz Power Inc, Philippines
- Antam Resourcindo - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Alfred C Toepfer International GmbH - Germany
- Binh Thuan Hamico - Vietnam
- Orica Australia Pty. Ltd.
- Kohat Cement Company Ltd. - Pakistan
- GVK Power & Infra Limited - India
- Indika Energy - Indonesia
- Sical Logistics Limited - India
- Orica Mining Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Altura Mining Limited, Indonesia
- Miang Besar Coal Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Goldman Sachs - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Parry Sugars Refinery, India
- Rashtriya Ispat Nigam Limited - India
- Manunggal Multi Energi - Indonesia
- Bhoruka Overseas - Indonesia
- Semirara Mining Corp, Philippines
- Savvy Resources Ltd - HongKong
- Bharathi Cement Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kalimantan Lumbung Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Malabar Cements Ltd - India
- Intertek Mineral Services - Indonesia
- Eastern Coal Council - USA
- Samtan Co., Ltd - South Korea
- Ceylon Electricity Board - Sri Lanka
- Neyveli Lignite Corporation Ltd, - India
- Essar Steel Hazira Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Agrawal Coal Company - India
- GMR Energy Limited - India
- Anglo American - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- OPG Power Generation Pvt Ltd - India
- Grasim Industreis Ltd - India
- Timah Investasi Mineral - Indoneisa
- Kartika Selabumi Mining - Indonesia
- India Bulls Power Limited - India
- Commonwealth Bank - Australia
- Cigading International Bulk Terminal - Indonesia
- Petron Corporation, Philippines
- Deloitte Consulting - India
- New Zealand Coal & Carbon
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Authority, New Zealand
- Standard Chartered Bank - UAE
- London Commodity Brokers - England
- Billiton Holdings Pty Ltd - Australia
- Madhucon Powers Ltd - India
- Attock Cement Pakistan Limited
- SMG Consultants - Indonesia
- Straits Asia Resources Limited - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- San Jose City I Power Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Trasteel International SA, Italy
- Coastal Gujarat Power Limited - India
- Ambuja Cements Ltd - India
- Minerals Council of Australia
- ICICI Bank Limited - India
- Banpu Public Company Limited - Thailand
- Globalindo Alam Lestari - Indonesia
- Economic Council, Georgia
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Finance - Indonesia
- MS Steel International - UAE
- Jorong Barutama Greston.PT - Indonesia
- PTC India Limited - India
- Kapuas Tunggal Persada - Indonesia
- Ministry of Transport, Egypt
- Global Business Power Corporation, Philippines
- Medco Energi Mining Internasional
- Holcim Trading Pte Ltd - Singapore
- Simpson Spence & Young - Indonesia
- Bhatia International Limited - India
- Iligan Light & Power Inc, Philippines
- SMC Global Power, Philippines
- VISA Power Limited - India
- Sakthi Sugars Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meralco Power Generation, Philippines
- Kobexindo Tractors - Indoneisa
- Oldendorff Carriers - Singapore
- Posco Energy - South Korea
- PetroVietnam Power Coal Import and Supply Company
- CNBM International Corporation - China
- Kaltim Prima Coal - Indonesia
- Tata Chemicals Ltd - India
- Jaiprakash Power Ventures ltd
- CIMB Investment Bank - Malaysia
- Heidelberg Cement - Germany
- Indo Tambangraya Megah - Indonesia
- Uttam Galva Steels Limited - India
- Indonesian Coal Mining Association
- Parliament of New Zealand
- Therma Luzon, Inc, Philippines
- Dalmia Cement Bharat India
- Singapore Mercantile Exchange
- Edison Trading Spa - Italy
- Coal and Oil Company - UAE
- ASAPP Information Group - India
- Rio Tinto Coal - Australia
- Carbofer General Trading SA - India
- Leighton Contractors Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- The University of Queensland
- Kumho Petrochemical, South Korea
- Jindal Steel & Power Ltd - India
- Star Paper Mills Limited - India
- Gujarat Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- Bukit Baiduri Energy - Indonesia
- Videocon Industries ltd - India
- IHS Mccloskey Coal Group - USA
- Toyota Tsusho Corporation, Japan
- South Luzon Thermal Energy Corporation
- Central Electricity Authority - India
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