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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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Thursday, 30 January 14
PANAMAX MARKET IS SOFTENING ON LESS ACTIVITY IN BOTH HEMISPHERES - FEARNRESEARCH
Handy
In the Atlantic rates have been slowly sliding but ows can still achieve decent money for TArv´s. USG positions still being fixed in re ...
Thursday, 30 January 14
TANKER PROFITABILITY IS THE 'MILLION-DOLLAR' QUESTION FOR SHIP OWNERS THIS YEAR - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The tanker market conditions are expected to remain challenging throughout the year for tanker owners, but even more pressing will be the issue of a ...
Tuesday, 28 January 14
GLOBAL COKING AND STEAM COAL PRODUCTION HAVE GROWN 2% TO 3% TO ABOUT 7.1 BILLION TONNES AS OF THE END OF 2013 - VDKI
COALspot.com (Press Release): Initial figures on the world hard coal market at the VDKi ((Association of Coal Importers - German) New Year’s R ...
Tuesday, 28 January 14
AUSTRALIAN NEWCASTLE PORT'S WEEKLY COAL EXPORTS JUMP 13.75% WEEK ON WEEK
COALspot.com: In the week ended 27 January 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, totalled ...
Tuesday, 28 January 14
RESOURCE NATIONALISM OR PROTECTIONISM FOR THE MINING AND EXTRACTIVES INDUSTRY - JOHN WHITTAKER & MICHAEL SWANGARD
Resource nationalism or protectionism for the mining and extractives industry as well as soft commodities sector and the oil industry.
‘Res ...
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Showing 3876 to 3880 news of total 6871 |
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- Maheswari Brothers Coal Limited - India
- CNBM International Corporation - China
- GMR Energy Limited - India
- Posco Energy - South Korea
- CIMB Investment Bank - Malaysia
- Kumho Petrochemical, South Korea
- South Luzon Thermal Energy Corporation
- Altura Mining Limited, Indonesia
- Semirara Mining Corp, Philippines
- Deloitte Consulting - India
- Maharashtra Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Savvy Resources Ltd - HongKong
- Bukit Makmur.PT - Indonesia
- Price Waterhouse Coopers - Russia
- Wilmar Investment Holdings
- Interocean Group of Companies - India
- Straits Asia Resources Limited - Singapore
- Billiton Holdings Pty Ltd - Australia
- McConnell Dowell - Australia
- Therma Luzon, Inc, Philippines
- Bharathi Cement Corporation - India
- Romanian Commodities Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Sinarmas Energy and Mining - Indonesia
- Global Green Power PLC Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Riau Bara Harum - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Global Business Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Mintek Dendrill Indonesia
- Timah Investasi Mineral - Indoneisa
- Oldendorff Carriers - Singapore
- Kideco Jaya Agung - Indonesia
- Thai Mozambique Logistica
- Planning Commission, India
- Kepco SPC Power Corporation, Philippines
- Xindia Steels Limited - India
- Thiess Contractors Indonesia
- Toyota Tsusho Corporation, Japan
- PNOC Exploration Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Sree Jayajothi Cements Limited - India
- Wood Mackenzie - Singapore
- Australian Commodity Traders Exchange
- Indonesian Coal Mining Association
- The State Trading Corporation of India Ltd
- Ministry of Transport, Egypt
- PowerSource Philippines DevCo
- Meenaskhi Energy Private Limited - India
- Latin American Coal - Colombia
- Alfred C Toepfer International GmbH - Germany
- Agrawal Coal Company - India
- Dalmia Cement Bharat India
- Aboitiz Power Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Georgia Ports Authority, United States
- Independent Power Producers Association of India
- Africa Commodities Group - South Africa
- SMC Global Power, Philippines
- Ceylon Electricity Board - Sri Lanka
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Singapore Mercantile Exchange
- Videocon Industries ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- SN Aboitiz Power Inc, Philippines
- Star Paper Mills Limited - India
- Indika Energy - Indonesia
- Energy Link Ltd, New Zealand
- New Zealand Coal & Carbon
- Samtan Co., Ltd - South Korea
- Marubeni Corporation - India
- IHS Mccloskey Coal Group - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Anglo American - United Kingdom
- Electricity Authority, New Zealand
- Makarim & Taira - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Sindya Power Generating Company Private Ltd
- San Jose City I Power Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Coal Association
- Eastern Coal Council - USA
- Minerals Council of Australia
- Indian Energy Exchange, India
- The University of Queensland
- Ambuja Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rio Tinto Coal - Australia
- Attock Cement Pakistan Limited
- Renaissance Capital - South Africa
- Heidelberg Cement - Germany
- Sical Logistics Limited - India
- Coal and Oil Company - UAE
- The Treasury - Australian Government
- Bulk Trading Sa - Switzerland
- India Bulls Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kobexindo Tractors - Indoneisa
- Madhucon Powers Ltd - India
- Manunggal Multi Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Salva Resources Pvt Ltd - India
- Siam City Cement - Thailand
- Jorong Barutama Greston.PT - Indonesia
- London Commodity Brokers - England
- Bukit Baiduri Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Sarangani Energy Corporation, Philippines
- Ministry of Mines - Canada
- Port Waratah Coal Services - Australia
- Bhoruka Overseas - Indonesia
- Baramulti Group, Indonesia
- MS Steel International - UAE
- Tata Chemicals Ltd - India
- Bangladesh Power Developement Board
- Medco Energi Mining Internasional
- Indogreen Group - Indonesia
- Larsen & Toubro Limited - India
- Metalloyd Limited - United Kingdom
- Goldman Sachs - Singapore
- Uttam Galva Steels Limited - India
- Intertek Mineral Services - Indonesia
- Merrill Lynch Commodities Europe
- Asmin Koalindo Tuhup - Indonesia
- Power Finance Corporation Ltd., India
- Binh Thuan Hamico - Vietnam
- Trasteel International SA, Italy
- Cigading International Bulk Terminal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- GVK Power & Infra Limited - India
- Essar Steel Hazira Ltd - India
- TeaM Sual Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Carbofer General Trading SA - India
- Chamber of Mines of South Africa
- Antam Resourcindo - Indonesia
- Jaiprakash Power Ventures ltd
- Semirara Mining and Power Corporation, Philippines
- Meralco Power Generation, Philippines
- OPG Power Generation Pvt Ltd - India
- Mercator Lines Limited - India
- Ind-Barath Power Infra Limited - India
- Electricity Generating Authority of Thailand
- PTC India Limited - India
- Jindal Steel & Power Ltd - India
- Aditya Birla Group - India
- Chettinad Cement Corporation Ltd - India
- Siam City Cement PLC, Thailand
- Malabar Cements Ltd - India
- Bhushan Steel Limited - India
- Rashtriya Ispat Nigam Limited - India
- Commonwealth Bank - Australia
- Mercuria Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Edison Trading Spa - Italy
- Karaikal Port Pvt Ltd - India
- Orica Mining Services - Indonesia
- Central Electricity Authority - India
- International Coal Ventures Pvt Ltd - India
- Economic Council, Georgia
- Mjunction Services Limited - India
- Miang Besar Coal Terminal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Kaltim Prima Coal - Indonesia
- Sojitz Corporation - Japan
- Parliament of New Zealand
- Vedanta Resources Plc - India
- Indian Oil Corporation Limited
- Bayan Resources Tbk. - Indonesia
- Iligan Light & Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Krishnapatnam Port Company Ltd. - India
- European Bulk Services B.V. - Netherlands
- Barasentosa Lestari - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Cement Manufacturers Association - India
- Sakthi Sugars Limited - India
- White Energy Company Limited
- ICICI Bank Limited - India
- Pendopo Energi Batubara - Indonesia
- Coalindo Energy - Indonesia
- Borneo Indobara - Indonesia
- Grasim Industreis Ltd - India
- Tamil Nadu electricity Board
- ASAPP Information Group - India
- Central Java Power - Indonesia
- Orica Australia Pty. Ltd.
- LBH Netherlands Bv - Netherlands
- Parry Sugars Refinery, India
- PetroVietnam Power Coal Import and Supply Company
- Global Coal Blending Company Limited - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Directorate Of Revenue Intelligence - India
- Vijayanagar Sugar Pvt Ltd - India
- SMG Consultants - Indonesia
- Kartika Selabumi Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- VISA Power Limited - India
- Bhatia International Limited - India
- Lanco Infratech Ltd - India
- Energy Development Corp, Philippines
- Eastern Energy - Thailand
- Vizag Seaport Private Limited - India
- Indo Tambangraya Megah - Indonesia
- Gujarat Sidhee Cement - India
- Petron Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Ministry of Finance - Indonesia
- Neyveli Lignite Corporation Ltd, - India
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