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Tuesday, 30 December 14
INDIA INC TO BENEFIT AS IMPORTED COAL PRICES SET TO FALL - RAHUL PRITHIANI
The Hindu: India‘s coal import volumes are set to rise by over 30 per cent over the next two years to 214 million tonnes in 2015-16, as domestic supply falls short of surging demand.
However, globally, the situation is just the reverse. Severe oversupply with few takers will drag down prices of both thermal and coking coal by about 25 per cent. This will slash fuel costs and support the profitability of India Inc. Lower prices will also cap India’s coal import bill, unlike a 17 per cent annual growth witnessed over the last five years.
Supply soars
Miners in major coal exporting countries like Indonesia and Australia have significantly ramped up investments over the past five years, anticipating steady off take from major importers such as India and China. For example, coal mining investments in Australia are estimated to have doubled to about $50 billion over 2009 to 2013 from about $25 billion over 2003 to 2008. Moreover, domestic coal supply in China is also likely to increase as its railway capacity for hauling coal expands by nearly one-third to three billion tonne by 2020. This will ease transportation bottlenecks in that country.
Thus, while coal supplies will grow, there are likely to be few takers.
Even as miners stack up supplies, off take by major consumers including China, the U.S. and Europe is set to post a muted rise. Weak GDP growth, a gradual shift to cleaner fuels and rising energy efficiencies will curb demand.
The most telling fact is that China, the world’s largest importer of coal, has placed import curbs, will further restrict demand. Over the last three months, it has banned imports of low-grade coal, while imposing import duties on both thermal (six per cent) and coking coal (three per cent). Global economic weakness and China’s measures to move away from an investment-led growth model will also halve the growth in coking coal importsover the next five years.
Thus, oversupply in the global coal market, along with weakening currencies in exporting countries, is expected to drag down thermal and coking coal prices by 25 per cent approximately over the next two years to $65 per tonne and $115 per tonne by 2015, respectively.
Advantage India
For India, which has scarce domestic energy resources, the above changing dynamics certainly bode well. India’s coal import volumes are expected to rise by 33 per cent over the next two years, as domestic production lags demand. In such a scenario, falling global coal prices will help India Inc.
In the power sector, projects running on imported coal — including that of Tata Power, Adani Power and Essar Power — will benefit the most from sliding coal prices. These projects have incurred huge losses since 2012-13 when Indonesian coal prices almost doubled following a change in regulations. However, with imported coal prices plummeting, returns of such projects are expected to improve. As per our analysis, for a project operating on imported coal, even a one per cent fall in fuel costs will drive up equity returns by 25 basis points.
Even power projects based on domestic coal will benefit, as they can increase blending of imported coal and boost utilisation rates. In particular, plant-load factors (PLFs) of post-2009 power projects, which languished at just 51 per cent in 2013-14, will improve gradually.
Similarly, input costs for cement and metal manufacturers will decline, supporting their profitability. For cement players, reliance on imported coal has gradually risen — reaching 30-35 per cent of total coal consumption in 2013-14, as the power sector was prioritised for domestic coal supply. As demand growth slowed and operating costs rose, the industry’s operating margins fell to 15 per cent in 2013-14 from 28 per cent in 2009-10. Therefore, falling imported coal prices, will reduce cost pressures for the sector through lower fuel costs, which will decline by 3-4 per cent in 2014-15. In particular, cement plants, which have higher reliance on coal imports, will witness a much sharper reduction in fuel costs, as imported coal prices are set to fall by 15-17 per cent in 2014-15.
The decline in global coking coal prices is good news even for steelmakers beset by muted demand and global overcapacity. With good-quality domestic supply being scarce, Indian steelmakers import nearly 70 per cent of their coking coal requirements and coal accounts for 30 per cent of their manufacturing costs. Thus, a sharp decline in global coking coal prices will drag down operating costs by 6-8 per cent in 2014-15 and thereby support profitability.
There are also some macroeconomic advantages. Most importantly, despite the rise in coal import (volumes), the value (or the import bill) will only rise marginally at a CAGR of one per cent over the next two years. This contrasts sharply vis-à-vis the past 5 years, when the bill had risen at a 17 per cent CAGR to Rs.888 billion (approximately US$ 13,950,428,156).
The author is Director, CRISIL.
Source: The Hindu
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Tuesday, 13 January 15
MORE PITFALLS FOR OWNERS LOOKING TO TERMINATE FOR UNPAID HIRE - INCE & CO
KNOWLEDGE TO ELEVATE
It is a debatable point whether or not the obligation to pay hire under a time charter is a condition of the contract or ...
Tuesday, 13 January 15
Q2 CFR SOUTH CHINA COAL SWAP DECLINED 8.66% M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery declined by US$ 3.48 (-5.73%) month over month and US$ 2.35 (-3.94%) week ...
Tuesday, 13 January 15
Q1' 2015 RICHARDS BAY COAL SWAP SLIGHTLY HIGHER THAN Q2 & Q4 2015 SWAPS
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q1' 2015 lost month on month and week over week.
The Q1 swap has lost US$ 7.21 ...
Monday, 12 January 15
COAL: LOW PRICES ARE EXPECTED TO DRIVE A SUPPLY-DRIVEN RECOVERY IN THE MEDIUM TERM - SGX
COALspot.com: Thermal coal prices dropped to six-year lows in 2014 driven by persistent oversupply, SGX says in its “ Commodities 2014 - A ye ...
Monday, 12 January 15
FREIGHT MARKET: 2015 FLEET SUPPLY GROWTH IS EXPECTED TO REMAIN SLIGHTLY AHEAD OF CARGO GROWTH - SGX
COALspot.com: The dry bulk freight market was forced to digest a number of negatives in 2014 leading the Baltic Dry Index to fall 66% through the y ...
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- London Commodity Brokers - England
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement PLC, Thailand
- Price Waterhouse Coopers - Russia
- South Luzon Thermal Energy Corporation
- Riau Bara Harum - Indonesia
- Romanian Commodities Exchange
- Madhucon Powers Ltd - India
- Ambuja Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- Minerals Council of Australia
- Therma Luzon, Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- SN Aboitiz Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Aditya Birla Group - India
- Uttam Galva Steels Limited - India
- Australian Commodity Traders Exchange
- Karbindo Abesyapradhi - Indoneisa
- Energy Link Ltd, New Zealand
- The Treasury - Australian Government
- Jorong Barutama Greston.PT - Indonesia
- Larsen & Toubro Limited - India
- LBH Netherlands Bv - Netherlands
- Samtan Co., Ltd - South Korea
- Australian Coal Association
- AsiaOL BioFuels Corp., Philippines
- Malabar Cements Ltd - India
- Intertek Mineral Services - Indonesia
- Petron Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cement Manufacturers Association - India
- TNB Fuel Sdn Bhd - Malaysia
- Barasentosa Lestari - Indonesia
- Globalindo Alam Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Singapore Mercantile Exchange
- Makarim & Taira - Indonesia
- Bukit Makmur.PT - Indonesia
- Global Business Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Indogreen Group - Indonesia
- VISA Power Limited - India
- MS Steel International - UAE
- Gujarat Mineral Development Corp Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Kaltim Prima Coal - Indonesia
- The University of Queensland
- Central Electricity Authority - India
- Manunggal Multi Energi - Indonesia
- McConnell Dowell - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Coal and Oil Company - UAE
- Goldman Sachs - Singapore
- Leighton Contractors Pty Ltd - Australia
- Planning Commission, India
- Sojitz Corporation - Japan
- Aboitiz Power Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- PTC India Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Karaikal Port Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Port Waratah Coal Services - Australia
- Interocean Group of Companies - India
- Jaiprakash Power Ventures ltd
- Bangladesh Power Developement Board
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Simpson Spence & Young - Indonesia
- Star Paper Mills Limited - India
- San Jose City I Power Corp, Philippines
- Power Finance Corporation Ltd., India
- Parliament of New Zealand
- International Coal Ventures Pvt Ltd - India
- Borneo Indobara - Indonesia
- Independent Power Producers Association of India
- Altura Mining Limited, Indonesia
- Sindya Power Generating Company Private Ltd
- Straits Asia Resources Limited - Singapore
- Savvy Resources Ltd - HongKong
- Ministry of Mines - Canada
- Bhushan Steel Limited - India
- Energy Development Corp, Philippines
- Agrawal Coal Company - India
- Bhatia International Limited - India
- Electricity Authority, New Zealand
- Baramulti Group, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Vizag Seaport Private Limited - India
- Marubeni Corporation - India
- Wood Mackenzie - Singapore
- Indo Tambangraya Megah - Indonesia
- Ind-Barath Power Infra Limited - India
- Edison Trading Spa - Italy
- Sarangani Energy Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Metalloyd Limited - United Kingdom
- Standard Chartered Bank - UAE
- Kohat Cement Company Ltd. - Pakistan
- Parry Sugars Refinery, India
- Indika Energy - Indonesia
- Dalmia Cement Bharat India
- PowerSource Philippines DevCo
- Petrochimia International Co. Ltd.- Taiwan
- Kalimantan Lumbung Energi - Indonesia
- CNBM International Corporation - China
- Orica Australia Pty. Ltd.
- Toyota Tsusho Corporation, Japan
- India Bulls Power Limited - India
- IEA Clean Coal Centre - UK
- Lanco Infratech Ltd - India
- Mjunction Services Limited - India
- Bhoruka Overseas - Indonesia
- PNOC Exploration Corporation - Philippines
- Carbofer General Trading SA - India
- Mintek Dendrill Indonesia
- SMC Global Power, Philippines
- GMR Energy Limited - India
- Thai Mozambique Logistica
- Chamber of Mines of South Africa
- Maharashtra Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Videocon Industries ltd - India
- Kartika Selabumi Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Bayan Resources Tbk. - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Kobexindo Tractors - Indoneisa
- SMG Consultants - Indonesia
- Eastern Coal Council - USA
- CIMB Investment Bank - Malaysia
- Gujarat Electricity Regulatory Commission - India
- Deloitte Consulting - India
- New Zealand Coal & Carbon
- Orica Mining Services - Indonesia
- Trasteel International SA, Italy
- Sree Jayajothi Cements Limited - India
- Georgia Ports Authority, United States
- Jindal Steel & Power Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kumho Petrochemical, South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Oil Corporation Limited
- Xindia Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- Formosa Plastics Group - Taiwan
- Vijayanagar Sugar Pvt Ltd - India
- Latin American Coal - Colombia
- Anglo American - United Kingdom
- Holcim Trading Pte Ltd - Singapore
- Wilmar Investment Holdings
- Gujarat Sidhee Cement - India
- GVK Power & Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Medco Energi Mining Internasional
- Indian Energy Exchange, India
- Oldendorff Carriers - Singapore
- Bukit Baiduri Energy - Indonesia
- Commonwealth Bank - Australia
- Mercuria Energy - Indonesia
- Bharathi Cement Corporation - India
- Sakthi Sugars Limited - India
- Attock Cement Pakistan Limited
- Meralco Power Generation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Tata Chemicals Ltd - India
- Ministry of Finance - Indonesia
- Kapuas Tunggal Persada - Indonesia
- GAC Shipping (India) Pvt Ltd
- Grasim Industreis Ltd - India
- Heidelberg Cement - Germany
- Renaissance Capital - South Africa
- Rio Tinto Coal - Australia
- Tamil Nadu electricity Board
- ASAPP Information Group - India
- The State Trading Corporation of India Ltd
- Essar Steel Hazira Ltd - India
- Merrill Lynch Commodities Europe
- Binh Thuan Hamico - Vietnam
- ICICI Bank Limited - India
- IHS Mccloskey Coal Group - USA
- Kepco SPC Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Eastern Energy - Thailand
- Posco Energy - South Korea
- Semirara Mining Corp, Philippines
- Siam City Cement - Thailand
- Chettinad Cement Corporation Ltd - India
- Coastal Gujarat Power Limited - India
- Central Java Power - Indonesia
- Coalindo Energy - Indonesia
- Indonesian Coal Mining Association
- Salva Resources Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Africa Commodities Group - South Africa
- Global Coal Blending Company Limited - Australia
- Thiess Contractors Indonesia
- Alfred C Toepfer International GmbH - Germany
- Electricity Generating Authority of Thailand
- Economic Council, Georgia
- Bulk Trading Sa - Switzerland
- Maheswari Brothers Coal Limited - India
- Ministry of Transport, Egypt
- European Bulk Services B.V. - Netherlands
- White Energy Company Limited
- Iligan Light & Power Inc, Philippines
- Sical Logistics Limited - India
- Krishnapatnam Port Company Ltd. - India
- Mercator Lines Limited - India
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