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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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- Altura Mining Limited, Indonesia
- Anglo American - United Kingdom
- Ind-Barath Power Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- Salva Resources Pvt Ltd - India
- Ministry of Mines - Canada
- Australian Coal Association
- PetroVietnam Power Coal Import and Supply Company
- Renaissance Capital - South Africa
- Mercuria Energy - Indonesia
- MS Steel International - UAE
- Larsen & Toubro Limited - India
- Bhushan Steel Limited - India
- Eastern Coal Council - USA
- Parliament of New Zealand
- Banpu Public Company Limited - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Samtan Co., Ltd - South Korea
- Posco Energy - South Korea
- Bayan Resources Tbk. - Indonesia
- Simpson Spence & Young - Indonesia
- Grasim Industreis Ltd - India
- Tamil Nadu electricity Board
- Formosa Plastics Group - Taiwan
- Holcim Trading Pte Ltd - Singapore
- Central Java Power - Indonesia
- Parry Sugars Refinery, India
- Cement Manufacturers Association - India
- Orica Mining Services - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Pipit Mutiara Jaya. PT, Indonesia
- Singapore Mercantile Exchange
- Essar Steel Hazira Ltd - India
- Indian Energy Exchange, India
- Manunggal Multi Energi - Indonesia
- Rio Tinto Coal - Australia
- IEA Clean Coal Centre - UK
- Kepco SPC Power Corporation, Philippines
- Carbofer General Trading SA - India
- Kalimantan Lumbung Energi - Indonesia
- Independent Power Producers Association of India
- Bukit Baiduri Energy - Indonesia
- Eastern Energy - Thailand
- Attock Cement Pakistan Limited
- Indonesian Coal Mining Association
- Electricity Generating Authority of Thailand
- Malabar Cements Ltd - India
- Latin American Coal - Colombia
- PNOC Exploration Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Georgia Ports Authority, United States
- Intertek Mineral Services - Indonesia
- Economic Council, Georgia
- TeaM Sual Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Bukit Makmur.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement - Thailand
- Timah Investasi Mineral - Indoneisa
- Interocean Group of Companies - India
- Goldman Sachs - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Coalindo Energy - Indonesia
- Xindia Steels Limited - India
- Barasentosa Lestari - Indonesia
- Medco Energi Mining Internasional
- Globalindo Alam Lestari - Indonesia
- Sakthi Sugars Limited - India
- Price Waterhouse Coopers - Russia
- Maharashtra Electricity Regulatory Commission - India
- PTC India Limited - India
- Global Business Power Corporation, Philippines
- Bhatia International Limited - India
- SMC Global Power, Philippines
- Ministry of Transport, Egypt
- Jorong Barutama Greston.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Kaltim Prima Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Karbindo Abesyapradhi - Indoneisa
- Minerals Council of Australia
- Iligan Light & Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- Gujarat Sidhee Cement - India
- Bangladesh Power Developement Board
- Star Paper Mills Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Kideco Jaya Agung - Indonesia
- Mintek Dendrill Indonesia
- Oldendorff Carriers - Singapore
- Indian Oil Corporation Limited
- Port Waratah Coal Services - Australia
- Borneo Indobara - Indonesia
- Kobexindo Tractors - Indoneisa
- Power Finance Corporation Ltd., India
- Cigading International Bulk Terminal - Indonesia
- Thiess Contractors Indonesia
- Energy Link Ltd, New Zealand
- Directorate Of Revenue Intelligence - India
- The University of Queensland
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jindal Steel & Power Ltd - India
- Chettinad Cement Corporation Ltd - India
- Riau Bara Harum - Indonesia
- Africa Commodities Group - South Africa
- Miang Besar Coal Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Chamber of Mines of South Africa
- Videocon Industries ltd - India
- LBH Netherlands Bv - Netherlands
- Meralco Power Generation, Philippines
- Sree Jayajothi Cements Limited - India
- Mjunction Services Limited - India
- Sindya Power Generating Company Private Ltd
- Sojitz Corporation - Japan
- London Commodity Brokers - England
- Therma Luzon, Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- European Bulk Services B.V. - Netherlands
- Dalmia Cement Bharat India
- GVK Power & Infra Limited - India
- Vizag Seaport Private Limited - India
- Siam City Cement PLC, Thailand
- SMG Consultants - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Romanian Commodities Exchange
- AsiaOL BioFuels Corp., Philippines
- Wilmar Investment Holdings
- Australian Commodity Traders Exchange
- Edison Trading Spa - Italy
- Baramulti Group, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Rashtriya Ispat Nigam Limited - India
- Central Electricity Authority - India
- White Energy Company Limited
- OPG Power Generation Pvt Ltd - India
- Lanco Infratech Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- India Bulls Power Limited - India
- The State Trading Corporation of India Ltd
- Deloitte Consulting - India
- Global Green Power PLC Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Trasteel International SA, Italy
- Pendopo Energi Batubara - Indonesia
- Billiton Holdings Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Madhucon Powers Ltd - India
- ICICI Bank Limited - India
- Meenaskhi Energy Private Limited - India
- The Treasury - Australian Government
- Gujarat Electricity Regulatory Commission - India
- Antam Resourcindo - Indonesia
- Indogreen Group - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Indika Energy - Indonesia
- Heidelberg Cement - Germany
- Asmin Koalindo Tuhup - Indonesia
- Global Coal Blending Company Limited - Australia
- CNBM International Corporation - China
- PowerSource Philippines DevCo
- Planning Commission, India
- Makarim & Taira - Indonesia
- Standard Chartered Bank - UAE
- Mercator Lines Limited - India
- Ministry of Finance - Indonesia
- Marubeni Corporation - India
- VISA Power Limited - India
- Kumho Petrochemical, South Korea
- Aditya Birla Group - India
- New Zealand Coal & Carbon
- Bharathi Cement Corporation - India
- GMR Energy Limited - India
- Metalloyd Limited - United Kingdom
- Energy Development Corp, Philippines
- Tata Chemicals Ltd - India
- IHS Mccloskey Coal Group - USA
- Agrawal Coal Company - India
- Petron Corporation, Philippines
- Ambuja Cements Ltd - India
- Vedanta Resources Plc - India
- TNB Fuel Sdn Bhd - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Aboitiz Power Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- McConnell Dowell - Australia
- Toyota Tsusho Corporation, Japan
- Sarangani Energy Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- SN Aboitiz Power Inc, Philippines
- Electricity Authority, New Zealand
- Sinarmas Energy and Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Kohat Cement Company Ltd. - Pakistan
- Orica Australia Pty. Ltd.
- Thai Mozambique Logistica
- Wood Mackenzie - Singapore
- Bulk Trading Sa - Switzerland
- ASAPP Information Group - India
- Merrill Lynch Commodities Europe
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Uttam Galva Steels Limited - India
- Coal and Oil Company - UAE
- Semirara Mining and Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Sical Logistics Limited - India
- Alfred C Toepfer International GmbH - Germany
- South Luzon Thermal Energy Corporation
- Commonwealth Bank - Australia
- Karaikal Port Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Semirara Mining Corp, Philippines
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