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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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Monday, 12 January 15
SHIPPING - CHALLENGES AND RESOLUTIONS - EVA TZIMA
Last year has without a doubt been another challenging one both for both our industry and our country. As Greece is currently dominated by election ...
Sunday, 11 January 15
BDI DECLINED 8% ON WEEK; BCI LOST 31%
COALspot.com: The BDI continued its decline in the first week of this year or lost 8 pct week over week. The BDI was closed at 709 points whi ...
Friday, 09 January 15
U.S. EASTERN SPOT STEAM COAL PRICES FELL IN 2014; ROSE IN WEST - EIA
U.S. Eastern spot steam coal prices declined in 2014 compared to 2013 levels because of a decline in steam coal exports.
According to U.S. Ene ...
Friday, 09 January 15
WEEKLY U.S. COAL PRODUCTION UP AN ESTIMATED 2.2% Y-O-Y
COALspot.com – United States the world's one of the largest coal producers, produced approximately 17.6 million short tons (mmst) of coal ...
Thursday, 08 January 15
INDONESIA PRESSES ON WITH HIGHER COAL ROYALTY FEE TO BOOST STATE REVENUE - JG
The Indonesian government is pressing on with its plan to raise the royalty charged to coal miners in order to increase state revenue, but the move ...
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- New Zealand Coal & Carbon
- Bhatia International Limited - India
- International Coal Ventures Pvt Ltd - India
- CNBM International Corporation - China
- Siam City Cement - Thailand
- Global Green Power PLC Corporation, Philippines
- Australian Coal Association
- Standard Chartered Bank - UAE
- GVK Power & Infra Limited - India
- Makarim & Taira - Indonesia
- Globalindo Alam Lestari - Indonesia
- Wood Mackenzie - Singapore
- ICICI Bank Limited - India
- SN Aboitiz Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- Billiton Holdings Pty Ltd - Australia
- Parliament of New Zealand
- Energy Link Ltd, New Zealand
- Kepco SPC Power Corporation, Philippines
- Deloitte Consulting - India
- Oldendorff Carriers - Singapore
- Semirara Mining Corp, Philippines
- Lanco Infratech Ltd - India
- Tata Chemicals Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- PTC India Limited - India
- Vedanta Resources Plc - India
- Leighton Contractors Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
- Chettinad Cement Corporation Ltd - India
- Coalindo Energy - Indonesia
- Ambuja Cements Ltd - India
- Power Finance Corporation Ltd., India
- Aditya Birla Group - India
- Dalmia Cement Bharat India
- The University of Queensland
- Economic Council, Georgia
- Indo Tambangraya Megah - Indonesia
- Aboitiz Power Corporation - Philippines
- Independent Power Producers Association of India
- Edison Trading Spa - Italy
- Kohat Cement Company Ltd. - Pakistan
- Chamber of Mines of South Africa
- Sojitz Corporation - Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- OPG Power Generation Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Mercator Lines Limited - India
- Eastern Energy - Thailand
- GAC Shipping (India) Pvt Ltd
- Pendopo Energi Batubara - Indonesia
- Toyota Tsusho Corporation, Japan
- Anglo American - United Kingdom
- Africa Commodities Group - South Africa
- Energy Development Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- San Jose City I Power Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Port Waratah Coal Services - Australia
- Orica Mining Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Electricity Authority, New Zealand
- Ministry of Finance - Indonesia
- McConnell Dowell - Australia
- Indian Oil Corporation Limited
- European Bulk Services B.V. - Netherlands
- Altura Mining Limited, Indonesia
- Barasentosa Lestari - Indonesia
- Uttam Galva Steels Limited - India
- Kumho Petrochemical, South Korea
- Heidelberg Cement - Germany
- Iligan Light & Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- MS Steel International - UAE
- Singapore Mercantile Exchange
- Indian Energy Exchange, India
- Tamil Nadu electricity Board
- Banpu Public Company Limited - Thailand
- Bangladesh Power Developement Board
- Vizag Seaport Private Limited - India
- Binh Thuan Hamico - Vietnam
- Krishnapatnam Port Company Ltd. - India
- Borneo Indobara - Indonesia
- Bharathi Cement Corporation - India
- Larsen & Toubro Limited - India
- Kideco Jaya Agung - Indonesia
- Baramulti Group, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Merrill Lynch Commodities Europe
- Electricity Generating Authority of Thailand
- Videocon Industries ltd - India
- Global Coal Blending Company Limited - Australia
- Ministry of Transport, Egypt
- Renaissance Capital - South Africa
- Australian Commodity Traders Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- ASAPP Information Group - India
- Malabar Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Central Java Power - Indonesia
- Timah Investasi Mineral - Indoneisa
- The State Trading Corporation of India Ltd
- Indonesian Coal Mining Association
- Bukit Makmur.PT - Indonesia
- Goldman Sachs - Singapore
- Central Electricity Authority - India
- Indogreen Group - Indonesia
- Directorate Of Revenue Intelligence - India
- Grasim Industreis Ltd - India
- Interocean Group of Companies - India
- SMC Global Power, Philippines
- Metalloyd Limited - United Kingdom
- Antam Resourcindo - Indonesia
- Ministry of Mines - Canada
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- PowerSource Philippines DevCo
- Marubeni Corporation - India
- Maheswari Brothers Coal Limited - India
- Star Paper Mills Limited - India
- Carbofer General Trading SA - India
- Sree Jayajothi Cements Limited - India
- Madhucon Powers Ltd - India
- Meralco Power Generation, Philippines
- Parry Sugars Refinery, India
- GN Power Mariveles Coal Plant, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Kobexindo Tractors - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Minerals Council of Australia
- Rashtriya Ispat Nigam Limited - India
- Kaltim Prima Coal - Indonesia
- IEA Clean Coal Centre - UK
- Sindya Power Generating Company Private Ltd
- Mintek Dendrill Indonesia
- Orica Australia Pty. Ltd.
- PetroVietnam Power Coal Import and Supply Company
- The Treasury - Australian Government
- Planning Commission, India
- Bukit Baiduri Energy - Indonesia
- Petron Corporation, Philippines
- Medco Energi Mining Internasional
- Thai Mozambique Logistica
- Asmin Koalindo Tuhup - Indonesia
- Ind-Barath Power Infra Limited - India
- Gujarat Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Bulk Trading Sa - Switzerland
- Commonwealth Bank - Australia
- White Energy Company Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Posco Energy - South Korea
- Sarangani Energy Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Agrawal Coal Company - India
- India Bulls Power Limited - India
- Coastal Gujarat Power Limited - India
- Savvy Resources Ltd - HongKong
- Sical Logistics Limited - India
- Price Waterhouse Coopers - Russia
- Rio Tinto Coal - Australia
- Alfred C Toepfer International GmbH - Germany
- CIMB Investment Bank - Malaysia
- South Luzon Thermal Energy Corporation
- Thiess Contractors Indonesia
- Mercuria Energy - Indonesia
- Georgia Ports Authority, United States
- Therma Luzon, Inc, Philippines
- Bhushan Steel Limited - India
- Wilmar Investment Holdings
- Essar Steel Hazira Ltd - India
- Riau Bara Harum - Indonesia
- Coal and Oil Company - UAE
- Romanian Commodities Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Miang Besar Coal Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Simpson Spence & Young - Indonesia
- PNOC Exploration Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- Indika Energy - Indonesia
- Xindia Steels Limited - India
- Formosa Plastics Group - Taiwan
- TeaM Sual Corporation - Philippines
- London Commodity Brokers - England
- Cement Manufacturers Association - India
- Manunggal Multi Energi - Indonesia
- Attock Cement Pakistan Limited
- Salva Resources Pvt Ltd - India
- Eastern Coal Council - USA
- Karaikal Port Pvt Ltd - India
- Mjunction Services Limited - India
- SMG Consultants - Indonesia
- Global Business Power Corporation, Philippines
- VISA Power Limited - India
- Trasteel International SA, Italy
- IHS Mccloskey Coal Group - USA
- GMR Energy Limited - India
- Intertek Mineral Services - Indonesia
- Latin American Coal - Colombia
- Kapuas Tunggal Persada - Indonesia
- Kartika Selabumi Mining - Indonesia
- Gujarat Sidhee Cement - India
- Sinarmas Energy and Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Sakthi Sugars Limited - India
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