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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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Wednesday, 07 January 15
FUEL EFFICIENT SHIPS MAKE LESS SENSE IN LOWER BUNKER PRICE MARKET, BUT FUEL COSTS ARE BOUND TO RISE AGAIN
The shipping industry entered 2015 on mixed emotions, as a relatively buoyant tanker market is met by a rather lackluster dry bulk market. Still, a ...
Wednesday, 07 January 15
2015 IS RIDDLED WITH CHALLENGES FOR THE SHIPPING SECTOR, MOST NOTABLY THE DRY BULK MARKET - HELLENIC SHIPPING NEWS
As the new year has now set foot for real, many are still looking to detect what’s in store for the various shipping markets, with the first ...
Tuesday, 06 January 15
SHIPPING MUST ADOPT CAN-DO ATTITUDE IN 2015 - MOORE STEPHENS
Shipping needs to adopt a can-do attitude in order to successfully meet the challenges which are likely to come its way in 2015.
Shipping part ...
Tuesday, 06 January 15
Q4' 15 FOB INDONESIA COAL SWAP CLOSED 1.81% HIGHER COMPARED TO Q1' 15 CLOSING
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month and week over week.
The Q1 swap has lost US$ 0.74 (-1.51%) m ...
Tuesday, 06 January 15
FOB RICHARDS BAY COAL SWAPS LOST W-O-W AND M-O-M, SGX DATA SHOWS
COALspot.com: API 4 FOB Richards Bay Coal for delivery Q1' 2015 lost month on month and week over week.
The Q1 swap has lost US$ 3.52 (-5. ...
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- Rio Tinto Coal - Australia
- Binh Thuan Hamico - Vietnam
- Eastern Energy - Thailand
- Jaiprakash Power Ventures ltd
- Parliament of New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Commonwealth Bank - Australia
- Bharathi Cement Corporation - India
- Global Green Power PLC Corporation, Philippines
- Barasentosa Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Kartika Selabumi Mining - Indonesia
- Romanian Commodities Exchange
- Leighton Contractors Pty Ltd - Australia
- SMG Consultants - Indonesia
- Petron Corporation, Philippines
- Gujarat Sidhee Cement - India
- Baramulti Group, Indonesia
- Jindal Steel & Power Ltd - India
- Vizag Seaport Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- TeaM Sual Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vedanta Resources Plc - India
- PTC India Limited - India
- Bayan Resources Tbk. - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Coal Council - USA
- Price Waterhouse Coopers - Russia
- Planning Commission, India
- Siam City Cement PLC, Thailand
- Borneo Indobara - Indonesia
- Larsen & Toubro Limited - India
- International Coal Ventures Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Billiton Holdings Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Star Paper Mills Limited - India
- Coalindo Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Parry Sugars Refinery, India
- Altura Mining Limited, Indonesia
- Georgia Ports Authority, United States
- Manunggal Multi Energi - Indonesia
- The Treasury - Australian Government
- Cigading International Bulk Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kalimantan Lumbung Energi - Indonesia
- Singapore Mercantile Exchange
- Mjunction Services Limited - India
- Meralco Power Generation, Philippines
- IHS Mccloskey Coal Group - USA
- Marubeni Corporation - India
- Central Electricity Authority - India
- Indian Oil Corporation Limited
- New Zealand Coal & Carbon
- Gujarat Electricity Regulatory Commission - India
- Maheswari Brothers Coal Limited - India
- Sindya Power Generating Company Private Ltd
- CIMB Investment Bank - Malaysia
- TNB Fuel Sdn Bhd - Malaysia
- Independent Power Producers Association of India
- Salva Resources Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- Makarim & Taira - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Goldman Sachs - Singapore
- Indonesian Coal Mining Association
- Riau Bara Harum - Indonesia
- Kumho Petrochemical, South Korea
- Banpu Public Company Limited - Thailand
- Essar Steel Hazira Ltd - India
- Central Java Power - Indonesia
- Timah Investasi Mineral - Indoneisa
- Samtan Co., Ltd - South Korea
- Coastal Gujarat Power Limited - India
- Siam City Cement - Thailand
- Australian Commodity Traders Exchange
- MS Steel International - UAE
- Ministry of Mines - Canada
- Lanco Infratech Ltd - India
- San Jose City I Power Corp, Philippines
- Orica Mining Services - Indonesia
- Bulk Trading Sa - Switzerland
- CNBM International Corporation - China
- Straits Asia Resources Limited - Singapore
- AsiaOL BioFuels Corp., Philippines
- Wood Mackenzie - Singapore
- Bukit Baiduri Energy - Indonesia
- Oldendorff Carriers - Singapore
- Kobexindo Tractors - Indoneisa
- Ambuja Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Posco Energy - South Korea
- Minerals Council of Australia
- SMC Global Power, Philippines
- Medco Energi Mining Internasional
- Chamber of Mines of South Africa
- Tata Chemicals Ltd - India
- LBH Netherlands Bv - Netherlands
- Port Waratah Coal Services - Australia
- Pendopo Energi Batubara - Indonesia
- Coal and Oil Company - UAE
- Tamil Nadu electricity Board
- Thiess Contractors Indonesia
- Indo Tambangraya Megah - Indonesia
- GMR Energy Limited - India
- Bhoruka Overseas - Indonesia
- Bhushan Steel Limited - India
- Formosa Plastics Group - Taiwan
- VISA Power Limited - India
- India Bulls Power Limited - India
- The University of Queensland
- Renaissance Capital - South Africa
- Videocon Industries ltd - India
- Electricity Generating Authority of Thailand
- Sojitz Corporation - Japan
- Karbindo Abesyapradhi - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Interocean Group of Companies - India
- Chettinad Cement Corporation Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Wilmar Investment Holdings
- Agrawal Coal Company - India
- OPG Power Generation Pvt Ltd - India
- Deloitte Consulting - India
- PetroVietnam Power Coal Import and Supply Company
- Kepco SPC Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Karaikal Port Pvt Ltd - India
- Edison Trading Spa - Italy
- Gujarat Mineral Development Corp Ltd - India
- Merrill Lynch Commodities Europe
- Intertek Mineral Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bangladesh Power Developement Board
- Attock Cement Pakistan Limited
- Latin American Coal - Colombia
- Indika Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Bhatia International Limited - India
- GAC Shipping (India) Pvt Ltd
- Toyota Tsusho Corporation, Japan
- Neyveli Lignite Corporation Ltd, - India
- Grasim Industreis Ltd - India
- South Luzon Thermal Energy Corporation
- Sarangani Energy Corporation, Philippines
- Heidelberg Cement - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The State Trading Corporation of India Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Carbofer General Trading SA - India
- London Commodity Brokers - England
- Anglo American - United Kingdom
- Malabar Cements Ltd - India
- Orica Australia Pty. Ltd.
- Standard Chartered Bank - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Ministry of Finance - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Jorong Barutama Greston.PT - Indonesia
- McConnell Dowell - Australia
- PNOC Exploration Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Mintek Dendrill Indonesia
- Sical Logistics Limited - India
- Economic Council, Georgia
- Sree Jayajothi Cements Limited - India
- GVK Power & Infra Limited - India
- Electricity Authority, New Zealand
- Rashtriya Ispat Nigam Limited - India
- Australian Coal Association
- Thai Mozambique Logistica
- Mercuria Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- Cement Manufacturers Association - India
- Ministry of Transport, Egypt
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Africa Commodities Group - South Africa
- Kapuas Tunggal Persada - Indonesia
- Metalloyd Limited - United Kingdom
- Indian Energy Exchange, India
- Simpson Spence & Young - Indonesia
- ASAPP Information Group - India
- Therma Luzon, Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Global Business Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- ICICI Bank Limited - India
- Trasteel International SA, Italy
- Globalindo Alam Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Sakthi Sugars Limited - India
- Savvy Resources Ltd - HongKong
- Power Finance Corporation Ltd., India
- Aditya Birla Group - India
- Indogreen Group - Indonesia
- Semirara Mining Corp, Philippines
- Xindia Steels Limited - India
- Madhucon Powers Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PowerSource Philippines DevCo
- White Energy Company Limited
- Energy Development Corp, Philippines
- Uttam Galva Steels Limited - India
- Dalmia Cement Bharat India
- European Bulk Services B.V. - Netherlands
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