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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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Saturday, 03 January 15
U.S WEEKLY COAL PRODUCTION FELL 11.2% TO 17.6 MMST WEEK OVER WEEK - EIA
COALspot.com – United States the world's one of the largest coal producers, produced approximately 17.6 million short tons (mmst) of coal ...
Thursday, 01 January 15
FOB RICHARDS BAY COAL SWAPS CLOSED AT $63.47 PMT ON 26 DEC, SGX DATA SHOWS
COALspot.com: API 4 FOB Richards Bay Coal for delivery Q1' 2015 lost month on month and week over week.
The Q1 swap has lost US$ 3.37 (-4. ...
Wednesday, 31 December 14
COASTAL ENERGEN (C&O) COMMENCES 1ST UNIT OF 1200 MW POWER PLANT IN INDIA
COALspot.com: Coastal Energen, part of the Coal & Oil Group, announced last week the commissioning and commencement of power production at the ...
Wednesday, 31 December 14
SUB-BIT INDONESIA COAL Q2' 15 DELIVERY SWAP CLOSED 1.03% LOWER COMPARED TO AVERAGE Q1' 15 DELIVERY PRICE - SGX
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month and gained week over week.
The Q1 swap has lost US$ 1.35 (-2 ...
Tuesday, 30 December 14
SHIP PRICES KEEP ON FALLING, SALES COME EARLY FOR SHIP OWNERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Ship prices keep on falling on the back of low freight rates. According to the latest report from shipbroker Allied Shipbroking, January sales seem ...
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- Iligan Light & Power Inc, Philippines
- SMG Consultants - Indonesia
- Directorate Of Revenue Intelligence - India
- Medco Energi Mining Internasional
- Pipit Mutiara Jaya. PT, Indonesia
- Global Coal Blending Company Limited - Australia
- Carbofer General Trading SA - India
- Parliament of New Zealand
- Bhoruka Overseas - Indonesia
- Kobexindo Tractors - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Power Finance Corporation Ltd., India
- Sinarmas Energy and Mining - Indonesia
- VISA Power Limited - India
- Lanco Infratech Ltd - India
- Rio Tinto Coal - Australia
- Krishnapatnam Port Company Ltd. - India
- Independent Power Producers Association of India
- Jorong Barutama Greston.PT - Indonesia
- Therma Luzon, Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Kideco Jaya Agung - Indonesia
- The Treasury - Australian Government
- Attock Cement Pakistan Limited
- SN Aboitiz Power Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Asmin Koalindo Tuhup - Indonesia
- Anglo American - United Kingdom
- Bangladesh Power Developement Board
- South Luzon Thermal Energy Corporation
- Gujarat Electricity Regulatory Commission - India
- Altura Mining Limited, Indonesia
- IHS Mccloskey Coal Group - USA
- Kartika Selabumi Mining - Indonesia
- London Commodity Brokers - England
- Antam Resourcindo - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Meenaskhi Energy Private Limited - India
- The State Trading Corporation of India Ltd
- Australian Commodity Traders Exchange
- Electricity Generating Authority of Thailand
- Cigading International Bulk Terminal - Indonesia
- ICICI Bank Limited - India
- Bayan Resources Tbk. - Indonesia
- Interocean Group of Companies - India
- Ministry of Finance - Indonesia
- ASAPP Information Group - India
- GN Power Mariveles Coal Plant, Philippines
- Goldman Sachs - Singapore
- Indika Energy - Indonesia
- Mintek Dendrill Indonesia
- Bukit Baiduri Energy - Indonesia
- Xindia Steels Limited - India
- PNOC Exploration Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Price Waterhouse Coopers - Russia
- India Bulls Power Limited - India
- Riau Bara Harum - Indonesia
- Agrawal Coal Company - India
- Africa Commodities Group - South Africa
- Latin American Coal - Colombia
- San Jose City I Power Corp, Philippines
- Trasteel International SA, Italy
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement PLC, Thailand
- Coastal Gujarat Power Limited - India
- Singapore Mercantile Exchange
- IEA Clean Coal Centre - UK
- Binh Thuan Hamico - Vietnam
- Bulk Trading Sa - Switzerland
- Chettinad Cement Corporation Ltd - India
- Planning Commission, India
- Ministry of Transport, Egypt
- Karaikal Port Pvt Ltd - India
- Heidelberg Cement - Germany
- Indonesian Coal Mining Association
- Eastern Energy - Thailand
- Coalindo Energy - Indonesia
- GMR Energy Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Cement Manufacturers Association - India
- Straits Asia Resources Limited - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Barasentosa Lestari - Indonesia
- Eastern Coal Council - USA
- New Zealand Coal & Carbon
- Mjunction Services Limited - India
- Kepco SPC Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Minerals Council of Australia
- Intertek Mineral Services - Indonesia
- Australian Coal Association
- Miang Besar Coal Terminal - Indonesia
- Thai Mozambique Logistica
- Orica Australia Pty. Ltd.
- Merrill Lynch Commodities Europe
- Sical Logistics Limited - India
- Simpson Spence & Young - Indonesia
- Oldendorff Carriers - Singapore
- Holcim Trading Pte Ltd - Singapore
- Sakthi Sugars Limited - India
- Global Green Power PLC Corporation, Philippines
- Indian Oil Corporation Limited
- Sojitz Corporation - Japan
- Salva Resources Pvt Ltd - India
- PTC India Limited - India
- Deloitte Consulting - India
- Kumho Petrochemical, South Korea
- Kapuas Tunggal Persada - Indonesia
- White Energy Company Limited
- Commonwealth Bank - Australia
- Bhushan Steel Limited - India
- Ambuja Cements Ltd - India
- Meralco Power Generation, Philippines
- Chamber of Mines of South Africa
- Essar Steel Hazira Ltd - India
- OPG Power Generation Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Port Waratah Coal Services - Australia
- Indogreen Group - Indonesia
- LBH Netherlands Bv - Netherlands
- Timah Investasi Mineral - Indoneisa
- The University of Queensland
- Sindya Power Generating Company Private Ltd
- Thiess Contractors Indonesia
- Maheswari Brothers Coal Limited - India
- Rashtriya Ispat Nigam Limited - India
- Tamil Nadu electricity Board
- Bahari Cakrawala Sebuku - Indonesia
- Standard Chartered Bank - UAE
- Dalmia Cement Bharat India
- Pendopo Energi Batubara - Indonesia
- Central Java Power - Indonesia
- Vedanta Resources Plc - India
- Star Paper Mills Limited - India
- Banpu Public Company Limited - Thailand
- Malabar Cements Ltd - India
- Petron Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Grasim Industreis Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Aditya Birla Group - India
- Jindal Steel & Power Ltd - India
- Sree Jayajothi Cements Limited - India
- Edison Trading Spa - Italy
- CNBM International Corporation - China
- Bank of Tokyo Mitsubishi UFJ Ltd
- Baramulti Group, Indonesia
- Tata Chemicals Ltd - India
- Economic Council, Georgia
- Semirara Mining and Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Metalloyd Limited - United Kingdom
- Larsen & Toubro Limited - India
- PowerSource Philippines DevCo
- Ministry of Mines - Canada
- TeaM Sual Corporation - Philippines
- Orica Mining Services - Indonesia
- Indian Energy Exchange, India
- Bharathi Cement Corporation - India
- Renaissance Capital - South Africa
- Semirara Mining Corp, Philippines
- Borneo Indobara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- Leighton Contractors Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
- McConnell Dowell - Australia
- AsiaOL BioFuels Corp., Philippines
- Videocon Industries ltd - India
- SMC Global Power, Philippines
- Central Electricity Authority - India
- Energy Development Corp, Philippines
- Formosa Plastics Group - Taiwan
- Uttam Galva Steels Limited - India
- Sarangani Energy Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Marubeni Corporation - India
- Vizag Seaport Private Limited - India
- Indo Tambangraya Megah - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bhatia International Limited - India
- Globalindo Alam Lestari - Indonesia
- Georgia Ports Authority, United States
- European Bulk Services B.V. - Netherlands
- CIMB Investment Bank - Malaysia
- Madhucon Powers Ltd - India
- Wood Mackenzie - Singapore
- Gujarat Sidhee Cement - India
- International Coal Ventures Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Makarim & Taira - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Romanian Commodities Exchange
- Directorate General of MIneral and Coal - Indonesia
- Energy Link Ltd, New Zealand
- Samtan Co., Ltd - South Korea
- Electricity Authority, New Zealand
- Aboitiz Power Corporation - Philippines
- Parry Sugars Refinery, India
- Ind-Barath Power Infra Limited - India
- Global Business Power Corporation, Philippines
- Coal and Oil Company - UAE
- MS Steel International - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Bukit Asam (Persero) Tbk - Indonesia
- Posco Energy - South Korea
- Mercuria Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Wilmar Investment Holdings
- Siam City Cement - Thailand
- GVK Power & Infra Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
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