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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, 30 December 14
U.S WEEKLY COAL PRODUCTION ALMOST FLAT AT -0.2%
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.8 million short tons (mmst) of coal ...
Monday, 29 December 14
CHINESE COAL IMPORTS: REGULATORY RISKS? - CLARKSONS
In recent years, Chinese seaborne coal imports have surged, registering average growth of 67% p.a. between 2009 and 2013 to total 265mt. However, t ...
Monday, 29 December 14
BULK MARKET ENDS YEAR ON SOUR NOTE, SHIPBROKER SEES 'BUMPY ROAD AHEAD' - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
2014 was supposed to be the year that the dry bulk market would stage a comeback and a sustainable one for that matter. However, while for the most ...
Monday, 29 December 14
Q1'15 CFR SOUTH CHINA COAL SWAP CLOSED AT $59.42
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery has decreased by US$ 3.51 (-5.58%) month over month and US$ 0.08 (-0.13%) ...
Monday, 29 December 14
SGX'S FOB NEWCASTLE COAL SWAPS IMPROVED W-O-W, LOST M-O-M
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery lost US$ 1.44 per MT (-2.73%) month over month and gained US$ 0.36 (+0.71%) ...
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- PetroVietnam Power Coal Import and Supply Company
- Power Finance Corporation Ltd., India
- Indian Oil Corporation Limited
- CNBM International Corporation - China
- Indogreen Group - Indonesia
- Independent Power Producers Association of India
- Ministry of Mines - Canada
- Chamber of Mines of South Africa
- Siam City Cement - Thailand
- Salva Resources Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Vizag Seaport Private Limited - India
- Mercuria Energy - Indonesia
- Orica Australia Pty. Ltd.
- Banpu Public Company Limited - Thailand
- White Energy Company Limited
- Global Green Power PLC Corporation, Philippines
- Renaissance Capital - South Africa
- Parry Sugars Refinery, India
- ASAPP Information Group - India
- The State Trading Corporation of India Ltd
- Indonesian Coal Mining Association
- Essar Steel Hazira Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Bhushan Steel Limited - India
- Xindia Steels Limited - India
- San Jose City I Power Corp, Philippines
- Baramulti Group, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Economic Council, Georgia
- McConnell Dowell - Australia
- New Zealand Coal & Carbon
- Barasentosa Lestari - Indonesia
- Altura Mining Limited, Indonesia
- Therma Luzon, Inc, Philippines
- Sakthi Sugars Limited - India
- Bulk Trading Sa - Switzerland
- Petron Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- PNOC Exploration Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Australian Coal Association
- Pendopo Energi Batubara - Indonesia
- TeaM Sual Corporation - Philippines
- MS Steel International - UAE
- GN Power Mariveles Coal Plant, Philippines
- CIMB Investment Bank - Malaysia
- Sinarmas Energy and Mining - Indonesia
- Lanco Infratech Ltd - India
- Manunggal Multi Energi - Indonesia
- Georgia Ports Authority, United States
- Malabar Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- SMG Consultants - Indonesia
- Kepco SPC Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Romanian Commodities Exchange
- The Treasury - Australian Government
- Goldman Sachs - Singapore
- Indika Energy - Indonesia
- Coalindo Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- Ceylon Electricity Board - Sri Lanka
- OPG Power Generation Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Sical Logistics Limited - India
- Larsen & Toubro Limited - India
- Formosa Plastics Group - Taiwan
- Wilmar Investment Holdings
- Chettinad Cement Corporation Ltd - India
- Anglo American - United Kingdom
- Bhoruka Overseas - Indonesia
- Minerals Council of Australia
- Cement Manufacturers Association - India
- South Luzon Thermal Energy Corporation
- European Bulk Services B.V. - Netherlands
- Kartika Selabumi Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Iligan Light & Power Inc, Philippines
- SMC Global Power, Philippines
- Ambuja Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Toyota Tsusho Corporation, Japan
- International Coal Ventures Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bharathi Cement Corporation - India
- Ind-Barath Power Infra Limited - India
- Simpson Spence & Young - Indonesia
- Bangladesh Power Developement Board
- Binh Thuan Hamico - Vietnam
- Meenaskhi Energy Private Limited - India
- Dalmia Cement Bharat India
- Heidelberg Cement - Germany
- Indian Energy Exchange, India
- Port Waratah Coal Services - Australia
- Coal and Oil Company - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TNB Fuel Sdn Bhd - Malaysia
- Kaltim Prima Coal - Indonesia
- Trasteel International SA, Italy
- Star Paper Mills Limited - India
- Bhatia International Limited - India
- Grasim Industreis Ltd - India
- Bayan Resources Tbk. - Indonesia
- The University of Queensland
- Parliament of New Zealand
- Leighton Contractors Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Posco Energy - South Korea
- Intertek Mineral Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Uttam Galva Steels Limited - India
- ICICI Bank Limited - India
- Madhucon Powers Ltd - India
- Central Java Power - Indonesia
- GVK Power & Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement PLC, Thailand
- Agrawal Coal Company - India
- VISA Power Limited - India
- Samtan Co., Ltd - South Korea
- Orica Mining Services - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Attock Cement Pakistan Limited
- Riau Bara Harum - Indonesia
- Thai Mozambique Logistica
- Mjunction Services Limited - India
- Jindal Steel & Power Ltd - India
- Antam Resourcindo - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Australian Commodity Traders Exchange
- Medco Energi Mining Internasional
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GMR Energy Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kumho Petrochemical, South Korea
- Bukit Baiduri Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Global Business Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Gujarat Sidhee Cement - India
- Wood Mackenzie - Singapore
- Metalloyd Limited - United Kingdom
- Vedanta Resources Plc - India
- Eastern Coal Council - USA
- IHS Mccloskey Coal Group - USA
- Savvy Resources Ltd - HongKong
- Sarangani Energy Corporation, Philippines
- Ministry of Finance - Indonesia
- Mintek Dendrill Indonesia
- Marubeni Corporation - India
- Carbofer General Trading SA - India
- PTC India Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- Semirara Mining Corp, Philippines
- Rio Tinto Coal - Australia
- Oldendorff Carriers - Singapore
- Gujarat Electricity Regulatory Commission - India
- Maheswari Brothers Coal Limited - India
- Eastern Energy - Thailand
- Mercator Lines Limited - India
- Alfred C Toepfer International GmbH - Germany
- Ministry of Transport, Egypt
- Aboitiz Power Corporation - Philippines
- Edison Trading Spa - Italy
- Africa Commodities Group - South Africa
- Price Waterhouse Coopers - Russia
- Energy Link Ltd, New Zealand
- SN Aboitiz Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Planning Commission, India
- Commonwealth Bank - Australia
- Standard Chartered Bank - UAE
- PowerSource Philippines DevCo
- Jaiprakash Power Ventures ltd
- Gujarat Mineral Development Corp Ltd - India
- Coastal Gujarat Power Limited - India
- Aditya Birla Group - India
- Merrill Lynch Commodities Europe
- Energy Development Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Deloitte Consulting - India
- Kobexindo Tractors - Indoneisa
- Global Coal Blending Company Limited - Australia
- Electricity Generating Authority of Thailand
- LBH Netherlands Bv - Netherlands
- Electricity Authority, New Zealand
- Thiess Contractors Indonesia
- Neyveli Lignite Corporation Ltd, - India
- GAC Shipping (India) Pvt Ltd
- Jorong Barutama Greston.PT - Indonesia
- Sojitz Corporation - Japan
- Krishnapatnam Port Company Ltd. - India
- Makarim & Taira - Indonesia
- Tata Chemicals Ltd - India
- Karaikal Port Pvt Ltd - India
- IEA Clean Coal Centre - UK
- India Bulls Power Limited - India
- Videocon Industries ltd - India
- Billiton Holdings Pty Ltd - Australia
- Central Electricity Authority - India
- Latin American Coal - Colombia
- Bukit Makmur.PT - Indonesia
- Singapore Mercantile Exchange
- Interocean Group of Companies - India
- Rashtriya Ispat Nigam Limited - India
- London Commodity Brokers - England
- Semirara Mining and Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Tamil Nadu electricity Board
- Directorate Of Revenue Intelligence - India
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