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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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- Sindya Power Generating Company Private Ltd
- Energy Development Corp, Philippines
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- Commonwealth Bank - Australia
- Africa Commodities Group - South Africa
- India Bulls Power Limited - India
- Aboitiz Power Corporation - Philippines
- Bangladesh Power Developement Board
- London Commodity Brokers - England
- Economic Council, Georgia
- Kalimantan Lumbung Energi - Indonesia
- ICICI Bank Limited - India
- Energy Link Ltd, New Zealand
- Bhushan Steel Limited - India
- Price Waterhouse Coopers - Russia
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- Mjunction Services Limited - India
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- Globalindo Alam Lestari - Indonesia
- Meralco Power Generation, Philippines
- Binh Thuan Hamico - Vietnam
- The State Trading Corporation of India Ltd
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- TNB Fuel Sdn Bhd - Malaysia
- Eastern Energy - Thailand
- The Treasury - Australian Government
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- Global Coal Blending Company Limited - Australia
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- Orica Australia Pty. Ltd.
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- Tata Chemicals Ltd - India
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- Ministry of Transport, Egypt
- Deloitte Consulting - India
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- McConnell Dowell - Australia
- Cement Manufacturers Association - India
- Kohat Cement Company Ltd. - Pakistan
- Bhoruka Overseas - Indonesia
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- Agrawal Coal Company - India
- Wilmar Investment Holdings
- Miang Besar Coal Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Simpson Spence & Young - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Electricity Regulatory Commission - India
- Bukit Asam (Persero) Tbk - Indonesia
- Chamber of Mines of South Africa
- ASAPP Information Group - India
- IHS Mccloskey Coal Group - USA
- SN Aboitiz Power Inc, Philippines
- Indogreen Group - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Indonesian Coal Mining Association
- Pendopo Energi Batubara - Indonesia
- Anglo American - United Kingdom
- Iligan Light & Power Inc, Philippines
- Rio Tinto Coal - Australia
- Formosa Plastics Group - Taiwan
- VISA Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Straits Asia Resources Limited - Singapore
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- Semirara Mining and Power Corporation, Philippines
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- Malabar Cements Ltd - India
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- Australian Commodity Traders Exchange
- Marubeni Corporation - India
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- Therma Luzon, Inc, Philippines
- Australian Coal Association
- Indika Energy - Indonesia
- PTC India Limited - India
- Electricity Authority, New Zealand
- Essar Steel Hazira Ltd - India
- Indian Oil Corporation Limited
- Chettinad Cement Corporation Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Kaltim Prima Coal - Indonesia
- Merrill Lynch Commodities Europe
- Xindia Steels Limited - India
- Bhatia International Limited - India
- Port Waratah Coal Services - Australia
- Alfred C Toepfer International GmbH - Germany
- Sojitz Corporation - Japan
- Standard Chartered Bank - UAE
- Wood Mackenzie - Singapore
- Indo Tambangraya Megah - Indonesia
- Bayan Resources Tbk. - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Lanco Infratech Ltd - India
- Toyota Tsusho Corporation, Japan
- Ministry of Mines - Canada
- Karaikal Port Pvt Ltd - India
- Interocean Group of Companies - India
- OPG Power Generation Pvt Ltd - India
- Dalmia Cement Bharat India
- PNOC Exploration Corporation - Philippines
- Antam Resourcindo - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Baramulti Group, Indonesia
- GAC Shipping (India) Pvt Ltd
- LBH Netherlands Bv - Netherlands
- European Bulk Services B.V. - Netherlands
- Bulk Trading Sa - Switzerland
- GVK Power & Infra Limited - India
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- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Billiton Holdings Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Goldman Sachs - Singapore
- Parliament of New Zealand
- Banpu Public Company Limited - Thailand
- Rashtriya Ispat Nigam Limited - India
- Sakthi Sugars Limited - India
- Vizag Seaport Private Limited - India
- TeaM Sual Corporation - Philippines
- SMC Global Power, Philippines
- Borneo Indobara - Indonesia
- IEA Clean Coal Centre - UK
- Georgia Ports Authority, United States
- Global Business Power Corporation, Philippines
- Medco Energi Mining Internasional
- Directorate Of Revenue Intelligence - India
- Altura Mining Limited, Indonesia
- Videocon Industries ltd - India
- Ambuja Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parry Sugars Refinery, India
- Mintek Dendrill Indonesia
- International Coal Ventures Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bharathi Cement Corporation - India
- Edison Trading Spa - Italy
- Manunggal Multi Energi - Indonesia
- South Luzon Thermal Energy Corporation
- Coal and Oil Company - UAE
- Aditya Birla Group - India
- Makarim & Taira - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Latin American Coal - Colombia
- New Zealand Coal & Carbon
- Coalindo Energy - Indonesia
- Central Electricity Authority - India
- CNBM International Corporation - China
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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- Vedanta Resources Plc - India
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- Offshore Bulk Terminal Pte Ltd, Singapore
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