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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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Friday, 26 December 14
SHIPS FACE LOWER SULPHUR FUEL REQUIREMENTS IN EMISSION CONTROL AREAS FROM 1 JANUARY 2015 - IMO
Ships trading in designated emission control areas will have to use on board fuel oil with a sulphur content of no more than 0.10% from 1 January 2 ...
Wednesday, 24 December 14
CAPE DEMAND WAS STILL EXTREMELY SOFT THIS PAST WEEK ACROSS BOTH BASINS - INTERMODAL
COALspot.com: The performance of the Dry Bulk market, which found itself in desperate search of support for yet another week, has left very little ...
Wednesday, 24 December 14
MARKET INSIGHT - JOHN N. COTZIAS, INTERMODAL SNP BROKER
The year is coming to an end, and we should be able to assess if this was a good year, a bad year, or even a lousy one? The answer clearly de ...
Tuesday, 23 December 14
Q1'15 FOB INDONESIA COAL SWAP GAINED 48 CENTS IN ONE WEEK
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month and gained week over week and day on day.
The Q1 swap has lo ...
Tuesday, 23 December 14
Q4'15 FOB RICHARDS BAY COAL SWAPS FALL $ 3.85 IN A MONTH
COALspot.com: API 4 FOB Richards Bay Coal for delivery Q1' 2015 lost month on month.
The Q1 swap has lost US$ 2.13 (-3.17%) month on month ...
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- Kaltim Prima Coal - Indonesia
- Merrill Lynch Commodities Europe
- Bulk Trading Sa - Switzerland
- Australian Coal Association
- Siam City Cement PLC, Thailand
- Central Electricity Authority - India
- Formosa Plastics Group - Taiwan
- Indian Oil Corporation Limited
- Mercator Lines Limited - India
- Gujarat Mineral Development Corp Ltd - India
- San Jose City I Power Corp, Philippines
- Anglo American - United Kingdom
- Commonwealth Bank - Australia
- CNBM International Corporation - China
- Price Waterhouse Coopers - Russia
- Minerals Council of Australia
- Coastal Gujarat Power Limited - India
- Coalindo Energy - Indonesia
- Tamil Nadu electricity Board
- Parry Sugars Refinery, India
- Bukit Baiduri Energy - Indonesia
- Energy Development Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Larsen & Toubro Limited - India
- Global Coal Blending Company Limited - Australia
- International Coal Ventures Pvt Ltd - India
- Baramulti Group, Indonesia
- Toyota Tsusho Corporation, Japan
- Indonesian Coal Mining Association
- VISA Power Limited - India
- Mjunction Services Limited - India
- Jaiprakash Power Ventures ltd
- Bharathi Cement Corporation - India
- IEA Clean Coal Centre - UK
- AsiaOL BioFuels Corp., Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- Africa Commodities Group - South Africa
- Ministry of Finance - Indonesia
- Thiess Contractors Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- The University of Queensland
- Renaissance Capital - South Africa
- Bukit Makmur.PT - Indonesia
- Medco Energi Mining Internasional
- Electricity Authority, New Zealand
- Bhatia International Limited - India
- Georgia Ports Authority, United States
- Bahari Cakrawala Sebuku - Indonesia
- Planning Commission, India
- Kobexindo Tractors - Indoneisa
- Global Business Power Corporation, Philippines
- Interocean Group of Companies - India
- The Treasury - Australian Government
- Edison Trading Spa - Italy
- Borneo Indobara - Indonesia
- Oldendorff Carriers - Singapore
- Posco Energy - South Korea
- Ambuja Cements Ltd - India
- Salva Resources Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Madhucon Powers Ltd - India
- Petron Corporation, Philippines
- Vizag Seaport Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- New Zealand Coal & Carbon
- GMR Energy Limited - India
- Energy Link Ltd, New Zealand
- Manunggal Multi Energi - Indonesia
- SMG Consultants - Indonesia
- Barasentosa Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- Sojitz Corporation - Japan
- Kideco Jaya Agung - Indonesia
- TeaM Sual Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Makarim & Taira - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Tata Chemicals Ltd - India
- Deloitte Consulting - India
- Wood Mackenzie - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Banpu Public Company Limited - Thailand
- LBH Netherlands Bv - Netherlands
- Meralco Power Generation, Philippines
- Heidelberg Cement - Germany
- Eastern Energy - Thailand
- Aboitiz Power Corporation - Philippines
- Marubeni Corporation - India
- Central Java Power - Indonesia
- Iligan Light & Power Inc, Philippines
- Orica Australia Pty. Ltd.
- Kartika Selabumi Mining - Indonesia
- The State Trading Corporation of India Ltd
- Wilmar Investment Holdings
- Cement Manufacturers Association - India
- PNOC Exploration Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Goldman Sachs - Singapore
- Krishnapatnam Port Company Ltd. - India
- Aditya Birla Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indo Tambangraya Megah - Indonesia
- Gujarat Electricity Regulatory Commission - India
- GVK Power & Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Mintek Dendrill Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Malabar Cements Ltd - India
- Chettinad Cement Corporation Ltd - India
- White Energy Company Limited
- Jindal Steel & Power Ltd - India
- Romanian Commodities Exchange
- Agrawal Coal Company - India
- Altura Mining Limited, Indonesia
- Xindia Steels Limited - India
- Eastern Coal Council - USA
- Indogreen Group - Indonesia
- IHS Mccloskey Coal Group - USA
- Chamber of Mines of South Africa
- Mercuria Energy - Indonesia
- Star Paper Mills Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Bangladesh Power Developement Board
- Parliament of New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Karbindo Abesyapradhi - Indoneisa
- Antam Resourcindo - Indonesia
- Latin American Coal - Colombia
- Timah Investasi Mineral - Indoneisa
- Directorate Of Revenue Intelligence - India
- Grasim Industreis Ltd - India
- Pendopo Energi Batubara - Indonesia
- Bhoruka Overseas - Indonesia
- Indian Energy Exchange, India
- Ministry of Transport, Egypt
- London Commodity Brokers - England
- Therma Luzon, Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Indika Energy - Indonesia
- Lanco Infratech Ltd - India
- Carbofer General Trading SA - India
- Independent Power Producers Association of India
- Holcim Trading Pte Ltd - Singapore
- Standard Chartered Bank - UAE
- Binh Thuan Hamico - Vietnam
- PowerSource Philippines DevCo
- Economic Council, Georgia
- SMC Global Power, Philippines
- SN Aboitiz Power Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Semirara Mining Corp, Philippines
- ICICI Bank Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- ASAPP Information Group - India
- Singapore Mercantile Exchange
- GAC Shipping (India) Pvt Ltd
- Dalmia Cement Bharat India
- Leighton Contractors Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- PTC India Limited - India
- South Luzon Thermal Energy Corporation
- Simpson Spence & Young - Indonesia
- Bhushan Steel Limited - India
- Orica Mining Services - Indonesia
- Ministry of Mines - Canada
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Electricity Generating Authority of Thailand
- Videocon Industries ltd - India
- Uttam Galva Steels Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Attock Cement Pakistan Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ceylon Electricity Board - Sri Lanka
- CIMB Investment Bank - Malaysia
- McConnell Dowell - Australia
- Kumho Petrochemical, South Korea
- OPG Power Generation Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Sarangani Energy Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Coal and Oil Company - UAE
- Sakthi Sugars Limited - India
- Rashtriya Ispat Nigam Limited - India
- Intertek Mineral Services - Indonesia
- Port Waratah Coal Services - Australia
- Siam City Cement - Thailand
- Sical Logistics Limited - India
- Thai Mozambique Logistica
- Meenaskhi Energy Private Limited - India
- Cigading International Bulk Terminal - Indonesia
- European Bulk Services B.V. - Netherlands
- Riau Bara Harum - Indonesia
- Trasteel International SA, Italy
- Globalindo Alam Lestari - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- India Bulls Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Commodity Traders Exchange
- MS Steel International - UAE
- Ind-Barath Power Infra Limited - India
- Power Finance Corporation Ltd., India
- Karaikal Port Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Rio Tinto Coal - Australia
- Straits Asia Resources Limited - Singapore
- Sindya Power Generating Company Private Ltd
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