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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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- Global Green Power PLC Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Mercuria Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Attock Cement Pakistan Limited
- Directorate Of Revenue Intelligence - India
- Australian Commodity Traders Exchange
- Asmin Koalindo Tuhup - Indonesia
- Indo Tambangraya Megah - Indonesia
- Kideco Jaya Agung - Indonesia
- Standard Chartered Bank - UAE
- Romanian Commodities Exchange
- Jindal Steel & Power Ltd - India
- London Commodity Brokers - England
- White Energy Company Limited
- Karaikal Port Pvt Ltd - India
- Eastern Energy - Thailand
- Chamber of Mines of South Africa
- Orica Mining Services - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Parliament of New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Riau Bara Harum - Indonesia
- Bukit Makmur.PT - Indonesia
- Rio Tinto Coal - Australia
- Interocean Group of Companies - India
- Wilmar Investment Holdings
- Global Business Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- ICICI Bank Limited - India
- Timah Investasi Mineral - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Georgia Ports Authority, United States
- Eastern Coal Council - USA
- Manunggal Multi Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Oldendorff Carriers - Singapore
- Binh Thuan Hamico - Vietnam
- ASAPP Information Group - India
- Neyveli Lignite Corporation Ltd, - India
- Indonesian Coal Mining Association
- Siam City Cement PLC, Thailand
- Lanco Infratech Ltd - India
- Metalloyd Limited - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Meenaskhi Energy Private Limited - India
- Kepco SPC Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Energy Link Ltd, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- Singapore Mercantile Exchange
- AsiaOL BioFuels Corp., Philippines
- Larsen & Toubro Limited - India
- VISA Power Limited - India
- Medco Energi Mining Internasional
- IHS Mccloskey Coal Group - USA
- Bayan Resources Tbk. - Indonesia
- SMC Global Power, Philippines
- Maheswari Brothers Coal Limited - India
- OPG Power Generation Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- CIMB Investment Bank - Malaysia
- India Bulls Power Limited - India
- Parry Sugars Refinery, India
- Aditya Birla Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- MS Steel International - UAE
- Miang Besar Coal Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Tamil Nadu electricity Board
- Iligan Light & Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Jaiprakash Power Ventures ltd
- Bulk Trading Sa - Switzerland
- GN Power Mariveles Coal Plant, Philippines
- Goldman Sachs - Singapore
- Coastal Gujarat Power Limited - India
- Global Coal Blending Company Limited - Australia
- Mjunction Services Limited - India
- Sindya Power Generating Company Private Ltd
- European Bulk Services B.V. - Netherlands
- Toyota Tsusho Corporation, Japan
- The State Trading Corporation of India Ltd
- Heidelberg Cement - Germany
- International Coal Ventures Pvt Ltd - India
- Star Paper Mills Limited - India
- Uttam Galva Steels Limited - India
- Deloitte Consulting - India
- Trasteel International SA, Italy
- Formosa Plastics Group - Taiwan
- Coalindo Energy - Indonesia
- New Zealand Coal & Carbon
- Kumho Petrochemical, South Korea
- Economic Council, Georgia
- Energy Development Corp, Philippines
- Malabar Cements Ltd - India
- Banpu Public Company Limited - Thailand
- Salva Resources Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Meralco Power Generation, Philippines
- Latin American Coal - Colombia
- CNBM International Corporation - China
- Mintek Dendrill Indonesia
- Merrill Lynch Commodities Europe
- Bhoruka Overseas - Indonesia
- Ministry of Finance - Indonesia
- Sree Jayajothi Cements Limited - India
- GMR Energy Limited - India
- Vizag Seaport Private Limited - India
- Electricity Authority, New Zealand
- Aboitiz Power Corporation - Philippines
- Madhucon Powers Ltd - India
- Marubeni Corporation - India
- Kobexindo Tractors - Indoneisa
- McConnell Dowell - Australia
- Price Waterhouse Coopers - Russia
- Baramulti Group, Indonesia
- Ambuja Cements Ltd - India
- Mercator Lines Limited - India
- Kapuas Tunggal Persada - Indonesia
- Vedanta Resources Plc - India
- Sical Logistics Limited - India
- Kartika Selabumi Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Kaltim Prima Coal - Indonesia
- The Treasury - Australian Government
- LBH Netherlands Bv - Netherlands
- PetroVietnam Power Coal Import and Supply Company
- Videocon Industries ltd - India
- Petron Corporation, Philippines
- Thai Mozambique Logistica
- Central Java Power - Indonesia
- Samtan Co., Ltd - South Korea
- Essar Steel Hazira Ltd - India
- Sakthi Sugars Limited - India
- Cigading International Bulk Terminal - Indonesia
- Agrawal Coal Company - India
- Grasim Industreis Ltd - India
- Makarim & Taira - Indonesia
- Carbofer General Trading SA - India
- Therma Luzon, Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Thiess Contractors Indonesia
- Bangladesh Power Developement Board
- Altura Mining Limited, Indonesia
- Ministry of Mines - Canada
- Directorate General of MIneral and Coal - Indonesia
- PTC India Limited - India
- Anglo American - United Kingdom
- Minerals Council of Australia
- Central Electricity Authority - India
- TeaM Sual Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Australian Coal Association
- Straits Asia Resources Limited - Singapore
- Antam Resourcindo - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Kalimantan Lumbung Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Posco Energy - South Korea
- Orica Australia Pty. Ltd.
- GAC Shipping (India) Pvt Ltd
- PNOC Exploration Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Tata Chemicals Ltd - India
- Ind-Barath Power Infra Limited - India
- Ministry of Transport, Egypt
- Renaissance Capital - South Africa
- Bhatia International Limited - India
- Indika Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Sinarmas Energy and Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Borneo Indobara - Indonesia
- Indian Oil Corporation Limited
- Wood Mackenzie - Singapore
- Bharathi Cement Corporation - India
- IEA Clean Coal Centre - UK
- Electricity Generating Authority of Thailand
- Cement Manufacturers Association - India
- Africa Commodities Group - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhushan Steel Limited - India
- Edison Trading Spa - Italy
- TNB Fuel Sdn Bhd - Malaysia
- Kohat Cement Company Ltd. - Pakistan
- Barasentosa Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- Power Finance Corporation Ltd., India
- Indian Energy Exchange, India
- Xindia Steels Limited - India
- Semirara Mining Corp, Philippines
- Dalmia Cement Bharat India
- Krishnapatnam Port Company Ltd. - India
- Jorong Barutama Greston.PT - Indonesia
- SMG Consultants - Indonesia
- Pendopo Energi Batubara - Indonesia
- PowerSource Philippines DevCo
- GVK Power & Infra Limited - India
- Siam City Cement - Thailand
- Port Waratah Coal Services - Australia
- Coal and Oil Company - UAE
- Indogreen Group - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Planning Commission, India
- Savvy Resources Ltd - HongKong
- Independent Power Producers Association of India
- Sojitz Corporation - Japan
- The University of Queensland
- Intertek Mineral Services - Indonesia
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