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