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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, 16 December 14
THIS PRICE IS A STEAL - EVA TZIMA
COALspot.com: Despite concerns that the slowdown of the Chinese economy would affect imports of iron ore, it seems that this has not been the case ...
Tuesday, 16 December 14
FOB RICHARDS BAY COAL SWAP FOR Q2' 15 DELIVERY CLOSED AT US$ 65.60 PMT
COALspot.com: API 4 FOB Richards Bay Coal for delivery Q1' 2015 lost month on month.
The Q1 swap has lost US$ 0.18 (-0.27%) month on month ...
Tuesday, 16 December 14
SUB-BIT FOB INDONESIA COAL SWAP CONTINUES ITS FALL
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month, week over week and day on day.
The Q1 swap has lost US$ 1.7 ...
Monday, 15 December 14
WILL TANKERS BENEFIT FROM REEMERGENCE OF FLOATING STORAGE PLAYS? - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The tanker market has been seeing high freight rates for some time now, riding on the back of low oil prices, which are boosting demand from develo ...
Monday, 15 December 14
INDONESIAN COAL PRICE REFERENCE CRASHES THROUGH $65
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down the coal bench mark price once again in December. HBA for t ...
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- LBH Netherlands Bv - Netherlands
- SMG Consultants - Indonesia
- Merrill Lynch Commodities Europe
- Krishnapatnam Port Company Ltd. - India
- Sree Jayajothi Cements Limited - India
- Orica Mining Services - Indonesia
- Globalindo Alam Lestari - Indonesia
- Parry Sugars Refinery, India
- Central Java Power - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Mineral Development Corp Ltd - India
- Coal and Oil Company - UAE
- Oldendorff Carriers - Singapore
- Mercuria Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Sojitz Corporation - Japan
- Singapore Mercantile Exchange
- Kumho Petrochemical, South Korea
- Bhatia International Limited - India
- Alfred C Toepfer International GmbH - Germany
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- Mercator Lines Limited - India
- Dalmia Cement Bharat India
- Marubeni Corporation - India
- International Coal Ventures Pvt Ltd - India
- Energy Development Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- MS Steel International - UAE
- Sindya Power Generating Company Private Ltd
- Medco Energi Mining Internasional
- IEA Clean Coal Centre - UK
- Orica Australia Pty. Ltd.
- Cement Manufacturers Association - India
- PTC India Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- Sical Logistics Limited - India
- Formosa Plastics Group - Taiwan
- Chettinad Cement Corporation Ltd - India
- San Jose City I Power Corp, Philippines
- Makarim & Taira - Indonesia
- Romanian Commodities Exchange
- Barasentosa Lestari - Indonesia
- Meralco Power Generation, Philippines
- Jindal Steel & Power Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Leighton Contractors Pty Ltd - Australia
- Minerals Council of Australia
- Attock Cement Pakistan Limited
- GVK Power & Infra Limited - India
- Posco Energy - South Korea
- Aboitiz Power Corporation - Philippines
- Baramulti Group, Indonesia
- London Commodity Brokers - England
- Riau Bara Harum - Indonesia
- Australian Commodity Traders Exchange
- Kobexindo Tractors - Indoneisa
- PowerSource Philippines DevCo
- Simpson Spence & Young - Indonesia
- European Bulk Services B.V. - Netherlands
- Georgia Ports Authority, United States
- Bhushan Steel Limited - India
- Standard Chartered Bank - UAE
- ICICI Bank Limited - India
- Mjunction Services Limited - India
- Chamber of Mines of South Africa
- Renaissance Capital - South Africa
- Toyota Tsusho Corporation, Japan
- Jorong Barutama Greston.PT - Indonesia
- Indian Oil Corporation Limited
- The University of Queensland
- Rio Tinto Coal - Australia
- Electricity Authority, New Zealand
- Africa Commodities Group - South Africa
- Bukit Makmur.PT - Indonesia
- Gujarat Sidhee Cement - India
- Sarangani Energy Corporation, Philippines
- Aditya Birla Group - India
- Ministry of Finance - Indonesia
- Altura Mining Limited, Indonesia
- Wood Mackenzie - Singapore
- McConnell Dowell - Australia
- Meenaskhi Energy Private Limited - India
- Kapuas Tunggal Persada - Indonesia
- Bangladesh Power Developement Board
- TNB Fuel Sdn Bhd - Malaysia
- Maheswari Brothers Coal Limited - India
- Thai Mozambique Logistica
- Banpu Public Company Limited - Thailand
- Bulk Trading Sa - Switzerland
- Samtan Co., Ltd - South Korea
- OPG Power Generation Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Wilmar Investment Holdings
- Planning Commission, India
- Timah Investasi Mineral - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- Anglo American - United Kingdom
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kohat Cement Company Ltd. - Pakistan
- Maharashtra Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- IHS Mccloskey Coal Group - USA
- Bhoruka Overseas - Indonesia
- Central Electricity Authority - India
- Star Paper Mills Limited - India
- Ambuja Cements Ltd - India
- Indian Energy Exchange, India
- Tamil Nadu electricity Board
- Siam City Cement - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Jaiprakash Power Ventures ltd
- Trasteel International SA, Italy
- Mintek Dendrill Indonesia
- Larsen & Toubro Limited - India
- GMR Energy Limited - India
- Edison Trading Spa - Italy
- Semirara Mining and Power Corporation, Philippines
- CNBM International Corporation - China
- Grasim Industreis Ltd - India
- Eastern Coal Council - USA
- Karaikal Port Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- New Zealand Coal & Carbon
- Global Business Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Straits Asia Resources Limited - Singapore
- South Luzon Thermal Energy Corporation
- Lanco Infratech Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Goldman Sachs - Singapore
- Pendopo Energi Batubara - Indonesia
- Coastal Gujarat Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- CIMB Investment Bank - Malaysia
- Billiton Holdings Pty Ltd - Australia
- Interocean Group of Companies - India
- Videocon Industries ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Semirara Mining Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kartika Selabumi Mining - Indonesia
- Savvy Resources Ltd - HongKong
- GN Power Mariveles Coal Plant, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Economic Council, Georgia
- Asmin Koalindo Tuhup - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Heidelberg Cement - Germany
- TeaM Sual Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Sakthi Sugars Limited - India
- Kepco SPC Power Corporation, Philippines
- Agrawal Coal Company - India
- Indika Energy - Indonesia
- White Energy Company Limited
- ASAPP Information Group - India
- Ministry of Mines - Canada
- India Bulls Power Limited - India
- Port Waratah Coal Services - Australia
- Indonesian Coal Mining Association
- Bukit Baiduri Energy - Indonesia
- Malabar Cements Ltd - India
- Borneo Indobara - Indonesia
- The Treasury - Australian Government
- Bayan Resources Tbk. - Indonesia
- VISA Power Limited - India
- Energy Link Ltd, New Zealand
- Xindia Steels Limited - India
- Australian Coal Association
- Bukit Asam (Persero) Tbk - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- Antam Resourcindo - Indonesia
- The State Trading Corporation of India Ltd
- Indogreen Group - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Petron Corporation, Philippines
- Madhucon Powers Ltd - India
- SMC Global Power, Philippines
- Miang Besar Coal Terminal - Indonesia
- Vedanta Resources Plc - India
- Essar Steel Hazira Ltd - India
- Uttam Galva Steels Limited - India
- Metalloyd Limited - United Kingdom
- Eastern Energy - Thailand
- SN Aboitiz Power Inc, Philippines
- Electricity Generating Authority of Thailand
- Commonwealth Bank - Australia
- Latin American Coal - Colombia
- Indo Tambangraya Megah - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Intertek Mineral Services - Indonesia
- Price Waterhouse Coopers - Russia
- Parliament of New Zealand
- Carbofer General Trading SA - India
- Tata Chemicals Ltd - India
- Coalindo Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Ministry of Transport, Egypt
- Ceylon Electricity Board - Sri Lanka
- Vizag Seaport Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Independent Power Producers Association of India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Deloitte Consulting - India
- Bharathi Cement Corporation - India
- PNOC Exploration Corporation - Philippines
- Thiess Contractors Indonesia
- Binh Thuan Hamico - Vietnam
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