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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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Wednesday, 10 December 14
SHIPPING MARKET INSIGHT - GEORGE ILIOPOULOS, INTERMODAL
COALspot.com: As 2014 is coming to an end, we look back to what has happened during the year and notice that SnP activity has been particularly sof ...
Wednesday, 10 December 14
WORLD HARD COAL MARKET 2014: PRODUCTION AND TRADE STAGNATING, IMPORTS TO GERMANY AND EUROPE ON THE DECLINE
Press Release: German Coal Importers Association (VDKi) criticizes regulations ordering reduction of CO2 emissions from coal-fired power plants as ...
Tuesday, 09 December 14
PRESSURE ON CHINA COAL MINERS TO CONTINUE DESPITE GOVERNMENT SUPPORT - FITCH
COALspot.com: Fitch Ratings says that Chinese coal mining companies will continue to be pressured by low prices, which will persist despite recent ...
Tuesday, 09 December 14
Q4' 2015, FOB INDONESIA COAL SWAP CLOSED AT $ 49.02 W/E 5 DEC
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$ 0.2 ...
Tuesday, 09 December 14
API 8 CFR SOUTH CHINA COAL SWAPS FELL 1.8% MONTH OVER MONTH
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery has decreased US$ 1.84 (-2.91%) month over month and US$ 0.95 (-1.52%) we ...
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- Intertek Mineral Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Madhucon Powers Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Thai Mozambique Logistica
- Bangladesh Power Developement Board
- Australian Coal Association
- Thiess Contractors Indonesia
- Price Waterhouse Coopers - Russia
- Sindya Power Generating Company Private Ltd
- Sojitz Corporation - Japan
- Merrill Lynch Commodities Europe
- Simpson Spence & Young - Indonesia
- Coastal Gujarat Power Limited - India
- Chamber of Mines of South Africa
- SMC Global Power, Philippines
- Interocean Group of Companies - India
- Power Finance Corporation Ltd., India
- PetroVietnam Power Coal Import and Supply Company
- Carbofer General Trading SA - India
- Semirara Mining Corp, Philippines
- Indika Energy - Indonesia
- CNBM International Corporation - China
- Kepco SPC Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Ministry of Mines - Canada
- TNB Fuel Sdn Bhd - Malaysia
- Leighton Contractors Pty Ltd - Australia
- Mercuria Energy - Indonesia
- Wilmar Investment Holdings
- Sakthi Sugars Limited - India
- India Bulls Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Global Green Power PLC Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Siam City Cement - Thailand
- White Energy Company Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mercator Lines Limited - India
- Bhushan Steel Limited - India
- Jindal Steel & Power Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- ICICI Bank Limited - India
- Siam City Cement PLC, Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Marubeni Corporation - India
- Georgia Ports Authority, United States
- The Treasury - Australian Government
- Indian Oil Corporation Limited
- San Jose City I Power Corp, Philippines
- Parry Sugars Refinery, India
- Energy Link Ltd, New Zealand
- Mjunction Services Limited - India
- Essar Steel Hazira Ltd - India
- Global Coal Blending Company Limited - Australia
- Singapore Mercantile Exchange
- Medco Energi Mining Internasional
- AsiaOL BioFuels Corp., Philippines
- Kartika Selabumi Mining - Indonesia
- Riau Bara Harum - Indonesia
- Kumho Petrochemical, South Korea
- Xindia Steels Limited - India
- PowerSource Philippines DevCo
- Alfred C Toepfer International GmbH - Germany
- Cigading International Bulk Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Eastern Coal Council - USA
- Binh Thuan Hamico - Vietnam
- Indian Energy Exchange, India
- PTC India Limited - India
- McConnell Dowell - Australia
- Kobexindo Tractors - Indoneisa
- Meralco Power Generation, Philippines
- Pendopo Energi Batubara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Maharashtra Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Latin American Coal - Colombia
- Trasteel International SA, Italy
- Bhoruka Overseas - Indonesia
- Directorate Of Revenue Intelligence - India
- Attock Cement Pakistan Limited
- ASAPP Information Group - India
- Savvy Resources Ltd - HongKong
- Edison Trading Spa - Italy
- LBH Netherlands Bv - Netherlands
- Meenaskhi Energy Private Limited - India
- Heidelberg Cement - Germany
- Malabar Cements Ltd - India
- Mintek Dendrill Indonesia
- Orica Australia Pty. Ltd.
- Dalmia Cement Bharat India
- GMR Energy Limited - India
- Vedanta Resources Plc - India
- Cement Manufacturers Association - India
- New Zealand Coal & Carbon
- Planning Commission, India
- Gujarat Electricity Regulatory Commission - India
- MS Steel International - UAE
- Ambuja Cements Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Africa Commodities Group - South Africa
- Baramulti Group, Indonesia
- Manunggal Multi Energi - Indonesia
- Altura Mining Limited, Indonesia
- Eastern Energy - Thailand
- IEA Clean Coal Centre - UK
- Electricity Authority, New Zealand
- Rashtriya Ispat Nigam Limited - India
- London Commodity Brokers - England
- Banpu Public Company Limited - Thailand
- International Coal Ventures Pvt Ltd - India
- Deloitte Consulting - India
- Ministry of Finance - Indonesia
- Bhatia International Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- The State Trading Corporation of India Ltd
- OPG Power Generation Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- The University of Queensland
- Star Paper Mills Limited - India
- Vizag Seaport Private Limited - India
- Renaissance Capital - South Africa
- Agrawal Coal Company - India
- Sree Jayajothi Cements Limited - India
- Formosa Plastics Group - Taiwan
- Aditya Birla Group - India
- Minerals Council of Australia
- Directorate General of MIneral and Coal - Indonesia
- Coal and Oil Company - UAE
- Orica Mining Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- GVK Power & Infra Limited - India
- Electricity Generating Authority of Thailand
- Barasentosa Lestari - Indonesia
- Ministry of Transport, Egypt
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Tata Chemicals Ltd - India
- Timah Investasi Mineral - Indoneisa
- SMG Consultants - Indonesia
- Parliament of New Zealand
- Makarim & Taira - Indonesia
- Metalloyd Limited - United Kingdom
- Straits Asia Resources Limited - Singapore
- Commonwealth Bank - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Uttam Galva Steels Limited - India
- Rio Tinto Coal - Australia
- Ind-Barath Power Infra Limited - India
- Indonesian Coal Mining Association
- VISA Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Jaiprakash Power Ventures ltd
- Economic Council, Georgia
- Bulk Trading Sa - Switzerland
- Billiton Holdings Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Petron Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Posco Energy - South Korea
- Therma Luzon, Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Lanco Infratech Ltd - India
- Salva Resources Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Bharathi Cement Corporation - India
- Indogreen Group - Indonesia
- IHS Mccloskey Coal Group - USA
- Wood Mackenzie - Singapore
- Aboitiz Power Corporation - Philippines
- Grasim Industreis Ltd - India
- Tamil Nadu electricity Board
- Australian Commodity Traders Exchange
- Chettinad Cement Corporation Ltd - India
- Energy Development Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Independent Power Producers Association of India
- Goldman Sachs - Singapore
- Kideco Jaya Agung - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bukit Makmur.PT - Indonesia
- Gujarat Sidhee Cement - India
- SN Aboitiz Power Inc, Philippines
- TeaM Sual Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Anglo American - United Kingdom
- South Luzon Thermal Energy Corporation
- Romanian Commodities Exchange
- Holcim Trading Pte Ltd - Singapore
- Sical Logistics Limited - India
- Larsen & Toubro Limited - India
- Karaikal Port Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Central Electricity Authority - India
- PNOC Exploration Corporation - Philippines
- Antam Resourcindo - Indonesia
- Central Java Power - Indonesia
- Borneo Indobara - Indonesia
- CIMB Investment Bank - Malaysia
- Port Waratah Coal Services - Australia
- Maheswari Brothers Coal Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Videocon Industries ltd - India
- GAC Shipping (India) Pvt Ltd
- Bahari Cakrawala Sebuku - Indonesia
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