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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, 03 December 14
SHIPPING MARKET INSIGHT - KONSTANTINOS KONTOMICHIS
The dry bulk market seems unable to turn sentiment round and is still looking for direction. The BCI's 887-point free fall last week had an obv ...
Wednesday, 03 December 14
CAPESIZE DRY BULK CARRIERS ENTER 2015 WITH MIXED FORTUNES, WITH A POSITIVE AND A NEGATIVE SCENARIO BOTH EMERGING - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The future of the Capesize dry bulk market appears to be engulfed from mixed “feelings” among analysts and market participants, despite ...
Tuesday, 02 December 14
KEY PLAYERS SHED NEW PERSPECTIVES ON COAL MARKETS
Press Release: Singapore’s ONLY and longest established Coal Trade event. Whilst Coal prices remain challenging, there is widespread consensu ...
Tuesday, 02 December 14
KOMIPO INVITES BIDS FOR 585,000 METRIC TONS OF COAL FOR Q1'15
COALspot.com - Korea Midland Power Co. Ltd. (KOMIPO) is inviting bids for the supply of 585,000 Metric Tons of coal. According to invitation, 5700 ...
Tuesday, 02 December 14
U.S WEEKLY COAL PRODUCTION FELL 1.4% WEEK ON WEEK - EIA
COALspot.com – United States the world's one of the largest coal producers, produced approximately 18.6 million short tons (mmst) o ...
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- MS Steel International - UAE
- Gujarat Mineral Development Corp Ltd - India
- CIMB Investment Bank - Malaysia
- Borneo Indobara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Independent Power Producers Association of India
- Krishnapatnam Port Company Ltd. - India
- IHS Mccloskey Coal Group - USA
- Simpson Spence & Young - Indonesia
- Essar Steel Hazira Ltd - India
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- International Coal Ventures Pvt Ltd - India
- Siam City Cement - Thailand
- Jaiprakash Power Ventures ltd
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- Holcim Trading Pte Ltd - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- Parliament of New Zealand
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- Makarim & Taira - Indonesia
- Cement Manufacturers Association - India
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- Metalloyd Limited - United Kingdom
- Electricity Authority, New Zealand
- Electricity Generating Authority of Thailand
- Indian Oil Corporation Limited
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- Commonwealth Bank - Australia
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- Mercator Lines Limited - India
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- Baramulti Group, Indonesia
- The University of Queensland
- Larsen & Toubro Limited - India
- Georgia Ports Authority, United States
- Edison Trading Spa - Italy
- Energy Link Ltd, New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Chamber of Mines of South Africa
- Bukit Makmur.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Ministry of Mines - Canada
- Therma Luzon, Inc, Philippines
- Indika Energy - Indonesia
- Posco Energy - South Korea
- GVK Power & Infra Limited - India
- Manunggal Multi Energi - Indonesia
- Port Waratah Coal Services - Australia
- Altura Mining Limited, Indonesia
- Oldendorff Carriers - Singapore
- Global Coal Blending Company Limited - Australia
- Star Paper Mills Limited - India
- Uttam Galva Steels Limited - India
- Straits Asia Resources Limited - Singapore
- Planning Commission, India
- Romanian Commodities Exchange
- Africa Commodities Group - South Africa
- Australian Coal Association
- White Energy Company Limited
- Aditya Birla Group - India
- Riau Bara Harum - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- Mercuria Energy - Indonesia
- Coalindo Energy - Indonesia
- Eastern Coal Council - USA
- Salva Resources Pvt Ltd - India
- Power Finance Corporation Ltd., India
- PetroVietnam Power Coal Import and Supply Company
- Bhatia International Limited - India
- Indian Energy Exchange, India
- Sojitz Corporation - Japan
- Jorong Barutama Greston.PT - Indonesia
- Trasteel International SA, Italy
- Globalindo Alam Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Heidelberg Cement - Germany
- Latin American Coal - Colombia
- Antam Resourcindo - Indonesia
- Wood Mackenzie - Singapore
- Goldman Sachs - Singapore
- Aboitiz Power Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Coastal Gujarat Power Limited - India
- Singapore Mercantile Exchange
- Semirara Mining and Power Corporation, Philippines
- The Treasury - Australian Government
- Videocon Industries ltd - India
- London Commodity Brokers - England
- Central Java Power - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bangladesh Power Developement Board
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- Intertek Mineral Services - Indonesia
- Interocean Group of Companies - India
- Bulk Trading Sa - Switzerland
- PTC India Limited - India
- Alfred C Toepfer International GmbH - Germany
- McConnell Dowell - Australia
- Renaissance Capital - South Africa
- TeaM Sual Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- San Jose City I Power Corp, Philippines
- Tata Chemicals Ltd - India
- ICICI Bank Limited - India
- Xindia Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Malabar Cements Ltd - India
- Meralco Power Generation, Philippines
- Iligan Light & Power Inc, Philippines
- Deloitte Consulting - India
- PNOC Exploration Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Maheswari Brothers Coal Limited - India
- Ambuja Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Medco Energi Mining Internasional
- Bhushan Steel Limited - India
- Indonesian Coal Mining Association
- Kaltim Prima Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- Grasim Industreis Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Eastern Energy - Thailand
- Savvy Resources Ltd - HongKong
- SMG Consultants - Indonesia
- Price Waterhouse Coopers - Russia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petron Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Thai Mozambique Logistica
- Thiess Contractors Indonesia
- Carbofer General Trading SA - India
- Karaikal Port Pvt Ltd - India
- Anglo American - United Kingdom
- Lanco Infratech Ltd - India
- Bukit Baiduri Energy - Indonesia
- Agrawal Coal Company - India
- Vijayanagar Sugar Pvt Ltd - India
- Central Electricity Authority - India
- Attock Cement Pakistan Limited
- Toyota Tsusho Corporation, Japan
- Banpu Public Company Limited - Thailand
- Bhoruka Overseas - Indonesia
- New Zealand Coal & Carbon
- Marubeni Corporation - India
- TNB Fuel Sdn Bhd - Malaysia
- Bharathi Cement Corporation - India
- Orica Australia Pty. Ltd.
- Indo Tambangraya Megah - Indonesia
- Ministry of Finance - Indonesia
- Sakthi Sugars Limited - India
- Neyveli Lignite Corporation Ltd, - India
- SMC Global Power, Philippines
- Sical Logistics Limited - India
- Economic Council, Georgia
- Coal and Oil Company - UAE
- PowerSource Philippines DevCo
- Mintek Dendrill Indonesia
- Sree Jayajothi Cements Limited - India
- South Luzon Thermal Energy Corporation
- Wilmar Investment Holdings
- Semirara Mining Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Minerals Council of Australia
- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
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- Indogreen Group - Indonesia
- OPG Power Generation Pvt Ltd - India
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- VISA Power Limited - India
- Gujarat Sidhee Cement - India
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