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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, 02 December 14
FOB RICHARDS BAY COAL SWAPS LOST MONTH OVER MONTH
COALspot.com: API 4 FOB Richards Bay Coal for delivery Q1' 2015 lost month on month, week on week and day over day.
The Q1 swap has lost U ...
Tuesday, 02 December 14
SUB-BIT FOB INDONESIA COAL Q1' 15 DELIVERY SWAP CLOSED AT US$ 49.50
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$ 0.4 ...
Monday, 01 December 14
SGX'S FOB NEWCASTLE COAL SWAP FOR Q1' 2015 DELIVERY CLOSED AT US$ 52.50
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery closed at US$ 52.50 on 28 November after losing US$ 1.20 (-2.23%) month ove ...
Monday, 01 December 14
Q2' 15 DELIVERY CFR SOUTH CHINA COAL SWAP CLOSED 0.42% LOWER THAN Q1' 15 DELIVERY CLOSING
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery has decreased US$ 2.45 (-3.78%) month over month and US$ 0.67 (-1.06%) we ...
Sunday, 30 November 14
SUPRAMAX COAL FREIGHT RATES FROM INDONESIA TO INDIA : FIRM
COALspot.com: The BDI fell 171 points and closed at 1153 points on Friday 28 November 2014. The Cape index also lost 887 points and closed at 2151 ...
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- Sojitz Corporation - Japan
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- Indian Oil Corporation Limited
- European Bulk Services B.V. - Netherlands
- Edison Trading Spa - Italy
- PNOC Exploration Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- Australian Commodity Traders Exchange
- Globalindo Alam Lestari - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Miang Besar Coal Terminal - Indonesia
- Central Electricity Authority - India
- Rio Tinto Coal - Australia
- Semirara Mining and Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Tata Chemicals Ltd - India
- Marubeni Corporation - India
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- SMG Consultants - Indonesia
- Dalmia Cement Bharat India
- Karbindo Abesyapradhi - Indoneisa
- Cement Manufacturers Association - India
- Economic Council, Georgia
- Kapuas Tunggal Persada - Indonesia
- Georgia Ports Authority, United States
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Essar Steel Hazira Ltd - India
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- Global Business Power Corporation, Philippines
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- Romanian Commodities Exchange
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- IEA Clean Coal Centre - UK
- Heidelberg Cement - Germany
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- Australian Coal Association
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- Kumho Petrochemical, South Korea
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- London Commodity Brokers - England
- Manunggal Multi Energi - Indonesia
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- Pendopo Energi Batubara - Indonesia
- Indonesian Coal Mining Association
- Commonwealth Bank - Australia
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- Bangladesh Power Developement Board
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- Altura Mining Limited, Indonesia
- Kaltim Prima Coal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Price Waterhouse Coopers - Russia
- LBH Netherlands Bv - Netherlands
- Formosa Plastics Group - Taiwan
- Singapore Mercantile Exchange
- White Energy Company Limited
- Metalloyd Limited - United Kingdom
- Power Finance Corporation Ltd., India
- IHS Mccloskey Coal Group - USA
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- Mercuria Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Bulk Trading Sa - Switzerland
- Toyota Tsusho Corporation, Japan
- Banpu Public Company Limited - Thailand
- Karaikal Port Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Thiess Contractors Indonesia
- Simpson Spence & Young - Indonesia
- ICICI Bank Limited - India
- Wood Mackenzie - Singapore
- Renaissance Capital - South Africa
- Coal and Oil Company - UAE
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- The State Trading Corporation of India Ltd
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- New Zealand Coal & Carbon
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- Rashtriya Ispat Nigam Limited - India
- McConnell Dowell - Australia
- Straits Asia Resources Limited - Singapore
- AsiaOL BioFuels Corp., Philippines
- Orica Australia Pty. Ltd.
- Parliament of New Zealand
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- Gujarat Mineral Development Corp Ltd - India
- Holcim Trading Pte Ltd - Singapore
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- Indian Energy Exchange, India
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- PowerSource Philippines DevCo
- Antam Resourcindo - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Merrill Lynch Commodities Europe
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Madhucon Powers Ltd - India
- SN Aboitiz Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
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- Bukit Makmur.PT - Indonesia
- Barasentosa Lestari - Indonesia
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- Riau Bara Harum - Indonesia
- Ministry of Finance - Indonesia
- International Coal Ventures Pvt Ltd - India
- Electricity Generating Authority of Thailand
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- Samtan Co., Ltd - South Korea
- The University of Queensland
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- Pipit Mutiara Jaya. PT, Indonesia
- Energy Development Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
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- Baramulti Group, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- MS Steel International - UAE
- CIMB Investment Bank - Malaysia
- Agrawal Coal Company - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
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- CNBM International Corporation - China
- Sindya Power Generating Company Private Ltd
- Lanco Infratech Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Chamber of Mines of South Africa
- Directorate General of MIneral and Coal - Indonesia
- Carbofer General Trading SA - India
- Neyveli Lignite Corporation Ltd, - India
- GMR Energy Limited - India
- Coalindo Energy - Indonesia
- Mercator Lines Limited - India
- Savvy Resources Ltd - HongKong
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- Mintek Dendrill Indonesia
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- Eastern Coal Council - USA
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