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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, 28 November 14
NEW BIMCO CLAUSE AIMS TO REDUCE SUPPLIERS' RELIANCE ON SHIP ARREST FOR CHARTERERS' UNPAID BUNKERS
KNOWLEDGE TO ELEVATE
Ship owners can, on occasion, find themselves in the invidious position of suffering unexpected loss of hire due to a tim ...
Friday, 28 November 14
JSW ENERGY AND GRM RESOURCES JOIN GLOBALCOAL
COALspot.com: globalCOAL® announced yesterday that two new Market Members have joined its online coal trading platform. According globaCOAL&rsq ...
Thursday, 27 November 14
MINING SERVICES TAX SPIKED BY 233% - BISNIS INDONESIA
COALspot.com: The Energy and Mineral Resources Department of Indonesia said the tax contribution from mining services sector in the 3rd Q 2014 ...
Thursday, 27 November 14
PANAMAX : EXPECTATION'S FOR A STRONG END OF YEAR RUSH, DISAPPEAR DAY BY DAY - FEARNLEYS
Handy
“We have experienced a firming market the last couple of weeks. More activity from cargo owners in the Atlantic and less available to ...
Wednesday, 26 November 14
OVERSUPPLY OF TONNAGE PUSHED PANAMAX SEGMENT DOWN FOR ANOTHER WEEK
COALspot.com: The Dry Bulk market managed to reverse its course from the week prior and with the sole exception of the Panamax segment, we witnesse ...
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- Krishnapatnam Port Company Ltd. - India
- Globalindo Alam Lestari - Indonesia
- Kartika Selabumi Mining - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- Deloitte Consulting - India
- Chettinad Cement Corporation Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Singapore Mercantile Exchange
- Vizag Seaport Private Limited - India
- PowerSource Philippines DevCo
- Cement Manufacturers Association - India
- Marubeni Corporation - India
- Barasentosa Lestari - Indonesia
- Tata Chemicals Ltd - India
- Goldman Sachs - Singapore
- Georgia Ports Authority, United States
- Edison Trading Spa - Italy
- Economic Council, Georgia
- Lanco Infratech Ltd - India
- IEA Clean Coal Centre - UK
- Mjunction Services Limited - India
- Meralco Power Generation, Philippines
- Port Waratah Coal Services - Australia
- International Coal Ventures Pvt Ltd - India
- Indian Energy Exchange, India
- Aboitiz Power Corporation - Philippines
- Bhushan Steel Limited - India
- Commonwealth Bank - Australia
- Kaltim Prima Coal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Borneo Indobara - Indonesia
- McConnell Dowell - Australia
- VISA Power Limited - India
- San Jose City I Power Corp, Philippines
- Carbofer General Trading SA - India
- Bukit Makmur.PT - Indonesia
- Mercuria Energy - Indonesia
- Dalmia Cement Bharat India
- Trasteel International SA, Italy
- Bulk Trading Sa - Switzerland
- SN Aboitiz Power Inc, Philippines
- Rio Tinto Coal - Australia
- Energy Development Corp, Philippines
- Merrill Lynch Commodities Europe
- New Zealand Coal & Carbon
- Manunggal Multi Energi - Indonesia
- Eastern Energy - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Central Java Power - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Videocon Industries ltd - India
- Makarim & Taira - Indonesia
- Xindia Steels Limited - India
- Straits Asia Resources Limited - Singapore
- Coal and Oil Company - UAE
- Price Waterhouse Coopers - Russia
- Chamber of Mines of South Africa
- Oldendorff Carriers - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- GMR Energy Limited - India
- Electricity Authority, New Zealand
- ASAPP Information Group - India
- Parry Sugars Refinery, India
- Aditya Birla Group - India
- GAC Shipping (India) Pvt Ltd
- Sinarmas Energy and Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- Antam Resourcindo - Indonesia
- LBH Netherlands Bv - Netherlands
- Coastal Gujarat Power Limited - India
- Samtan Co., Ltd - South Korea
- Banpu Public Company Limited - Thailand
- The University of Queensland
- Kalimantan Lumbung Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Vedanta Resources Plc - India
- Sical Logistics Limited - India
- Leighton Contractors Pty Ltd - Australia
- ICICI Bank Limited - India
- Altura Mining Limited, Indonesia
- Meenaskhi Energy Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Independent Power Producers Association of India
- Tamil Nadu electricity Board
- Sakthi Sugars Limited - India
- Directorate Of Revenue Intelligence - India
- Maharashtra Electricity Regulatory Commission - India
- Planning Commission, India
- Australian Commodity Traders Exchange
- Indonesian Coal Mining Association
- Wood Mackenzie - Singapore
- Sarangani Energy Corporation, Philippines
- Riau Bara Harum - Indonesia
- Simpson Spence & Young - Indonesia
- Indian Oil Corporation Limited
- Malabar Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Indogreen Group - Indonesia
- Bhoruka Overseas - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Semirara Mining and Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Madhucon Powers Ltd - India
- White Energy Company Limited
- GVK Power & Infra Limited - India
- Rashtriya Ispat Nigam Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Uttam Galva Steels Limited - India
- Ind-Barath Power Infra Limited - India
- Bangladesh Power Developement Board
- Wilmar Investment Holdings
- Jindal Steel & Power Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Anglo American - United Kingdom
- Indika Energy - Indonesia
- MS Steel International - UAE
- Miang Besar Coal Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Parliament of New Zealand
- Kumho Petrochemical, South Korea
- Standard Chartered Bank - UAE
- Billiton Holdings Pty Ltd - Australia
- CIMB Investment Bank - Malaysia
- Indo Tambangraya Megah - Indonesia
- Metalloyd Limited - United Kingdom
- Thai Mozambique Logistica
- Sree Jayajothi Cements Limited - India
- IHS Mccloskey Coal Group - USA
- India Bulls Power Limited - India
- Baramulti Group, Indonesia
- Star Paper Mills Limited - India
- Maheswari Brothers Coal Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Pipit Mutiara Jaya. PT, Indonesia
- Heidelberg Cement - Germany
- Bharathi Cement Corporation - India
- Gujarat Sidhee Cement - India
- Ambuja Cements Ltd - India
- Essar Steel Hazira Ltd - India
- Orica Mining Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Power Finance Corporation Ltd., India
- Karbindo Abesyapradhi - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Global Business Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Bhatia International Limited - India
- Savvy Resources Ltd - HongKong
- The State Trading Corporation of India Ltd
- European Bulk Services B.V. - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Iligan Light & Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Karaikal Port Pvt Ltd - India
- Sojitz Corporation - Japan
- London Commodity Brokers - England
- Electricity Generating Authority of Thailand
- Larsen & Toubro Limited - India
- Coalindo Energy - Indonesia
- Medco Energi Mining Internasional
- Therma Luzon, Inc, Philippines
- Semirara Mining Corp, Philippines
- Siam City Cement - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sindya Power Generating Company Private Ltd
- The Treasury - Australian Government
- PNOC Exploration Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Minerals Council of Australia
- Africa Commodities Group - South Africa
- Ministry of Mines - Canada
- Posco Energy - South Korea
- Attock Cement Pakistan Limited
- Gujarat Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Interocean Group of Companies - India
- Siam City Cement PLC, Thailand
- CNBM International Corporation - China
- Timah Investasi Mineral - Indoneisa
- Orica Australia Pty. Ltd.
- Ministry of Finance - Indonesia
- Kepco SPC Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Grasim Industreis Ltd - India
- Salva Resources Pvt Ltd - India
- Mercator Lines Limited - India
- Binh Thuan Hamico - Vietnam
- Neyveli Lignite Corporation Ltd, - India
- Latin American Coal - Colombia
- PTC India Limited - India
- Romanian Commodities Exchange
- Petron Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Bukit Baiduri Energy - Indonesia
- Ministry of Transport, Egypt
- Renaissance Capital - South Africa
- OPG Power Generation Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- South Luzon Thermal Energy Corporation
- Mintek Dendrill Indonesia
- PetroVietnam Power Coal Import and Supply Company
- SMC Global Power, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thiess Contractors Indonesia
- Eastern Coal Council - USA
- SMG Consultants - Indonesia
- Global Green Power PLC Corporation, Philippines
- Agrawal Coal Company - India
- Australian Coal Association
- Energy Link Ltd, New Zealand
- Central Electricity Authority - India
- Global Coal Blending Company Limited - Australia
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