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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, 26 November 14
SHIPPING MARKET INSIGHT - EVA TZIMA
The tanker market has been enjoying some good returns lately. Ok, that may be a big understatement, but with all the ups and downs of the past year ...
Tuesday, 25 November 14
FISCAL BREAKEVEN OIL PRICES SHOW SOVEREIGN VULNERABILITY - FITCH
COALspot.com: The vulnerability of the sovereign credit profiles of net oil exporters, as shown by their fiscal breakeven oil prices, suggests that ...
Tuesday, 25 November 14
UK: TRIBUNAL RULES ON SPEED AND PERFORMANCE CLAIMS UNDER TWO CONSECUTIVE TIME CHARTERPARTIES - REED SMITH
KNOWLEDGE TO ELEVATE
“Owners not to be responsible if the vessel under the currency of this charter party stays at port or anchorage or ...
Tuesday, 25 November 14
FOB RICHARDS BAY COAL SWAP FOR Q4' 15 DELIVERY CLOSED AT US$ 68.20
COALspot.com: API 4 FOB Richards Bay Coal for delivery Q1' 2015 gained month on month, week on week and day over day.
The Q1 swap has gain ...
Tuesday, 25 November 14
SUB-BIT FOB INDONESIA COAL SWAP FOR Q2' 15 DELIVERY CLOSED AT $ 49.55
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month, gained week on week.
The Q1 swap has lost US$ 0.12 (-0.24%) ...
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- Jaiprakash Power Ventures ltd
- New Zealand Coal & Carbon
- Indian Oil Corporation Limited
- Kideco Jaya Agung - Indonesia
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Altura Mining Limited, Indonesia
- Parliament of New Zealand
- Vedanta Resources Plc - India
- PetroVietnam Power Coal Import and Supply Company
- Simpson Spence & Young - Indonesia
- Intertek Mineral Services - Indonesia
- Price Waterhouse Coopers - Russia
- Toyota Tsusho Corporation, Japan
- Coastal Gujarat Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ambuja Cements Ltd - India
- Interocean Group of Companies - India
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- Sindya Power Generating Company Private Ltd
- Semirara Mining and Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Deloitte Consulting - India
- GN Power Mariveles Coal Plant, Philippines
- Borneo Indobara - Indonesia
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- GVK Power & Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Orica Australia Pty. Ltd.
- Essar Steel Hazira Ltd - India
- Eastern Coal Council - USA
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- Electricity Authority, New Zealand
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- Mjunction Services Limited - India
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- Jindal Steel & Power Ltd - India
- CNBM International Corporation - China
- Commonwealth Bank - Australia
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- Power Finance Corporation Ltd., India
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- Merrill Lynch Commodities Europe
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- Wood Mackenzie - Singapore
- Economic Council, Georgia
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- Kartika Selabumi Mining - Indonesia
- Georgia Ports Authority, United States
- London Commodity Brokers - England
- Romanian Commodities Exchange
- Africa Commodities Group - South Africa
- Indogreen Group - Indonesia
- Timah Investasi Mineral - Indoneisa
- Renaissance Capital - South Africa
- Ministry of Mines - Canada
- IEA Clean Coal Centre - UK
- Parry Sugars Refinery, India
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- Meralco Power Generation, Philippines
- Makarim & Taira - Indonesia
- Therma Luzon, Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- Australian Commodity Traders Exchange
- Jorong Barutama Greston.PT - Indonesia
- The Treasury - Australian Government
- Goldman Sachs - Singapore
- McConnell Dowell - Australia
- Ministry of Transport, Egypt
- ICICI Bank Limited - India
- Meenaskhi Energy Private Limited - India
- Madhucon Powers Ltd - India
- Indian Energy Exchange, India
- Sojitz Corporation - Japan
- Chamber of Mines of South Africa
- Kohat Cement Company Ltd. - Pakistan
- Metalloyd Limited - United Kingdom
- Aditya Birla Group - India
- Standard Chartered Bank - UAE
- Lanco Infratech Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Bhatia International Limited - India
- Sakthi Sugars Limited - India
- VISA Power Limited - India
- Kobexindo Tractors - Indoneisa
- The State Trading Corporation of India Ltd
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- Salva Resources Pvt Ltd - India
- Petron Corporation, Philippines
- Indika Energy - Indonesia
- Tata Chemicals Ltd - India
- Bukit Baiduri Energy - Indonesia
- Coalindo Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Alfred C Toepfer International GmbH - Germany
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- Dalmia Cement Bharat India
- Siam City Cement - Thailand
- Riau Bara Harum - Indonesia
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- Bhoruka Overseas - Indonesia
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- Thiess Contractors Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Sinarmas Energy and Mining - Indonesia
- Electricity Generating Authority of Thailand
- Wilmar Investment Holdings
- Directorate General of MIneral and Coal - Indonesia
- Posco Energy - South Korea
- Latin American Coal - Colombia
- Kumho Petrochemical, South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Grasim Industreis Ltd - India
- Rio Tinto Coal - Australia
- Attock Cement Pakistan Limited
- Billiton Holdings Pty Ltd - Australia
- Baramulti Group, Indonesia
- Central Java Power - Indonesia
- San Jose City I Power Corp, Philippines
- Trasteel International SA, Italy
- Bulk Trading Sa - Switzerland
- Thai Mozambique Logistica
- Medco Energi Mining Internasional
- Central Electricity Authority - India
- IHS Mccloskey Coal Group - USA
- Marubeni Corporation - India
- GAC Shipping (India) Pvt Ltd
- Eastern Energy - Thailand
- European Bulk Services B.V. - Netherlands
- South Luzon Thermal Energy Corporation
- Samtan Co., Ltd - South Korea
- White Energy Company Limited
- Videocon Industries ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Formosa Plastics Group - Taiwan
- Port Waratah Coal Services - Australia
- Ceylon Electricity Board - Sri Lanka
- Aboitiz Power Corporation - Philippines
- Xindia Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Coal and Oil Company - UAE
- Holcim Trading Pte Ltd - Singapore
- Kapuas Tunggal Persada - Indonesia
- Sree Jayajothi Cements Limited - India
- Independent Power Producers Association of India
- Antam Resourcindo - Indonesia
- Binh Thuan Hamico - Vietnam
- SMC Global Power, Philippines
- Cement Manufacturers Association - India
- Bayan Resources Tbk. - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
- Energy Link Ltd, New Zealand
- Gujarat Sidhee Cement - India
- Semirara Mining Corp, Philippines
- Mercator Lines Limited - India
- Carbofer General Trading SA - India
- Uttam Galva Steels Limited - India
- Bangladesh Power Developement Board
- Savvy Resources Ltd - HongKong
- Bahari Cakrawala Sebuku - Indonesia
- Energy Development Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Karaikal Port Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- PNOC Exploration Corporation - Philippines
- Larsen & Toubro Limited - India
- Edison Trading Spa - Italy
- Global Business Power Corporation, Philippines
- Malabar Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Australian Coal Association
- Anglo American - United Kingdom
- Star Paper Mills Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Sical Logistics Limited - India
- Minerals Council of Australia
- Ministry of Finance - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
- Heidelberg Cement - Germany
- MS Steel International - UAE
- Iligan Light & Power Inc, Philippines
- PowerSource Philippines DevCo
- Rashtriya Ispat Nigam Limited - India
- Oldendorff Carriers - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karbindo Abesyapradhi - Indoneisa
- Indonesian Coal Mining Association
- Singapore Mercantile Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Mintek Dendrill Indonesia
- The University of Queensland
- Kaltim Prima Coal - Indonesia
- Tamil Nadu electricity Board
- CIMB Investment Bank - Malaysia
- OPG Power Generation Pvt Ltd - India
- Planning Commission, India
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