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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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Saturday, 22 November 14
THE FALL IN BUNKER PRICES REDUCE FUEL COSTS SIGNIFICANTLY - BIMCO, PETER SAND
For a ship that burns 24 tonnes of fuel per day while steaming, fuel costs are reduced by as much as USD 1 million a year if current price level st ...
Saturday, 22 November 14
DRY BULKERS NEWBUILDING DELIVERIES REACHED 11.8 MILLION DWT DURING THIRD QUARTER, NET FLEET GROWTH FOR 2014 TO REACH 5% - HELLENIC SHIPPING NEWS
The dry bulk market has rebounded since its less than impressive performance since the start of the year, but overall, third quarter figures could ...
Friday, 21 November 14
BUMI ENTERS INTO CONDITIONAL SALE & PURCHASE AGREEMENT TO SELL FBS STAKE
COALspot.com: PT Bumi Resources Tbk, one of the Indonesia's largest coal producers confirms that it has executed a Conditional Sale and Purchas ...
Friday, 21 November 14
U.S LAST WEEK'S COAL PRODUCTION STAYS FLAT W-O-W
COALspot.com – United States the world's one of the largest coal producers, produced approximately 18.9 million short tons (mmst) of coal ...
Thursday, 20 November 14
MOST MAJOR ASIAN ECONOMIES TO BENEFIT FROM LOWER OIL - FITCH
COALspot.com: The 25% drop in the price of oil since July is likely to lift economic growth prospects, improve terms of trade, and have a pot ...
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- Energy Link Ltd, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Posco Energy - South Korea
- Minerals Council of Australia
- Sical Logistics Limited - India
- Rashtriya Ispat Nigam Limited - India
- South Luzon Thermal Energy Corporation
- Ministry of Mines - Canada
- Ambuja Cements Ltd - India
- PowerSource Philippines DevCo
- Mjunction Services Limited - India
- SN Aboitiz Power Inc, Philippines
- Bhushan Steel Limited - India
- Global Green Power PLC Corporation, Philippines
- Madhucon Powers Ltd - India
- India Bulls Power Limited - India
- Port Waratah Coal Services - Australia
- Maheswari Brothers Coal Limited - India
- Gujarat Sidhee Cement - India
- Riau Bara Harum - Indonesia
- Mercator Lines Limited - India
- Coalindo Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Global Business Power Corporation, Philippines
- Independent Power Producers Association of India
- Medco Energi Mining Internasional
- Jorong Barutama Greston.PT - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Mintek Dendrill Indonesia
- Global Coal Blending Company Limited - Australia
- Asmin Koalindo Tuhup - Indonesia
- Bhoruka Overseas - Indonesia
- Energy Development Corp, Philippines
- Planning Commission, India
- AsiaOL BioFuels Corp., Philippines
- Aditya Birla Group - India
- OPG Power Generation Pvt Ltd - India
- Mercuria Energy - Indonesia
- McConnell Dowell - Australia
- Bangladesh Power Developement Board
- Gujarat Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- Antam Resourcindo - Indonesia
- PNOC Exploration Corporation - Philippines
- Lanco Infratech Ltd - India
- Samtan Co., Ltd - South Korea
- TeaM Sual Corporation - Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Coal Association
- Salva Resources Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Straits Asia Resources Limited - Singapore
- Central Java Power - Indonesia
- Eastern Coal Council - USA
- Attock Cement Pakistan Limited
- Indian Oil Corporation Limited
- Indogreen Group - Indonesia
- The State Trading Corporation of India Ltd
- Sree Jayajothi Cements Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Larsen & Toubro Limited - India
- International Coal Ventures Pvt Ltd - India
- Siam City Cement - Thailand
- Sakthi Sugars Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Georgia Ports Authority, United States
- GVK Power & Infra Limited - India
- Power Finance Corporation Ltd., India
- Sojitz Corporation - Japan
- IEA Clean Coal Centre - UK
- Kepco SPC Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Uttam Galva Steels Limited - India
- Grasim Industreis Ltd - India
- Simpson Spence & Young - Indonesia
- Agrawal Coal Company - India
- Iligan Light & Power Inc, Philippines
- Wilmar Investment Holdings
- Krishnapatnam Port Company Ltd. - India
- Sindya Power Generating Company Private Ltd
- San Jose City I Power Corp, Philippines
- Indika Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Aboitiz Power Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Timah Investasi Mineral - Indoneisa
- Tamil Nadu electricity Board
- Savvy Resources Ltd - HongKong
- Interocean Group of Companies - India
- MS Steel International - UAE
- Kaltim Prima Coal - Indonesia
- Deloitte Consulting - India
- Kalimantan Lumbung Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Formosa Plastics Group - Taiwan
- Heidelberg Cement - Germany
- Commonwealth Bank - Australia
- Meenaskhi Energy Private Limited - India
- Semirara Mining Corp, Philippines
- Standard Chartered Bank - UAE
- Bulk Trading Sa - Switzerland
- CIMB Investment Bank - Malaysia
- The University of Queensland
- Romanian Commodities Exchange
- Vedanta Resources Plc - India
- Vijayanagar Sugar Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Borneo Indobara - Indonesia
- Star Paper Mills Limited - India
- Alfred C Toepfer International GmbH - Germany
- GMR Energy Limited - India
- Chettinad Cement Corporation Ltd - India
- Baramulti Group, Indonesia
- CNBM International Corporation - China
- Latin American Coal - Colombia
- The Treasury - Australian Government
- Parliament of New Zealand
- PTC India Limited - India
- Africa Commodities Group - South Africa
- Karbindo Abesyapradhi - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Ind-Barath Power Infra Limited - India
- Edison Trading Spa - Italy
- Jaiprakash Power Ventures ltd
- Bhatia International Limited - India
- Merrill Lynch Commodities Europe
- Dalmia Cement Bharat India
- Banpu Public Company Limited - Thailand
- Bharathi Cement Corporation - India
- IHS Mccloskey Coal Group - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- Manunggal Multi Energi - Indonesia
- Thiess Contractors Indonesia
- Bayan Resources Tbk. - Indonesia
- Pendopo Energi Batubara - Indonesia
- Makarim & Taira - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Videocon Industries ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Trasteel International SA, Italy
- ICICI Bank Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Transport, Egypt
- SMG Consultants - Indonesia
- LBH Netherlands Bv - Netherlands
- Holcim Trading Pte Ltd - Singapore
- GAC Shipping (India) Pvt Ltd
- Rio Tinto Coal - Australia
- Sinarmas Energy and Mining - Indonesia
- Xindia Steels Limited - India
- Australian Commodity Traders Exchange
- Therma Luzon, Inc, Philippines
- Parry Sugars Refinery, India
- European Bulk Services B.V. - Netherlands
- Thai Mozambique Logistica
- Tata Chemicals Ltd - India
- Coastal Gujarat Power Limited - India
- Toyota Tsusho Corporation, Japan
- Bahari Cakrawala Sebuku - Indonesia
- VISA Power Limited - India
- Vizag Seaport Private Limited - India
- Petron Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- Bukit Makmur.PT - Indonesia
- Orica Mining Services - Indonesia
- Electricity Generating Authority of Thailand
- Coal and Oil Company - UAE
- White Energy Company Limited
- Kumho Petrochemical, South Korea
- Directorate Of Revenue Intelligence - India
- Cement Manufacturers Association - India
- Singapore Mercantile Exchange
- Karaikal Port Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Bukit Baiduri Energy - Indonesia
- Anglo American - United Kingdom
- Cigading International Bulk Terminal - Indonesia
- Chamber of Mines of South Africa
- Kobexindo Tractors - Indoneisa
- Goldman Sachs - Singapore
- Meralco Power Generation, Philippines
- Central Electricity Authority - India
- Altura Mining Limited, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Marubeni Corporation - India
- Ministry of Finance - Indonesia
- Indonesian Coal Mining Association
- SMC Global Power, Philippines
- Eastern Energy - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Wood Mackenzie - Singapore
- Malabar Cements Ltd - India
- Oldendorff Carriers - Singapore
- Barasentosa Lestari - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Economic Council, Georgia
- Sarangani Energy Corporation, Philippines
- Electricity Authority, New Zealand
- London Commodity Brokers - England
- Indian Energy Exchange, India
- Carbofer General Trading SA - India
- Jindal Steel & Power Ltd - India
- ASAPP Information Group - India
- Price Waterhouse Coopers - Russia
- New Zealand Coal & Carbon
- Renaissance Capital - South Africa
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