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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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Thursday, 20 November 14
HANDY: INDO ROUNDS ARE BEING FIXED IN REGION OF US$ 10K - FEARNLEYS
Handy
In the Atlantic we have experienced firmer rates this week much lead by the grain activity out of USG. Vsls open in the USG can achieve in ...
Thursday, 20 November 14
DEMAND FOR DRY BULK CARRIERS INCREASES ON THE BACK OF HEIGHTENED FREIGHT RATE MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Ship owners are looking to take advantage of favorable market conditions through the acquisition of more dry bulk carriers. According to shipbroker ...
Wednesday, 19 November 14
INDONESIA FUEL-PRICE RISE A CLEAR, POSITIVE REFORM SIGNAL - FITCH
COALspot.com: Indonesia's hike of more than 30% in administered fuel prices, announced on 17 November, provides a clear, positive signal of the ...
Wednesday, 19 November 14
CAPES WERE UNDER PRESSURE; LOST 20% WITHIN A WEEK
COALspot.com: " The negative environment in which the week prior ended, marked this past week as well, which closed off on Friday noting the f ...
Wednesday, 19 November 14
SHIPPING MARKET INSIGHT - BY KATERINA RESTIS
The current Ebola outbreak in West Africa has been declared as a worldwide health emergency by the World Health Organization and has had a great im ...
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- Thai Mozambique Logistica
- Samtan Co., Ltd - South Korea
- Global Green Power PLC Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Essar Steel Hazira Ltd - India
- International Coal Ventures Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Kobexindo Tractors - Indoneisa
- Petron Corporation, Philippines
- Indian Oil Corporation Limited
- Madhucon Powers Ltd - India
- Edison Trading Spa - Italy
- Australian Coal Association
- AsiaOL BioFuels Corp., Philippines
- Maharashtra Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Romanian Commodities Exchange
- Orica Mining Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Maheswari Brothers Coal Limited - India
- Cement Manufacturers Association - India
- Georgia Ports Authority, United States
- Latin American Coal - Colombia
- Bangladesh Power Developement Board
- Indika Energy - Indonesia
- Kumho Petrochemical, South Korea
- Sarangani Energy Corporation, Philippines
- Borneo Indobara - Indonesia
- Mjunction Services Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Intertek Mineral Services - Indonesia
- TeaM Sual Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Bhushan Steel Limited - India
- Global Coal Blending Company Limited - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- Larsen & Toubro Limited - India
- CIMB Investment Bank - Malaysia
- Siam City Cement PLC, Thailand
- Krishnapatnam Port Company Ltd. - India
- Attock Cement Pakistan Limited
- Baramulti Group, Indonesia
- Ministry of Finance - Indonesia
- IHS Mccloskey Coal Group - USA
- Economic Council, Georgia
- Chettinad Cement Corporation Ltd - India
- Kaltim Prima Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Savvy Resources Ltd - HongKong
- Aditya Birla Group - India
- McConnell Dowell - Australia
- Bhatia International Limited - India
- Semirara Mining and Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Bharathi Cement Corporation - India
- Africa Commodities Group - South Africa
- Malabar Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- London Commodity Brokers - England
- Bukit Makmur.PT - Indonesia
- Karaikal Port Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Eastern Coal Council - USA
- Bukit Baiduri Energy - Indonesia
- GVK Power & Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- Mintek Dendrill Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Salva Resources Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Pendopo Energi Batubara - Indonesia
- ICICI Bank Limited - India
- Bhoruka Overseas - Indonesia
- Independent Power Producers Association of India
- Kalimantan Lumbung Energi - Indonesia
- Vedanta Resources Plc - India
- VISA Power Limited - India
- Simpson Spence & Young - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Lanco Infratech Ltd - India
- IEA Clean Coal Centre - UK
- Jaiprakash Power Ventures ltd
- Tata Chemicals Ltd - India
- Straits Asia Resources Limited - Singapore
- Carbofer General Trading SA - India
- Vizag Seaport Private Limited - India
- Formosa Plastics Group - Taiwan
- Parry Sugars Refinery, India
- Ceylon Electricity Board - Sri Lanka
- Planning Commission, India
- Meralco Power Generation, Philippines
- Medco Energi Mining Internasional
- Deloitte Consulting - India
- Timah Investasi Mineral - Indoneisa
- Sical Logistics Limited - India
- Orica Australia Pty. Ltd.
- SMC Global Power, Philippines
- The State Trading Corporation of India Ltd
- MS Steel International - UAE
- Merrill Lynch Commodities Europe
- Renaissance Capital - South Africa
- Standard Chartered Bank - UAE
- Uttam Galva Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- PowerSource Philippines DevCo
- Indian Energy Exchange, India
- Commonwealth Bank - Australia
- SN Aboitiz Power Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Wilmar Investment Holdings
- South Luzon Thermal Energy Corporation
- OPG Power Generation Pvt Ltd - India
- Videocon Industries ltd - India
- Iligan Light & Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Xindia Steels Limited - India
- Holcim Trading Pte Ltd - Singapore
- Central Java Power - Indonesia
- Trasteel International SA, Italy
- Altura Mining Limited, Indonesia
- Jindal Steel & Power Ltd - India
- Semirara Mining Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Billiton Holdings Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- White Energy Company Limited
- GMR Energy Limited - India
- Toyota Tsusho Corporation, Japan
- CNBM International Corporation - China
- Coalindo Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Energy - Thailand
- SMG Consultants - Indonesia
- Ministry of Mines - Canada
- Ministry of Transport, Egypt
- Tamil Nadu electricity Board
- Therma Luzon, Inc, Philippines
- Coastal Gujarat Power Limited - India
- Parliament of New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mercator Lines Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Heidelberg Cement - Germany
- Bayan Resources Tbk. - Indonesia
- Interocean Group of Companies - India
- Kepco SPC Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Energy Development Corp, Philippines
- The Treasury - Australian Government
- Anglo American - United Kingdom
- Metalloyd Limited - United Kingdom
- Miang Besar Coal Terminal - Indonesia
- San Jose City I Power Corp, Philippines
- Chamber of Mines of South Africa
- Kartika Selabumi Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- Agrawal Coal Company - India
- Gujarat Sidhee Cement - India
- Grasim Industreis Ltd - India
- Kideco Jaya Agung - Indonesia
- Sakthi Sugars Limited - India
- Thiess Contractors Indonesia
- Rio Tinto Coal - Australia
- Star Paper Mills Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- PTC India Limited - India
- Directorate Of Revenue Intelligence - India
- New Zealand Coal & Carbon
- PNOC Exploration Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Ambuja Cements Ltd - India
- Posco Energy - South Korea
- Rashtriya Ispat Nigam Limited - India
- Riau Bara Harum - Indonesia
- Sree Jayajothi Cements Limited - India
- Coal and Oil Company - UAE
- India Bulls Power Limited - India
- Sojitz Corporation - Japan
- Marubeni Corporation - India
- Minerals Council of Australia
- Mercuria Energy - Indonesia
- Global Business Power Corporation, Philippines
- Electricity Authority, New Zealand
- The University of Queensland
- Dalmia Cement Bharat India
- Central Electricity Authority - India
- Electricity Generating Authority of Thailand
- Meenaskhi Energy Private Limited - India
- Banpu Public Company Limited - Thailand
- Goldman Sachs - Singapore
- ASAPP Information Group - India
- Price Waterhouse Coopers - Russia
- Singapore Mercantile Exchange
- Makarim & Taira - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- TNB Fuel Sdn Bhd - Malaysia
- Wood Mackenzie - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement - Thailand
- Australian Commodity Traders Exchange
- Indonesian Coal Mining Association
- Gujarat Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cigading International Bulk Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Indo Tambangraya Megah - Indonesia
- Power Finance Corporation Ltd., India
- Indogreen Group - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kapuas Tunggal Persada - Indonesia
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