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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, 18 November 14
VALEMAX DEAL TO DETERMINE DRY BULK MARKET'S FATE - DREWRY MARITIME RESEARCH
Vale’s accord to sell and lease four Valemax vessels to COSCO might have negative repercussions on dry bulk freight rates. Vale has committed ...
Tuesday, 18 November 14
SUB-BIT FOB INDONESIA COAL SWAP DELIVERY Q2' 2015 CLOSED AT $ 49.55; DOWN 4.10% M-O-M
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month, gained week on week and day on day.
The Q1 swap has lost US ...
Tuesday, 18 November 14
FOB RICHARDS BAY COAL SWAP FOR Q1' 2015 DELIVERY CLOSED AT $ 66.31; UP 1.33% W-O-W
COALspot.com: API 4 FOB Richards Bay Coal swap for Q1’ 2015 delivery has gained US$ 0.27 (+0.41%) month over month and US$ 0.87 (+1.33%) week ...
Tuesday, 18 November 14
CHEAP OIL PRICES COULD RESHAPE GLOBAL OIL EXPORTING MAP - HELLENIC SHIPPING
Tanker owners have enjoyed a rather healthy 2014, but as the year draws to a close, the fall of oil prices is bound to reshape traditional, as well ...
Monday, 17 November 14
SKULD ISSUES URGENT NOTICE ON BANKRUPTCY OF OW BUNKER A/S
Further to the Association’s advices of 7 November 2014, more information has come to light with respect to the potential impact and scale of ...
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- Asmin Koalindo Tuhup - Indonesia
- Sojitz Corporation - Japan
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement - Thailand
- Holcim Trading Pte Ltd - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Transport, Egypt
- Bukit Baiduri Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Medco Energi Mining Internasional
- Maheswari Brothers Coal Limited - India
- Toyota Tsusho Corporation, Japan
- CIMB Investment Bank - Malaysia
- Electricity Authority, New Zealand
- Indonesian Coal Mining Association
- Xindia Steels Limited - India
- Edison Trading Spa - Italy
- ICICI Bank Limited - India
- Chamber of Mines of South Africa
- Directorate Of Revenue Intelligence - India
- Baramulti Group, Indonesia
- Energy Development Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Marubeni Corporation - India
- Globalindo Alam Lestari - Indonesia
- Ind-Barath Power Infra Limited - India
- Sindya Power Generating Company Private Ltd
- Renaissance Capital - South Africa
- Electricity Generating Authority of Thailand
- Star Paper Mills Limited - India
- Ministry of Mines - Canada
- Mercator Lines Limited - India
- VISA Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- GMR Energy Limited - India
- Bhushan Steel Limited - India
- Chettinad Cement Corporation Ltd - India
- Petron Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- International Coal Ventures Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Siam City Cement PLC, Thailand
- GAC Shipping (India) Pvt Ltd
- PTC India Limited - India
- PowerSource Philippines DevCo
- Global Business Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Indika Energy - Indonesia
- Planning Commission, India
- Formosa Plastics Group - Taiwan
- Bhatia International Limited - India
- Bukit Makmur.PT - Indonesia
- San Jose City I Power Corp, Philippines
- Banpu Public Company Limited - Thailand
- Romanian Commodities Exchange
- Orica Australia Pty. Ltd.
- London Commodity Brokers - England
- Commonwealth Bank - Australia
- Gujarat Mineral Development Corp Ltd - India
- Thiess Contractors Indonesia
- Straits Asia Resources Limited - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- The State Trading Corporation of India Ltd
- Antam Resourcindo - Indonesia
- Merrill Lynch Commodities Europe
- Rio Tinto Coal - Australia
- Pendopo Energi Batubara - Indonesia
- Kartika Selabumi Mining - Indonesia
- Kaltim Prima Coal - Indonesia
- Georgia Ports Authority, United States
- Eastern Energy - Thailand
- Intertek Mineral Services - Indonesia
- Mjunction Services Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Heidelberg Cement - Germany
- Aboitiz Power Corporation - Philippines
- PNOC Exploration Corporation - Philippines
- Minerals Council of Australia
- White Energy Company Limited
- Parry Sugars Refinery, India
- Central Electricity Authority - India
- Savvy Resources Ltd - HongKong
- Bulk Trading Sa - Switzerland
- Offshore Bulk Terminal Pte Ltd, Singapore
- Makarim & Taira - Indonesia
- Jindal Steel & Power Ltd - India
- Deloitte Consulting - India
- Thai Mozambique Logistica
- Therma Luzon, Inc, Philippines
- Independent Power Producers Association of India
- Ambuja Cements Ltd - India
- Energy Link Ltd, New Zealand
- Uttam Galva Steels Limited - India
- Larsen & Toubro Limited - India
- AsiaOL BioFuels Corp., Philippines
- The Treasury - Australian Government
- Karaikal Port Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Finance - Indonesia
- Standard Chartered Bank - UAE
- Interocean Group of Companies - India
- Gujarat Electricity Regulatory Commission - India
- Australian Coal Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bharathi Cement Corporation - India
- CNBM International Corporation - China
- South Luzon Thermal Energy Corporation
- Timah Investasi Mineral - Indoneisa
- IEA Clean Coal Centre - UK
- Eastern Coal Council - USA
- New Zealand Coal & Carbon
- GVK Power & Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- PetroVietnam Power Coal Import and Supply Company
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Coalindo Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Mercuria Energy - Indonesia
- Posco Energy - South Korea
- Semirara Mining and Power Corporation, Philippines
- SMG Consultants - Indonesia
- Altura Mining Limited, Indonesia
- Attock Cement Pakistan Limited
- The University of Queensland
- Latin American Coal - Colombia
- Kumho Petrochemical, South Korea
- Parliament of New Zealand
- European Bulk Services B.V. - Netherlands
- Sree Jayajothi Cements Limited - India
- Aditya Birla Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cement Manufacturers Association - India
- Bangladesh Power Developement Board
- IHS Mccloskey Coal Group - USA
- Lanco Infratech Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Vizag Seaport Private Limited - India
- Binh Thuan Hamico - Vietnam
- Malabar Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Gujarat Sidhee Cement - India
- Carbofer General Trading SA - India
- Bayan Resources Tbk. - Indonesia
- Meralco Power Generation, Philippines
- Salva Resources Pvt Ltd - India
- Economic Council, Georgia
- Madhucon Powers Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Tamil Nadu electricity Board
- Videocon Industries ltd - India
- McConnell Dowell - Australia
- Manunggal Multi Energi - Indonesia
- Samtan Co., Ltd - South Korea
- Cigading International Bulk Terminal - Indonesia
- Dalmia Cement Bharat India
- Mintek Dendrill Indonesia
- OPG Power Generation Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- India Bulls Power Limited - India
- Africa Commodities Group - South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Indian Oil Corporation Limited
- Kideco Jaya Agung - Indonesia
- Australian Commodity Traders Exchange
- Leighton Contractors Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- Vedanta Resources Plc - India
- Singapore Mercantile Exchange
- Central Java Power - Indonesia
- Oldendorff Carriers - Singapore
- Coastal Gujarat Power Limited - India
- Iligan Light & Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- Indogreen Group - Indonesia
- Trasteel International SA, Italy
- ASAPP Information Group - India
- Miang Besar Coal Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Kohat Cement Company Ltd. - Pakistan
- Indian Energy Exchange, India
- Petrochimia International Co. Ltd.- Taiwan
- Sinarmas Energy and Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Jaiprakash Power Ventures ltd
- Billiton Holdings Pty Ltd - Australia
- Barasentosa Lestari - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- SMC Global Power, Philippines
- Anglo American - United Kingdom
- Wood Mackenzie - Singapore
- MS Steel International - UAE
- Tata Chemicals Ltd - India
- Simpson Spence & Young - Indonesia
- Sakthi Sugars Limited - India
- Agrawal Coal Company - India
- Orica Mining Services - Indonesia
- Riau Bara Harum - Indonesia
- Coal and Oil Company - UAE
- Goldman Sachs - Singapore
- Power Finance Corporation Ltd., India
- Kobexindo Tractors - Indoneisa
- Wilmar Investment Holdings
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Port Waratah Coal Services - Australia
- SN Aboitiz Power Inc, Philippines
- Borneo Indobara - Indonesia
- Sical Logistics Limited - India
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