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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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Monday, 17 November 14
INDONESIAN COAL PRICE REFERENCE CONTINUES FREE FALL; SLUMPS TO 69-MONTH LOW
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down the coal bench mark price once again in November. HBA for t ...
Monday, 17 November 14
API 5 FOB NEWCASTLE COAL SWAP FOR Q1' 15 DELIVERY CLOSED AT $ 52.75
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery has decreased US$ 1.77 (-3.25%) month over month and US$ 0.02 (-0.04%) day ...
Monday, 17 November 14
SOUTH CHINA COAL SWAP SLIGHTLY INCREASED WEEK OVER WEEK
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery has decreased US$ 1.73 (-2.67%) month over month and US$ 0.10 (-0.16%) da ...
Sunday, 16 November 14
THE BDI LOST 12.59% WEEK ON WEEK; THE BCI LOST 19.95%
COALspot.com: The BDI fell 12.59 percent to 1256 point week on week on Friday 14 November. All the segments were also most down this week. The cape ...
Friday, 14 November 14
U.S. WEEKLY COAL OUTPUT SLIPS SLIGHTLY WEEK ENDING NOVEMBER 08
COALspot.com – United States the world's one of the largest coal producers, produced approximately 18.9 million short tons (mmst) of coal ...
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- Central Electricity Authority - India
- Iligan Light & Power Inc, Philippines
- Sakthi Sugars Limited - India
- Jaiprakash Power Ventures ltd
- Indika Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bangladesh Power Developement Board
- Posco Energy - South Korea
- Leighton Contractors Pty Ltd - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Semirara Mining Corp, Philippines
- Mintek Dendrill Indonesia
- Indo Tambangraya Megah - Indonesia
- Malabar Cements Ltd - India
- Vedanta Resources Plc - India
- Grasim Industreis Ltd - India
- Kideco Jaya Agung - Indonesia
- Larsen & Toubro Limited - India
- Madhucon Powers Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- Global Coal Blending Company Limited - Australia
- Chettinad Cement Corporation Ltd - India
- Antam Resourcindo - Indonesia
- The University of Queensland
- Offshore Bulk Terminal Pte Ltd, Singapore
- Riau Bara Harum - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Electricity Authority, New Zealand
- Coal and Oil Company - UAE
- Kepco SPC Power Corporation, Philippines
- Sojitz Corporation - Japan
- GN Power Mariveles Coal Plant, Philippines
- Krishnapatnam Port Company Ltd. - India
- The Treasury - Australian Government
- Planning Commission, India
- Indogreen Group - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Directorate General of MIneral and Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Goldman Sachs - Singapore
- Uttam Galva Steels Limited - India
- Vizag Seaport Private Limited - India
- Makarim & Taira - Indonesia
- Petron Corporation, Philippines
- Trasteel International SA, Italy
- PTC India Limited - India
- CIMB Investment Bank - Malaysia
- PowerSource Philippines DevCo
- Kumho Petrochemical, South Korea
- Directorate Of Revenue Intelligence - India
- Eastern Coal Council - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wood Mackenzie - Singapore
- Bukit Baiduri Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ceylon Electricity Board - Sri Lanka
- GMR Energy Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Jorong Barutama Greston.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Lanco Infratech Ltd - India
- Africa Commodities Group - South Africa
- Mercator Lines Limited - India
- Ministry of Mines - Canada
- Agrawal Coal Company - India
- Meralco Power Generation, Philippines
- Orica Australia Pty. Ltd.
- Heidelberg Cement - Germany
- Aboitiz Power Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Deloitte Consulting - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Standard Chartered Bank - UAE
- Wilmar Investment Holdings
- Holcim Trading Pte Ltd - Singapore
- Medco Energi Mining Internasional
- Formosa Plastics Group - Taiwan
- Sinarmas Energy and Mining - Indonesia
- TeaM Sual Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Central Java Power - Indonesia
- Merrill Lynch Commodities Europe
- Barasentosa Lestari - Indonesia
- SMC Global Power, Philippines
- Indian Energy Exchange, India
- Bhushan Steel Limited - India
- LBH Netherlands Bv - Netherlands
- Port Waratah Coal Services - Australia
- Rio Tinto Coal - Australia
- Altura Mining Limited, Indonesia
- Parry Sugars Refinery, India
- Global Green Power PLC Corporation, Philippines
- VISA Power Limited - India
- Mercuria Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Price Waterhouse Coopers - Russia
- Indonesian Coal Mining Association
- Commonwealth Bank - Australia
- Karaikal Port Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Eastern Energy - Thailand
- Baramulti Group, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- India Bulls Power Limited - India
- Star Paper Mills Limited - India
- Simpson Spence & Young - Indonesia
- Coalindo Energy - Indonesia
- Australian Coal Association
- Pipit Mutiara Jaya. PT, Indonesia
- Sarangani Energy Corporation, Philippines
- Chamber of Mines of South Africa
- Straits Asia Resources Limited - Singapore
- Siam City Cement PLC, Thailand
- IEA Clean Coal Centre - UK
- Binh Thuan Hamico - Vietnam
- ASAPP Information Group - India
- Globalindo Alam Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- Bharathi Cement Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- The State Trading Corporation of India Ltd
- Kartika Selabumi Mining - Indonesia
- San Jose City I Power Corp, Philippines
- Energy Development Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Timah Investasi Mineral - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Ministry of Finance - Indonesia
- Global Business Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Ind-Barath Power Infra Limited - India
- ICICI Bank Limited - India
- Sical Logistics Limited - India
- Coastal Gujarat Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Economic Council, Georgia
- Attock Cement Pakistan Limited
- MS Steel International - UAE
- Renaissance Capital - South Africa
- Gujarat Sidhee Cement - India
- Meenaskhi Energy Private Limited - India
- Banpu Public Company Limited - Thailand
- Electricity Generating Authority of Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Semirara Mining and Power Corporation, Philippines
- Georgia Ports Authority, United States
- South Luzon Thermal Energy Corporation
- Videocon Industries ltd - India
- Toyota Tsusho Corporation, Japan
- Bulk Trading Sa - Switzerland
- Power Finance Corporation Ltd., India
- Latin American Coal - Colombia
- OPG Power Generation Pvt Ltd - India
- SMG Consultants - Indonesia
- Aditya Birla Group - India
- Ambuja Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- Thai Mozambique Logistica
- Gujarat Mineral Development Corp Ltd - India
- McConnell Dowell - Australia
- GVK Power & Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- London Commodity Brokers - England
- Oldendorff Carriers - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Commodity Traders Exchange
- Tata Chemicals Ltd - India
- Minerals Council of Australia
- Energy Link Ltd, New Zealand
- Orica Mining Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Tamil Nadu electricity Board
- Mjunction Services Limited - India
- Bhoruka Overseas - Indonesia
- Essar Steel Hazira Ltd - India
- Borneo Indobara - Indonesia
- Anglo American - United Kingdom
- European Bulk Services B.V. - Netherlands
- Xindia Steels Limited - India
- New Zealand Coal & Carbon
- Jindal Steel & Power Ltd - India
- CNBM International Corporation - China
- International Coal Ventures Pvt Ltd - India
- White Energy Company Limited
- Independent Power Producers Association of India
- Marubeni Corporation - India
- Sree Jayajothi Cements Limited - India
- Dalmia Cement Bharat India
- Parliament of New Zealand
- Thiess Contractors Indonesia
- Samtan Co., Ltd - South Korea
- Salva Resources Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Kaltim Prima Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- Siam City Cement - Thailand
- Carbofer General Trading SA - India
- Singapore Mercantile Exchange
- Interocean Group of Companies - India
- Edison Trading Spa - Italy
- Bhatia International Limited - India
- Ministry of Transport, Egypt
- Maheswari Brothers Coal Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- Cement Manufacturers Association - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Romanian Commodities Exchange
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