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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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Friday, 14 November 14
MORE NATURAL GAS FROM RUSSIA TO HELP STABILISE CHINA PRICES - FITCH RATINGS
COALspot.com: Fitch Ratings has said possible additional natural gas supplies from Russia's OAO Gazprom to China via the Altai pipeline would h ...
Thursday, 13 November 14
SLOWER AND LOWER HAS BEEN THE TREND OF THE PANAMAX IN BOTH HEMISPHERES - FEARNLEYS
Handy
We are experiencing an oversupply of tonnage in the Atlantic which is out numbering the amount of cargoes, Fearnleys broker says in its lat ...
Thursday, 13 November 14
DRY BULK MARKET'S REBOUND HINGES ON IRON ORE OVERSUPPLY ISSUES MOVING FORWARD - HELLENIC SHIPPING NEWS
“One man’s benefit, is another man’s demise” is a phrase which can be used to describe today’s situation in the dry b ...
Thursday, 13 November 14
COAL MINISTER WANTS INDIA TO STOP COAL IMPORTS IN TWO OR THREE YEARS
COALspot.com: India to ramp up coal production to a billion tonnes by 2019 from its current level of 490 million tones. According to Power and Coal ...
Thursday, 13 November 14
MODERN DRY BULK SHIPS' PRICES START FIRMING UP - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
While the main story of the past few weeks has been the rebound of the dry bulk market, which has been a result of increased Chinese iron ore impor ...
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- India Bulls Power Limited - India
- Romanian Commodities Exchange
- Indian Energy Exchange, India
- New Zealand Coal & Carbon
- Lanco Infratech Ltd - India
- Chettinad Cement Corporation Ltd - India
- Interocean Group of Companies - India
- Pipit Mutiara Jaya. PT, Indonesia
- Thai Mozambique Logistica
- Salva Resources Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Global Coal Blending Company Limited - Australia
- Holcim Trading Pte Ltd - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Alfred C Toepfer International GmbH - Germany
- Binh Thuan Hamico - Vietnam
- Kumho Petrochemical, South Korea
- Semirara Mining and Power Corporation, Philippines
- Trasteel International SA, Italy
- CNBM International Corporation - China
- Australian Commodity Traders Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Sree Jayajothi Cements Limited - India
- Malabar Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- Renaissance Capital - South Africa
- Ministry of Finance - Indonesia
- Vedanta Resources Plc - India
- Samtan Co., Ltd - South Korea
- Mercuria Energy - Indonesia
- Africa Commodities Group - South Africa
- TeaM Sual Corporation - Philippines
- Merrill Lynch Commodities Europe
- Vizag Seaport Private Limited - India
- Mercator Lines Limited - India
- Global Business Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Rio Tinto Coal - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Deloitte Consulting - India
- Port Waratah Coal Services - Australia
- Siam City Cement - Thailand
- Banpu Public Company Limited - Thailand
- AsiaOL BioFuels Corp., Philippines
- Mintek Dendrill Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bharathi Cement Corporation - India
- Siam City Cement PLC, Thailand
- Heidelberg Cement - Germany
- Ambuja Cements Ltd - India
- ASAPP Information Group - India
- SMC Global Power, Philippines
- CIMB Investment Bank - Malaysia
- Goldman Sachs - Singapore
- Ministry of Mines - Canada
- The State Trading Corporation of India Ltd
- The Treasury - Australian Government
- Therma Luzon, Inc, Philippines
- Mjunction Services Limited - India
- Minerals Council of Australia
- Asmin Koalindo Tuhup - Indonesia
- Commonwealth Bank - Australia
- Miang Besar Coal Terminal - Indonesia
- Kobexindo Tractors - Indoneisa
- Toyota Tsusho Corporation, Japan
- Jorong Barutama Greston.PT - Indonesia
- Aditya Birla Group - India
- Dalmia Cement Bharat India
- Maharashtra Electricity Regulatory Commission - India
- Iligan Light & Power Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Antam Resourcindo - Indonesia
- Independent Power Producers Association of India
- Wilmar Investment Holdings
- Baramulti Group, Indonesia
- Madhucon Powers Ltd - India
- Central Electricity Authority - India
- Metalloyd Limited - United Kingdom
- Bhoruka Overseas - Indonesia
- Tamil Nadu electricity Board
- Jindal Steel & Power Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Sojitz Corporation - Japan
- MS Steel International - UAE
- Billiton Holdings Pty Ltd - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indonesian Coal Mining Association
- Sarangani Energy Corporation, Philippines
- Gujarat Sidhee Cement - India
- Orica Australia Pty. Ltd.
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coalindo Energy - Indonesia
- Posco Energy - South Korea
- VISA Power Limited - India
- Straits Asia Resources Limited - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Pendopo Energi Batubara - Indonesia
- Eastern Coal Council - USA
- Oldendorff Carriers - Singapore
- Timah Investasi Mineral - Indoneisa
- Directorate Of Revenue Intelligence - India
- Indogreen Group - Indonesia
- Orica Mining Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cement Manufacturers Association - India
- Electricity Generating Authority of Thailand
- Aboitiz Power Corporation - Philippines
- Makarim & Taira - Indonesia
- Sinarmas Energy and Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- GVK Power & Infra Limited - India
- Bukit Makmur.PT - Indonesia
- White Energy Company Limited
- ICICI Bank Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Sindya Power Generating Company Private Ltd
- South Luzon Thermal Energy Corporation
- Xindia Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Uttam Galva Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Medco Energi Mining Internasional
- Edison Trading Spa - Italy
- Petron Corporation, Philippines
- Parliament of New Zealand
- Gujarat Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- Bhatia International Limited - India
- Gujarat Mineral Development Corp Ltd - India
- The University of Queensland
- Karaikal Port Pvt Ltd - India
- Meralco Power Generation, Philippines
- Simpson Spence & Young - Indonesia
- Electricity Authority, New Zealand
- Anglo American - United Kingdom
- Sakthi Sugars Limited - India
- Planning Commission, India
- Kohat Cement Company Ltd. - Pakistan
- SMG Consultants - Indonesia
- Ministry of Transport, Egypt
- Carbofer General Trading SA - India
- Leighton Contractors Pty Ltd - Australia
- Indika Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Borneo Indobara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Global Green Power PLC Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Barasentosa Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Australian Coal Association
- International Coal Ventures Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Wood Mackenzie - Singapore
- Agrawal Coal Company - India
- Central Java Power - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Oil Corporation Limited
- PowerSource Philippines DevCo
- Latin American Coal - Colombia
- Bangladesh Power Developement Board
- Ind-Barath Power Infra Limited - India
- Power Finance Corporation Ltd., India
- Indo Tambangraya Megah - Indonesia
- Attock Cement Pakistan Limited
- PetroVietnam Power Coal Import and Supply Company
- Kepco SPC Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Standard Chartered Bank - UAE
- Directorate General of MIneral and Coal - Indonesia
- Bulk Trading Sa - Switzerland
- McConnell Dowell - Australia
- Altura Mining Limited, Indonesia
- Thiess Contractors Indonesia
- Georgia Ports Authority, United States
- Sical Logistics Limited - India
- Bayan Resources Tbk. - Indonesia
- Energy Link Ltd, New Zealand
- Parry Sugars Refinery, India
- Savvy Resources Ltd - HongKong
- Grasim Industreis Ltd - India
- Globalindo Alam Lestari - Indonesia
- London Commodity Brokers - England
- GMR Energy Limited - India
- Jaiprakash Power Ventures ltd
- Manunggal Multi Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kideco Jaya Agung - Indonesia
- Economic Council, Georgia
- Petrochimia International Co. Ltd.- Taiwan
- Singapore Mercantile Exchange
- Bhushan Steel Limited - India
- Riau Bara Harum - Indonesia
- European Bulk Services B.V. - Netherlands
- Price Waterhouse Coopers - Russia
- Energy Development Corp, Philippines
- Larsen & Toubro Limited - India
- Marubeni Corporation - India
- IHS Mccloskey Coal Group - USA
- SN Aboitiz Power Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Coal and Oil Company - UAE
- Videocon Industries ltd - India
- IEA Clean Coal Centre - UK
- Tata Chemicals Ltd - India
- Star Paper Mills Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Energy - Thailand
- Rashtriya Ispat Nigam Limited - India
- PTC India Limited - India
- Kaltim Prima Coal - Indonesia
- Coastal Gujarat Power Limited - India
- Semirara Mining Corp, Philippines
- Chamber of Mines of South Africa
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