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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, 04 November 14
FOB NEWCASTLE COAL SWAPS GAINED WEEK OVER WEEK
COALspot.com: API 5 FOB Newcastle Coal swap for Q4’ 2014 delivery decreased US$ 1.09 (-1.99%) month over month and increased US$ 0.31 (+0.58% ...
Monday, 03 November 14
ADARO PRODUCED 41.90MT OF COAL FOR FIRST 9 MONTHS OF 2014
COALspot.com: Adaro’s coal production in the third quarter reached 14.03 Mt, a 2% increase compared to the same period of last year. Accordin ...
Monday, 03 November 14
CFR SOUTH CHINA COAL SWAP FOR Q4' 2014 DELIVERY LOST 2.80% MONTH OVER MONTH
COALspot.com: API 8 CFR South China Coal swap for Q4’ 2014 delivery has decreased US$ 1.86 (-2.80%) month over month and increased US$ 0.37 ( ...
Monday, 03 November 14
INDONESIAN'S COAL EXPORTS JUMP IN SEPTEMBER
COALspot.com: Indonesia, one of the world's largest coal producers and the global leading multi grade coal exporter shipped around $1.50 ...
Sunday, 02 November 14
CAPE INDEX WAS UP 46.65% WEEK ON WEEK
COALspot.com: The BDI and Cape index continued the strong upward trend this week. The BDI was up 19.80 pct and Cape index was up by 46.65 per ...
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- Kideco Jaya Agung - Indonesia
- Thai Mozambique Logistica
- Makarim & Taira - Indonesia
- SMG Consultants - Indonesia
- Mintek Dendrill Indonesia
- Electricity Generating Authority of Thailand
- Sarangani Energy Corporation, Philippines
- Borneo Indobara - Indonesia
- Simpson Spence & Young - Indonesia
- India Bulls Power Limited - India
- Timah Investasi Mineral - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Intertek Mineral Services - Indonesia
- Dalmia Cement Bharat India
- Indo Tambangraya Megah - Indonesia
- Goldman Sachs - Singapore
- Tata Chemicals Ltd - India
- Deloitte Consulting - India
- Sree Jayajothi Cements Limited - India
- Marubeni Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- Iligan Light & Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Heidelberg Cement - Germany
- LBH Netherlands Bv - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- Energy Development Corp, Philippines
- Vedanta Resources Plc - India
- Australian Commodity Traders Exchange
- Commonwealth Bank - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Anglo American - United Kingdom
- Indian Energy Exchange, India
- Kepco SPC Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhatia International Limited - India
- Kumho Petrochemical, South Korea
- Minerals Council of Australia
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- Jindal Steel & Power Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- New Zealand Coal & Carbon
- Barasentosa Lestari - Indonesia
- Grasim Industreis Ltd - India
- Toyota Tsusho Corporation, Japan
- Mercator Lines Limited - India
- Antam Resourcindo - Indonesia
- Bayan Resources Tbk. - Indonesia
- Lanco Infratech Ltd - India
- White Energy Company Limited
- Chamber of Mines of South Africa
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- AsiaOL BioFuels Corp., Philippines
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- Maheswari Brothers Coal Limited - India
- McConnell Dowell - Australia
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- Georgia Ports Authority, United States
- Indian Oil Corporation Limited
- Chettinad Cement Corporation Ltd - India
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- Offshore Bulk Terminal Pte Ltd, Singapore
- South Luzon Thermal Energy Corporation
- Mercuria Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Tamil Nadu electricity Board
- Videocon Industries ltd - India
- Karaikal Port Pvt Ltd - India
- Thiess Contractors Indonesia
- European Bulk Services B.V. - Netherlands
- Carbofer General Trading SA - India
- Attock Cement Pakistan Limited
- PNOC Exploration Corporation - Philippines
- Parry Sugars Refinery, India
- San Jose City I Power Corp, Philippines
- Posco Energy - South Korea
- Kartika Selabumi Mining - Indonesia
- Uttam Galva Steels Limited - India
- Sical Logistics Limited - India
- Wilmar Investment Holdings
- Meenaskhi Energy Private Limited - India
- Cement Manufacturers Association - India
- Vijayanagar Sugar Pvt Ltd - India
- VISA Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Ministry of Transport, Egypt
- Petron Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- MS Steel International - UAE
- Sakthi Sugars Limited - India
- Samtan Co., Ltd - South Korea
- GVK Power & Infra Limited - India
- Electricity Authority, New Zealand
- SMC Global Power, Philippines
- Gujarat Sidhee Cement - India
- Power Finance Corporation Ltd., India
- Cigading International Bulk Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- The Treasury - Australian Government
- Price Waterhouse Coopers - Russia
- Orica Australia Pty. Ltd.
- Semirara Mining and Power Corporation, Philippines
- Trasteel International SA, Italy
- Interocean Group of Companies - India
- TeaM Sual Corporation - Philippines
- Africa Commodities Group - South Africa
- Baramulti Group, Indonesia
- Bangladesh Power Developement Board
- Economic Council, Georgia
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining Corp, Philippines
- PTC India Limited - India
- Coastal Gujarat Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Independent Power Producers Association of India
- Parliament of New Zealand
- The State Trading Corporation of India Ltd
- Medco Energi Mining Internasional
- Straits Asia Resources Limited - Singapore
- CNBM International Corporation - China
- Wood Mackenzie - Singapore
- Leighton Contractors Pty Ltd - Australia
- Eastern Coal Council - USA
- Agrawal Coal Company - India
- IEA Clean Coal Centre - UK
- International Coal Ventures Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- London Commodity Brokers - England
- Kobexindo Tractors - Indoneisa
- Ambuja Cements Ltd - India
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- Oldendorff Carriers - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Star Paper Mills Limited - India
- Kaltim Prima Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Siam City Cement PLC, Thailand
- Latin American Coal - Colombia
- OPG Power Generation Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Gujarat Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- Bukit Baiduri Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Global Business Power Corporation, Philippines
- Australian Coal Association
- Eastern Energy - Thailand
- Ceylon Electricity Board - Sri Lanka
- IHS Mccloskey Coal Group - USA
- Romanian Commodities Exchange
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Mineral Development Corp Ltd - India
- Global Green Power PLC Corporation, Philippines
- Planning Commission, India
- Binh Thuan Hamico - Vietnam
- Renaissance Capital - South Africa
- GAC Shipping (India) Pvt Ltd
- Pendopo Energi Batubara - Indonesia
- Manunggal Multi Energi - Indonesia
- Singapore Mercantile Exchange
- Kalimantan Lumbung Energi - Indonesia
- Rio Tinto Coal - Australia
- The University of Queensland
- Bhoruka Overseas - Indonesia
- Ministry of Finance - Indonesia
- Bhushan Steel Limited - India
- Ind-Barath Power Infra Limited - India
- PowerSource Philippines DevCo
- Essar Steel Hazira Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Xindia Steels Limited - India
- Central Electricity Authority - India
- Holcim Trading Pte Ltd - Singapore
- Krishnapatnam Port Company Ltd. - India
- Central Java Power - Indonesia
- Banpu Public Company Limited - Thailand
- ICICI Bank Limited - India
- Port Waratah Coal Services - Australia
- Indonesian Coal Mining Association
- Edison Trading Spa - Italy
- ASAPP Information Group - India
- Indogreen Group - Indonesia
- Indika Energy - Indonesia
- Aditya Birla Group - India
- Therma Luzon, Inc, Philippines
- Bharathi Cement Corporation - India
- Standard Chartered Bank - UAE
- Altura Mining Limited, Indonesia
- Coal and Oil Company - UAE
- Miang Besar Coal Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Orica Mining Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Larsen & Toubro Limited - India
- Directorate Of Revenue Intelligence - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Siam City Cement - Thailand
- Mjunction Services Limited - India
- Metalloyd Limited - United Kingdom
- Merrill Lynch Commodities Europe
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jaiprakash Power Ventures ltd
- Madhucon Powers Ltd - India
- Coalindo Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sojitz Corporation - Japan
- Aboitiz Power Corporation - Philippines
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