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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, 17 October 14
INTERNATIONAL COAL PRICES ARE AT LOWEST LEVEL; COAL STOCKS AT INDIAN POWER PLANTS ARE ALSO AT LOWEST LEVEL
International coal prices as well as coal freights are falling and reaching to its lowest levels. According to PTI, fuel stockpiles at the thermal ...
Friday, 17 October 14
U.S. COAL PRODUCTION UP BY 3.6% WEEK - ON - WEEK
COALspot.com – United States the world's one of largest coal producers, produced approximately 19.20 million short tons (mmst) of coal in ...
Friday, 17 October 14
DRY BULK SHIPPING'S OUTLOOK NOW SHIFTING TO A LESS PROMISING ONE, SHIP PRICES EXPECTED TO FOLLOW SOON - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
China’s and other Asian countries’ return to the dry bulk market last week, didn’t trigger the hoped support towards the dry bulk ...
Thursday, 16 October 14
KOREA MIDLAND POWER TO BUY 490K MT OF LCV COAL FOR 1Q 2015
COALspot.com : Korea Midland Power Co., Ltd. has invited bids through International open bidding for 490,000 Metric Tons (MT) of LCV (Sub) Bitumino ...
Thursday, 16 October 14
PANAMAX OWNERS RECEIVE A PREMIUM FOR GOING TO INDIA VIA INDONESIA - FEARNLEYS AS
Handy
The Handy/Supra market continues to slide in both hemispheres, said Fearnleys AS in its latest week report. In the Atlantic we see rates co ...
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- Oldendorff Carriers - Singapore
- Baramulti Group, Indonesia
- Indian Energy Exchange, India
- Goldman Sachs - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Mines - Canada
- Timah Investasi Mineral - Indoneisa
- Siam City Cement PLC, Thailand
- Leighton Contractors Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- Vizag Seaport Private Limited - India
- Bayan Resources Tbk. - Indonesia
- IHS Mccloskey Coal Group - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
- Neyveli Lignite Corporation Ltd, - India
- Petron Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Madhucon Powers Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Minerals Council of Australia
- Jorong Barutama Greston.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Borneo Indobara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Deloitte Consulting - India
- Sindya Power Generating Company Private Ltd
- Rashtriya Ispat Nigam Limited - India
- Parry Sugars Refinery, India
- Electricity Authority, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Price Waterhouse Coopers - Russia
- Offshore Bulk Terminal Pte Ltd, Singapore
- GMR Energy Limited - India
- Ministry of Finance - Indonesia
- McConnell Dowell - Australia
- Mjunction Services Limited - India
- Independent Power Producers Association of India
- Iligan Light & Power Inc, Philippines
- Savvy Resources Ltd - HongKong
- Directorate General of MIneral and Coal - Indonesia
- The University of Queensland
- Singapore Mercantile Exchange
- Larsen & Toubro Limited - India
- Georgia Ports Authority, United States
- ASAPP Information Group - India
- Sical Logistics Limited - India
- Grasim Industreis Ltd - India
- Latin American Coal - Colombia
- Wood Mackenzie - Singapore
- Metalloyd Limited - United Kingdom
- Lanco Infratech Ltd - India
- Interocean Group of Companies - India
- Straits Asia Resources Limited - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Eastern Energy - Thailand
- Bukit Baiduri Energy - Indonesia
- Economic Council, Georgia
- London Commodity Brokers - England
- CIMB Investment Bank - Malaysia
- Sree Jayajothi Cements Limited - India
- Mercuria Energy - Indonesia
- Videocon Industries ltd - India
- Bangladesh Power Developement Board
- Sakthi Sugars Limited - India
- Coal and Oil Company - UAE
- LBH Netherlands Bv - Netherlands
- Cement Manufacturers Association - India
- TeaM Sual Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Sidhee Cement - India
- Aditya Birla Group - India
- PTC India Limited - India
- Star Paper Mills Limited - India
- Rio Tinto Coal - Australia
- CNBM International Corporation - China
- Australian Coal Association
- Binh Thuan Hamico - Vietnam
- Bharathi Cement Corporation - India
- Bhatia International Limited - India
- Aboitiz Power Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Romanian Commodities Exchange
- Asmin Koalindo Tuhup - Indonesia
- MS Steel International - UAE
- Intertek Mineral Services - Indonesia
- Energy Development Corp, Philippines
- Electricity Generating Authority of Thailand
- Attock Cement Pakistan Limited
- International Coal Ventures Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Riau Bara Harum - Indonesia
- Simpson Spence & Young - Indonesia
- Sojitz Corporation - Japan
- Antam Resourcindo - Indonesia
- Thai Mozambique Logistica
- Carbofer General Trading SA - India
- Salva Resources Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- San Jose City I Power Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Coalindo Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- South Luzon Thermal Energy Corporation
- Indian Oil Corporation Limited
- Sarangani Energy Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Ambuja Cements Ltd - India
- PowerSource Philippines DevCo
- Kapuas Tunggal Persada - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Central Electricity Authority - India
- Standard Chartered Bank - UAE
- Ceylon Electricity Board - Sri Lanka
- Merrill Lynch Commodities Europe
- Karbindo Abesyapradhi - Indoneisa
- SMG Consultants - Indonesia
- The State Trading Corporation of India Ltd
- India Bulls Power Limited - India
- Jaiprakash Power Ventures ltd
- Posco Energy - South Korea
- Samtan Co., Ltd - South Korea
- The Treasury - Australian Government
- New Zealand Coal & Carbon
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wilmar Investment Holdings
- Meralco Power Generation, Philippines
- Power Finance Corporation Ltd., India
- Global Business Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Edison Trading Spa - Italy
- Formosa Plastics Group - Taiwan
- PNOC Exploration Corporation - Philippines
- Africa Commodities Group - South Africa
- Kepco SPC Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Central Java Power - Indonesia
- Semirara Mining Corp, Philippines
- VISA Power Limited - India
- Mintek Dendrill Indonesia
- Heidelberg Cement - Germany
- Billiton Holdings Pty Ltd - Australia
- Planning Commission, India
- Karaikal Port Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- SMC Global Power, Philippines
- Meenaskhi Energy Private Limited - India
- Semirara Mining and Power Corporation, Philippines
- Indonesian Coal Mining Association
- Vijayanagar Sugar Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Orica Australia Pty. Ltd.
- Gujarat Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Global Green Power PLC Corporation, Philippines
- Parliament of New Zealand
- Mercator Lines Limited - India
- Manunggal Multi Energi - Indonesia
- Kumho Petrochemical, South Korea
- Commonwealth Bank - Australia
- Dalmia Cement Bharat India
- Maharashtra Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Kideco Jaya Agung - Indonesia
- Thiess Contractors Indonesia
- Marubeni Corporation - India
- Essar Steel Hazira Ltd - India
- Ind-Barath Power Infra Limited - India
- Chamber of Mines of South Africa
- Chettinad Cement Corporation Ltd - India
- Bhushan Steel Limited - India
- Coastal Gujarat Power Limited - India
- Port Waratah Coal Services - Australia
- Therma Luzon, Inc, Philippines
- Bhoruka Overseas - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Tamil Nadu electricity Board
- Miang Besar Coal Terminal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Trasteel International SA, Italy
- White Energy Company Limited
- Ministry of Transport, Egypt
- Globalindo Alam Lestari - Indonesia
- GVK Power & Infra Limited - India
- Anglo American - United Kingdom
- Agrawal Coal Company - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jindal Steel & Power Ltd - India
- Kobexindo Tractors - Indoneisa
- ICICI Bank Limited - India
- Siam City Cement - Thailand
- Xindia Steels Limited - India
- Australian Commodity Traders Exchange
- Indogreen Group - Indonesia
- Kartika Selabumi Mining - Indonesia
- Indika Energy - Indonesia
- Eastern Coal Council - USA
- OPG Power Generation Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Renaissance Capital - South Africa
- Orica Mining Services - Indonesia
- Malabar Cements Ltd - India
- Tata Chemicals Ltd - India
- Pendopo Energi Batubara - Indonesia
- Kaltim Prima Coal - Indonesia
- Bukit Makmur.PT - Indonesia
- Uttam Galva Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- Medco Energi Mining Internasional
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Makarim & Taira - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Gujarat Mineral Development Corp Ltd - India
- Banpu Public Company Limited - Thailand
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