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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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Thursday, 16 October 14
ARE WE GOING TO SHOOT OURSELVES IN THE FOOT ONCE AGAIN? - PANOS MAKRINOS
As the East part of our globe was coming back from its October holidays last week, everyone expected that the Dry Bulk market would follow suit and ...
Wednesday, 15 October 14
PANAMAX: ACTIVITY IN THE PACIFIC WAS UNIMPRESSIVE
The Dry Bulk market noted another weekly decline last week, while the BDI moved below 1,000 points taking down with it expectations that a post hol ...
Wednesday, 15 October 14
INDONESIAN COAL PRICE REFERENCE FELL TO FRESH MULTI-YEAR LOWS IN OCTOBER
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down the coal bench mark price once again in October 2014.
...
Wednesday, 15 October 14
DRY BULK SHIPPING: RATE IMPROVEMENTS ARRIVED AS FORECAST, BUT UNCERTAINTY MOUNTS FOR 2015 DEMAND - BIMCO
BIMCO released its latest short term assessment of the dry bulk market, estimating that over the October-November period, the level of Capesize TC ...
Wednesday, 15 October 14
SHIPOWNER NOT LIABLE FOR CARGO DAMAGE RESULTING FROM POOR STOWAGE - CLYDE & CO
KNOWLEDGE TO ELEVATE
Russian metal trading company Yuzhny Zavod Metall Profil (YZMP), the holder of a CONGEN 1994 bill of lading, took delivery o ...
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- Anglo American - United Kingdom
- Krishnapatnam Port Company Ltd. - India
- International Coal Ventures Pvt Ltd - India
- Madhucon Powers Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Renaissance Capital - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Miang Besar Coal Terminal - Indonesia
- Meralco Power Generation, Philippines
- European Bulk Services B.V. - Netherlands
- Siam City Cement - Thailand
- Mercuria Energy - Indonesia
- Eastern Coal Council - USA
- Vijayanagar Sugar Pvt Ltd - India
- Goldman Sachs - Singapore
- Barasentosa Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Star Paper Mills Limited - India
- Wood Mackenzie - Singapore
- Agrawal Coal Company - India
- Posco Energy - South Korea
- Tamil Nadu electricity Board
- Standard Chartered Bank - UAE
- MS Steel International - UAE
- Straits Asia Resources Limited - Singapore
- Indo Tambangraya Megah - Indonesia
- Energy Development Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Sojitz Corporation - Japan
- CIMB Investment Bank - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Mintek Dendrill Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Independent Power Producers Association of India
- Minerals Council of Australia
- SN Aboitiz Power Inc, Philippines
- Bhatia International Limited - India
- Karaikal Port Pvt Ltd - India
- Ministry of Finance - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Cement Manufacturers Association - India
- Kaltim Prima Coal - Indonesia
- Africa Commodities Group - South Africa
- Sree Jayajothi Cements Limited - India
- Bhoruka Overseas - Indonesia
- Kobexindo Tractors - Indoneisa
- Kideco Jaya Agung - Indonesia
- White Energy Company Limited
- Orica Australia Pty. Ltd.
- Vizag Seaport Private Limited - India
- The University of Queensland
- Ministry of Transport, Egypt
- GAC Shipping (India) Pvt Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Indonesian Coal Mining Association
- Romanian Commodities Exchange
- Indogreen Group - Indonesia
- The State Trading Corporation of India Ltd
- Ceylon Electricity Board - Sri Lanka
- Intertek Mineral Services - Indonesia
- San Jose City I Power Corp, Philippines
- The Treasury - Australian Government
- Aditya Birla Group - India
- Indian Energy Exchange, India
- Eastern Energy - Thailand
- Commonwealth Bank - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petron Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Electricity Authority, New Zealand
- Global Green Power PLC Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Singapore Mercantile Exchange
- IEA Clean Coal Centre - UK
- Edison Trading Spa - Italy
- Latin American Coal - Colombia
- VISA Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Borneo Indobara - Indonesia
- Australian Coal Association
- Sindya Power Generating Company Private Ltd
- Simpson Spence & Young - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Trasteel International SA, Italy
- Savvy Resources Ltd - HongKong
- Altura Mining Limited, Indonesia
- Coalindo Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Medco Energi Mining Internasional
- Electricity Generating Authority of Thailand
- Kumho Petrochemical, South Korea
- McConnell Dowell - Australia
- Leighton Contractors Pty Ltd - Australia
- Rio Tinto Coal - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Manunggal Multi Energi - Indonesia
- Economic Council, Georgia
- Kartika Selabumi Mining - Indonesia
- Antam Resourcindo - Indonesia
- Jindal Steel & Power Ltd - India
- CNBM International Corporation - China
- Directorate Of Revenue Intelligence - India
- GN Power Mariveles Coal Plant, Philippines
- ICICI Bank Limited - India
- Gujarat Electricity Regulatory Commission - India
- Price Waterhouse Coopers - Russia
- Semirara Mining Corp, Philippines
- Uttam Galva Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- PowerSource Philippines DevCo
- Xindia Steels Limited - India
- Parliament of New Zealand
- Bhushan Steel Limited - India
- Grasim Industreis Ltd - India
- Central Electricity Authority - India
- Neyveli Lignite Corporation Ltd, - India
- Banpu Public Company Limited - Thailand
- Chettinad Cement Corporation Ltd - India
- Bayan Resources Tbk. - Indonesia
- Global Business Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Makarim & Taira - Indonesia
- Ind-Barath Power Infra Limited - India
- Interocean Group of Companies - India
- New Zealand Coal & Carbon
- Gujarat Sidhee Cement - India
- Deloitte Consulting - India
- Parry Sugars Refinery, India
- Mjunction Services Limited - India
- Merrill Lynch Commodities Europe
- Kohat Cement Company Ltd. - Pakistan
- Power Finance Corporation Ltd., India
- Orica Mining Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GVK Power & Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Siam City Cement PLC, Thailand
- Energy Link Ltd, New Zealand
- PTC India Limited - India
- SMC Global Power, Philippines
- Iligan Light & Power Inc, Philippines
- Heidelberg Cement - Germany
- Vedanta Resources Plc - India
- Meenaskhi Energy Private Limited - India
- Sical Logistics Limited - India
- Malabar Cements Ltd - India
- Riau Bara Harum - Indonesia
- IHS Mccloskey Coal Group - USA
- Thiess Contractors Indonesia
- Australian Commodity Traders Exchange
- PetroVietnam Power Coal Import and Supply Company
- GMR Energy Limited - India
- Bangladesh Power Developement Board
- Aboitiz Power Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Carbofer General Trading SA - India
- Toyota Tsusho Corporation, Japan
- Indian Oil Corporation Limited
- Lanco Infratech Ltd - India
- Maheswari Brothers Coal Limited - India
- South Luzon Thermal Energy Corporation
- PNOC Exploration Corporation - Philippines
- Ministry of Mines - Canada
- Coastal Gujarat Power Limited - India
- Samtan Co., Ltd - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Essar Steel Hazira Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Therma Luzon, Inc, Philippines
- Marubeni Corporation - India
- ASAPP Information Group - India
- Indika Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Timah Investasi Mineral - Indoneisa
- Tata Chemicals Ltd - India
- OPG Power Generation Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Salva Resources Pvt Ltd - India
- SMG Consultants - Indonesia
- Mercator Lines Limited - India
- Wilmar Investment Holdings
- Georgia Ports Authority, United States
- Dalmia Cement Bharat India
- Bharathi Cement Corporation - India
- Chamber of Mines of South Africa
- Ambuja Cements Ltd - India
- Formosa Plastics Group - Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Attock Cement Pakistan Limited
- London Commodity Brokers - England
- Pipit Mutiara Jaya. PT, Indonesia
- Coal and Oil Company - UAE
- Videocon Industries ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Global Coal Blending Company Limited - Australia
- India Bulls Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Baramulti Group, Indonesia
- Bulk Trading Sa - Switzerland
- Bahari Cakrawala Sebuku - Indonesia
- Planning Commission, India
- Larsen & Toubro Limited - India
- Bukit Makmur.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Port Waratah Coal Services - Australia
- Semirara Mining and Power Corporation, Philippines
- Thai Mozambique Logistica
- Central Java Power - Indonesia
- Oldendorff Carriers - Singapore
- Sakthi Sugars Limited - India
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