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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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Wednesday, 15 October 14
NEWCASTLE SHIPPED 13.96 MILLION TONS OF COAL IN SEPTEMBER; UP 5.72%
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped $1,227.7 wor ...
Tuesday, 14 October 14
KING COAL UNDER ATTACK? - EVA TZIMA
With the last quarter of the year being well underway and with no strong signs that the Dry Bulk market could be ready for a big positive reversal, ...
Tuesday, 14 October 14
THE NEW CHINESE TRANSPORTATION TAX LAW: WHAT DOES IT MEAN FOR GREEK SHIPPING? - DELOITTE
China has recently promulgated a new law which imposes tax on profits from freights of inbound routes. The objective of the new tax law titled &ldq ...
Monday, 13 October 14
CHINESE COAL IMPORT TARIFFS YET ANOTHER BLOW TO AUSTRALIAN COAL EXPORTS - TIM BUCKLEY
COALspot.com: China’s unexpected move to reintroduce thermal coal import tariffs of 6% will have a materially negative impact on the viabilit ...
Monday, 13 October 14
NEWCASTLE COAL SWAP FOR Q1' 2015 DELIVERY CLOSED AT US$ 54.92, SGX DATA SHOWS
COALspot.com: API 5 FOB Newcastle Coal swap for delivery Q4' 2014 decreased US$ 0.80 (-1.46%) month over month and US$ 0.52 (-0.95%) week over ...
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- Directorate Of Revenue Intelligence - India
- Carbofer General Trading SA - India
- Bhoruka Overseas - Indonesia
- Semirara Mining Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Ministry of Mines - Canada
- Global Coal Blending Company Limited - Australia
- Maharashtra Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- Minerals Council of Australia
- Malabar Cements Ltd - India
- Rio Tinto Coal - Australia
- Trasteel International SA, Italy
- Parliament of New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Singapore Mercantile Exchange
- Asmin Koalindo Tuhup - Indonesia
- Economic Council, Georgia
- Ministry of Finance - Indonesia
- Pendopo Energi Batubara - Indonesia
- Global Green Power PLC Corporation, Philippines
- Salva Resources Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- India Bulls Power Limited - India
- Interocean Group of Companies - India
- Bhatia International Limited - India
- Parry Sugars Refinery, India
- Meralco Power Generation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Star Paper Mills Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Timah Investasi Mineral - Indoneisa
- Romanian Commodities Exchange
- Siam City Cement PLC, Thailand
- Indian Energy Exchange, India
- Oldendorff Carriers - Singapore
- Karaikal Port Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- OPG Power Generation Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- GVK Power & Infra Limited - India
- Cement Manufacturers Association - India
- Semirara Mining and Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Directorate General of MIneral and Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- Merrill Lynch Commodities Europe
- Indo Tambangraya Megah - Indonesia
- Indonesian Coal Mining Association
- Lanco Infratech Ltd - India
- Jaiprakash Power Ventures ltd
- Banpu Public Company Limited - Thailand
- Leighton Contractors Pty Ltd - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tamil Nadu electricity Board
- Karbindo Abesyapradhi - Indoneisa
- Manunggal Multi Energi - Indonesia
- Kobexindo Tractors - Indoneisa
- San Jose City I Power Corp, Philippines
- Thiess Contractors Indonesia
- Latin American Coal - Colombia
- Bukit Baiduri Energy - Indonesia
- Dalmia Cement Bharat India
- Videocon Industries ltd - India
- Deloitte Consulting - India
- MS Steel International - UAE
- CIMB Investment Bank - Malaysia
- The Treasury - Australian Government
- Goldman Sachs - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Altura Mining Limited, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Sinarmas Energy and Mining - Indonesia
- Simpson Spence & Young - Indonesia
- ICICI Bank Limited - India
- Port Waratah Coal Services - Australia
- Sical Logistics Limited - India
- Eastern Energy - Thailand
- IEA Clean Coal Centre - UK
- Independent Power Producers Association of India
- Binh Thuan Hamico - Vietnam
- CNBM International Corporation - China
- Bangladesh Power Developement Board
- Straits Asia Resources Limited - Singapore
- Orica Australia Pty. Ltd.
- Posco Energy - South Korea
- Attock Cement Pakistan Limited
- Agrawal Coal Company - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMC Global Power, Philippines
- Eastern Coal Council - USA
- Coal and Oil Company - UAE
- Wilmar Investment Holdings
- Bank of Tokyo Mitsubishi UFJ Ltd
- Xindia Steels Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Transport, Egypt
- Mintek Dendrill Indonesia
- European Bulk Services B.V. - Netherlands
- Renaissance Capital - South Africa
- Kaltim Prima Coal - Indonesia
- Vizag Seaport Private Limited - India
- Siam City Cement - Thailand
- Makarim & Taira - Indonesia
- Iligan Light & Power Inc, Philippines
- TeaM Sual Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Kapuas Tunggal Persada - Indonesia
- Essar Steel Hazira Ltd - India
- Bharathi Cement Corporation - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- Vedanta Resources Plc - India
- Power Finance Corporation Ltd., India
- Electricity Generating Authority of Thailand
- The University of Queensland
- Borneo Indobara - Indonesia
- Electricity Authority, New Zealand
- Bulk Trading Sa - Switzerland
- Larsen & Toubro Limited - India
- Georgia Ports Authority, United States
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Electricity Authority - India
- GN Power Mariveles Coal Plant, Philippines
- Heidelberg Cement - Germany
- Sojitz Corporation - Japan
- Ceylon Electricity Board - Sri Lanka
- New Zealand Coal & Carbon
- Bhushan Steel Limited - India
- Sindya Power Generating Company Private Ltd
- Rashtriya Ispat Nigam Limited - India
- PTC India Limited - India
- Petron Corporation, Philippines
- Central Java Power - Indonesia
- Energy Development Corp, Philippines
- Planning Commission, India
- Therma Luzon, Inc, Philippines
- Commonwealth Bank - Australia
- Billiton Holdings Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Edison Trading Spa - Italy
- GMR Energy Limited - India
- Bukit Makmur.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Oil Corporation Limited
- Metalloyd Limited - United Kingdom
- Mjunction Services Limited - India
- Toyota Tsusho Corporation, Japan
- Indogreen Group - Indonesia
- Madhucon Powers Ltd - India
- Thai Mozambique Logistica
- Kalimantan Lumbung Energi - Indonesia
- London Commodity Brokers - England
- Savvy Resources Ltd - HongKong
- Aboitiz Power Corporation - Philippines
- Barasentosa Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Petrochimia International Co. Ltd.- Taiwan
- SMG Consultants - Indonesia
- Price Waterhouse Coopers - Russia
- Formosa Plastics Group - Taiwan
- Sakthi Sugars Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Energy Link Ltd, New Zealand
- Miang Besar Coal Terminal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Africa Commodities Group - South Africa
- The State Trading Corporation of India Ltd
- ASAPP Information Group - India
- Chettinad Cement Corporation Ltd - India
- Antam Resourcindo - Indonesia
- Standard Chartered Bank - UAE
- Kumho Petrochemical, South Korea
- Mercuria Energy - Indonesia
- Orica Mining Services - Indonesia
- Kartika Selabumi Mining - Indonesia
- IHS Mccloskey Coal Group - USA
- Aditya Birla Group - India
- Global Business Power Corporation, Philippines
- Indika Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Krishnapatnam Port Company Ltd. - India
- Uttam Galva Steels Limited - India
- Chamber of Mines of South Africa
- McConnell Dowell - Australia
- AsiaOL BioFuels Corp., Philippines
- Ambuja Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Australian Coal Association
- Australian Commodity Traders Exchange
- White Energy Company Limited
- VISA Power Limited - India
- Wood Mackenzie - Singapore
- Tata Chemicals Ltd - India
- Meenaskhi Energy Private Limited - India
- Riau Bara Harum - Indonesia
- Ind-Barath Power Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- PowerSource Philippines DevCo
- Anglo American - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- Mercator Lines Limited - India
- GAC Shipping (India) Pvt Ltd
- Baramulti Group, Indonesia
- Grasim Industreis Ltd - India
- Medco Energi Mining Internasional
- Samtan Co., Ltd - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Sarangani Energy Corporation, Philippines
- Marubeni Corporation - India
- Jindal Steel & Power Ltd - India
- Gujarat Sidhee Cement - India
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