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Wednesday, 21 January 15
THERMAL COAL PRICE OUTLOOK DEPENDENT ON INDIAN IMPORT DEMAND - MATTHEW BOYLE, CRU
 COALspot.com: Supply and demand side developments in India will be an important determinant of future market dynamics and prices for thermal coal according to analysis in CRU's new Thermal Coal Market Outlook service.
The possible volatility in import requirements is substantial, given considerable uncertainty over both domestic supply and demand. Potential volatility in imports or range of outcomes is exacerbated by the fact that India is largely self-sufficient in thermal coal, and its imports account for only ~20% of its demand.
India's domestic demand in 2014 equalled around 80% of the global seaborne market, which means that small changes in supply and demand can have a relatively large impact on total import requirements. Even if domestic coal production was to increase, there would still be issues getting the coal to market due to logistical bottlenecks. CRU has undertaken scenario analysis of potential forecast changes to India's imports, and suggests given the wide range of outcomes, its impact will be felt by the seaborne market.
-- Under CRU's base case scenario, Indian domestic production is expected to grow at a CAGR of 4.8%, while Indian coal-fired capacity growth is expected to grow at a CAGR of 5.1%. Power capacity utilization rates in India, which have fallen in recent years, are expected to gradually recover, yet remain below historic levels. Under this scenario, Indian demand is expected to grow at a CAGR of 6.8%, but critically, import requirements are expected to grow at a CAGR of 12.5%, highlighting import sensitivity in such a large market.
-- Under a bull case for Indian imports, domestic Indian production will grow at a CAGR of 3%, more in line with historic performance, and consumption to grow in line with current coal-fired construction projects and plans. Under such as scenario, we estimate that total Indian demand would grow at a CAGR of 9% (i.e. only 2.2% higher than in the base case), but import requirements would increase at a staggering 18.5% CAGR.
-- Under a bear case scenario for imports, domestic Indian output growth is set closer to current production targets at a CAGR of 7%, whereas consumption growth is limited to the most advanced and likely Indian coal-fired construction projects coming on stream. Under such scenario, we estimate that total demand would grow at a 5.1% CAGR (i.e. only 2.5% lower than in the base case), and import requirements to increase at a very modest 5.4%, adding only 8-10 Mt to total imports/y.
India will be instrumental in determining how much seaborne material will be available for delivery to China, which acts as the clearing market, and remains a key pricing driver. The difference in Indian import volumes between the base case and the two scenarios is 90-110 Mt on either side, equivalent in size to the entire South Korean market.
India's coal industry, in many ways, is at a cross-roads. After a number of years of less than spectacular domestic production growth failing to keep up with power consumption growth, and in turn, a significant increase in and reliance on imported thermal coal, the new Modi government has stepped up plans to increase domestic coal production and power generation. The reallocation of domestic coal blocks, interaction with labour unions and the approval of forest clearances are all signs the government is willing to push ahead with domestic output growth. Whilst the plans are aggressive and needed to reverse an almost paralyzed domestic coal industry, we maintain the view that unless there are seismic changes in Indian policy and red and green tape, we are not as optimistic as the government's domestic coal production targets. We estimate Indian coal output to be 599.0 Mt in 2014 with CAGR of 4.8% between 2013 and 2019.
The imbalance between thermal coal production and thermal coal demand growth looks set to continue over the forecast period, requiring an additional 136 Mt of imports by 2019. The majority of this import growth is expected to materialize over the next three years as significant coal-fired capacity comes on stream, and CRU expects India to replace China as the world's largest import market by 2015-2016.
- This article was initially published in CRU -
About Author
Matthew Boyle | Principal Consultant, CRU
Matthew has over fifteen years experience in the metals and mining industry, and has specialized in the metallurgical and thermal coal markets for the past ten years. Prior to joining CRU in January 2014, Matthew had worked in a number of commodity research and analytical roles, including Vale. Matthew has extensive overseas experience, having worked in Tokyo, London, and Singapore, as well as Sydney and Brisbane in Australia. Matthew holds a triple-major Bachelor of Arts (Honours) degree in economic geography from the University of Sydney, and has completed technical coal utilisation courses from McMaster University in Hamilton, Ontario, Canada.
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Wednesday, 21 January 15
PANAMAX MARKET MOVED SIDEWAYS OVERALL LAST WEEK - INTERMODAL
COALspot.com: The positive sentiment in which the week prior ended carried on through-out last week as well, the end of which marked the first posi ...
Wednesday, 21 January 15
SHIFT IN INTERNATIONAL COAL TRADE TO THE PACIFIC BASIN WILL CONTINUE - IMF
COALspot.com: The shift in international coal trade to the Pacific Basin will continue, IMF said in its latest Medium-Term Coal Market Report.
...
Wednesday, 21 January 15
MARKET INSIGHT - VASSILIS LOGOTHETIS, INTERMODAL
The World Bank has lowered its forecast for global growth in 2015 to 3% down from its previous level of 3.4% amid rising concerns over the economic ...
Wednesday, 21 January 15
PORT OF NEWCASTLE COAL EXPORTS JUMP 16.19% ON MONTH TO 15.80 MIL MT IN DECEMBER' 14
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped $1.136 billi ...
Tuesday, 20 January 15
INDIA TO SURPASS THE UNITED STATES AND BECOME THE SECOND-LARGEST COAL CONSUMER IN THE WORLD BY 2019 - IMF
COALspot.com: In 2013, coal added more primary energy than any other fuel and was the fastest-growing fossil fuel, enhancing its position as the se ...
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- Indonesian Coal Mining Association
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- Gujarat Mineral Development Corp Ltd - India
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- Price Waterhouse Coopers - Russia
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- Coal and Oil Company - UAE
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- New Zealand Coal & Carbon
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- Global Coal Blending Company Limited - Australia
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- Bulk Trading Sa - Switzerland
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- Bhushan Steel Limited - India
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- San Jose City I Power Corp, Philippines
- Africa Commodities Group - South Africa
- Ministry of Mines - Canada
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- Ministry of Finance - Indonesia
- Goldman Sachs - Singapore
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- Gujarat Sidhee Cement - India
- Bukit Asam (Persero) Tbk - Indonesia
- GMR Energy Limited - India
- White Energy Company Limited
- Ministry of Transport, Egypt
- Economic Council, Georgia
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- Georgia Ports Authority, United States
- Energy Development Corp, Philippines
- Sical Logistics Limited - India
- Global Green Power PLC Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
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- Semirara Mining and Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Port Waratah Coal Services - Australia
- SMC Global Power, Philippines
- Salva Resources Pvt Ltd - India
- Kumho Petrochemical, South Korea
- GVK Power & Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- Maheswari Brothers Coal Limited - India
- Siam City Cement - Thailand
- Grasim Industreis Ltd - India
- Cement Manufacturers Association - India
- Ceylon Electricity Board - Sri Lanka
- VISA Power Limited - India
- PTC India Limited - India
- Eastern Energy - Thailand
- Kapuas Tunggal Persada - Indonesia
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- Kartika Selabumi Mining - Indonesia
- Bangladesh Power Developement Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Karbindo Abesyapradhi - Indoneisa
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- Star Paper Mills Limited - India
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- Commonwealth Bank - Australia
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- Aboitiz Power Corporation - Philippines
- ICICI Bank Limited - India
- Energy Link Ltd, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Globalindo Alam Lestari - Indonesia
- Uttam Galva Steels Limited - India
- Merrill Lynch Commodities Europe
- Parliament of New Zealand
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- The University of Queensland
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- Simpson Spence & Young - Indonesia
- CNBM International Corporation - China
- Australian Coal Association
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- IEA Clean Coal Centre - UK
- European Bulk Services B.V. - Netherlands
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- Baramulti Group, Indonesia
- Coalindo Energy - Indonesia
- Larsen & Toubro Limited - India
- Agrawal Coal Company - India
- Petron Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- IHS Mccloskey Coal Group - USA
- Electricity Authority, New Zealand
- Videocon Industries ltd - India
- Essar Steel Hazira Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- PetroVietnam Power Coal Import and Supply Company
- Intertek Mineral Services - Indonesia
- Altura Mining Limited, Indonesia
- Pendopo Energi Batubara - Indonesia
- Straits Asia Resources Limited - Singapore
- Oldendorff Carriers - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bharathi Cement Corporation - India
- Eastern Coal Council - USA
- Minerals Council of Australia
- Iligan Light & Power Inc, Philippines
- Sakthi Sugars Limited - India
- Sinarmas Energy and Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- Makarim & Taira - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bayan Resources Tbk. - Indonesia
- Marubeni Corporation - India
- SMG Consultants - Indonesia
- Samtan Co., Ltd - South Korea
- Thai Mozambique Logistica
- CIMB Investment Bank - Malaysia
- Rio Tinto Coal - Australia
- Indian Energy Exchange, India
- Kaltim Prima Coal - Indonesia
- Indogreen Group - Indonesia
- Semirara Mining Corp, Philippines
- Latin American Coal - Colombia
- International Coal Ventures Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Central Java Power - Indonesia
- Deloitte Consulting - India
- Sree Jayajothi Cements Limited - India
- Indika Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- McConnell Dowell - Australia
- South Luzon Thermal Energy Corporation
- GAC Shipping (India) Pvt Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Jindal Steel & Power Ltd - India
- Coastal Gujarat Power Limited - India
- Thiess Contractors Indonesia
- Global Business Power Corporation, Philippines
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- Wood Mackenzie - Singapore
- Binh Thuan Hamico - Vietnam
- Dalmia Cement Bharat India
- Savvy Resources Ltd - HongKong
- Chamber of Mines of South Africa
- Singapore Mercantile Exchange
- Kohat Cement Company Ltd. - Pakistan
- GN Power Mariveles Coal Plant, Philippines
- Madhucon Powers Ltd - India
- Standard Chartered Bank - UAE
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- Indian Oil Corporation Limited
- Sindya Power Generating Company Private Ltd
- Jaiprakash Power Ventures ltd
- Trasteel International SA, Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mintek Dendrill Indonesia
- Karaikal Port Pvt Ltd - India
- Meralco Power Generation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Borneo Indobara - Indonesia
- Mjunction Services Limited - India
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