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Monday, 09 February 15
AUSTRALIAN COAL PRODUCERS BEST POSITIONED IN OVERSUPPLIED MARKET; US MINES MOST AT RISK - WOOD MACKENZIE
 In a 2015 global coal outlook report, Wood Mackenzie says that Australia and Indonesian coal suppliers will see some upside in the difficult months ahead as they continue to capture market share of coal exports from higher cost producers. Further modest productivity gains, the rapid fall in oil prices and currency devaluation in Australia and Russia will help lower costs. Therefore, Australian mines stands in a relatively strong position compared with higher cost suppliers - particularly those in the US - which are at much greater risk of closures this year. Even with increased closures and reduced US supply, Wood Mackenzie says they do not foresee sufficient volume exiting to balance the market and support price recovery. Lower-than-anticipated demand, especially from China combined with persistent production will be key factors that will sustain the weak market environment.
Australian producers best positioned in 2015
Mr Rory Simington, Principal Asia Pacific Coal Analyst says, “Australia is a standout competitor in both the metallurgical (met) and thermal coal trade, but particularly the former. Comparing 2014 from 2013, while global met coal import demand reduced by about 8 Mt, Australian exports rose by around 14 million tonnes (Mt), growing seaborne market share from 58% to 64%. The scalability of Australian mines and their high coal quality has enabled the displacement of major competitors in US, Canada and Indonesia. This trend is likely to continue thanks to a continued strong operating performance plus currency depreciation. On the other hand, US suppliers, many of which exhibit high costs, will not see the cost relief that currency devaluation brings to Australia.”
Furthermore, increased competition will come from higher Mozambique exports this year as Vale’s Nacala transport corridor ramps up indicating another year of aggressive pricing as producers fight to secure sales. In thermal coal, Australian exports were also strong, leaping 20Mt despite seaborne demand remaining essentially flat last year.
Lower costs discourage large-scale shutdowns
Despite a traumatic 2014 for the coal industry, mine shutdowns were relatively muted. Mr Simington explains, ”In fact metallurgical supply reductions were more than offset by the reduction in Chinese import demand, resulting in increased overcapacity. Although overall closures will accelerate this year, they will unlikely redress the imbalance.” Costly take or pay obligations in the event of closure, makes it more expensive for mines to shutdown than operate at a loss. As such, they remain in production and hamper the return to tighter market conditions. The recent low oil price and exchange rate has driven cost relief for Australia, Indonesia and Russia, which will further reduce the likelihood of wholesale supply cuts as well as delay any price recovery.
China uncertainties depress demand in oversupplied market
China’s economic rebalancing will continue to affect power demand growth and therefore thermal coal requirements. Of critical importance to the seaborne trade will be the effects of Government policies designed to protect the environment as well as domestic coal suppliers. Mr Robin Griffin, Research Director for Global Metallurgical Coal, says, “Current industry focus is on the new trace element restrictions for imported coal. We see most seaborne supply meeting the new guidelines but import levels are affected due to the uncertainty of the accuracy of coal quality tests and delays it may cause to the delivery process. Another big uncertainty to watch is the lengths to which the Chinese Government will go to protect its domestic industry.” Wood Mackenzie says stricter limits on imported coal quality is possible and the Government could make an aggressive move to waive the 17% value added tax (VAT) charged on coal sales which could considerably enhance the competitiveness of Chinese coal and enable some of the best quality and lowest cost Chinese coking coal to compete into Japan, South Korea or Taiwan. Should this occur, worsened oversupply conditions could occur in 2015.
Mr Griffin says “As China makes up 22% of seaborne trade and is expected see continued domestic oversupply, the country will be a major cause of depressed global import demand this year. Market fundamentals outside of China also remain uninspiring, for both metallurgical and thermal coal. Under such circumstances a material price recovery is unlikely this year”.
M&A activities to pick up in 2015
“Mine asset valuations have fallen considerably over the last three years due to the weakening market. Whilst low prices endure more companies will look to shed assets, perhaps to decrease debt or to allow a greater focus on their highest value operations. The negative price environment will persist through 2015 but not forever. Given our expectation of long term strength in coal demand fundamentals, the present market conditions offer a window of opportunity for both suppliers and buyers to consolidate their positions in the industry. We expect M&A to start picking up this year particularly for companies who want to gain a foothold in the industry for the long term.”
About Wood Mackenzie
Wood Mackenzie is a global leader in commercial intelligence for the energy, metals and mining industries. We provide objective analysis and advice on assets, companies and markets, giving clients the insights they need to make better strategic decisions
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Friday, 13 March 15
U.S. COAL PRODUCTION UP 2.3% WEEK OVER WEEK
COALspot.com – United States the world's one of the largest coal producers, produced approximately 17.5 million short tons (mmst) of coal ...
Friday, 13 March 15
ADARO RECORDED A 7% INCREASE IN EBITDA OF $877 MILLION IN 2014
“Coal market continues to be difficult and challenging” – Adaro Energy
The world’s Top 5 thermal coal exporter, ...
Thursday, 12 March 15
CAPESIZE : ACTIVITY IS LOW; PANAMAX: BIT MORE ACTIVITY; HANDY: A FIRMING WEEK
Handy
It has been a firming week in both hemispheres this week and especially in the Pacific, says Fearnleys AS in its week's week report.
...
Thursday, 12 March 15
COAL MINERS REMAIN UNDER PRESSURE AS GLUT CONTINUES - THE JAKARTA POST
Indonesia’s major coal miners reported a significant drop in their earnings last year as the sharp drop in the global demand, mainly from Chi ...
Thursday, 12 March 15
FOB INDONESIA COAL SWAP DROP TO $47.33 A TON IN THE WEEK ENDED MAR.6
COALspot.com: Indonesian coal swaps for delivery Q2' 2015 drop month on month and week over week.
The Q2 swap fell US$ 0.37 (0.78%) month ...
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- Ministry of Mines - Canada
- Grasim Industreis Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Aditya Birla Group - India
- Indian Oil Corporation Limited
- Bulk Trading Sa - Switzerland
- Intertek Mineral Services - Indonesia
- Indika Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coastal Gujarat Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Kobexindo Tractors - Indoneisa
- Mjunction Services Limited - India
- Tata Chemicals Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bangladesh Power Developement Board
- Sojitz Corporation - Japan
- Therma Luzon, Inc, Philippines
- Posco Energy - South Korea
- Ambuja Cements Ltd - India
- MS Steel International - UAE
- The University of Queensland
- Singapore Mercantile Exchange
- Global Business Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- CNBM International Corporation - China
- SN Aboitiz Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Thiess Contractors Indonesia
- Ceylon Electricity Board - Sri Lanka
- IHS Mccloskey Coal Group - USA
- TeaM Sual Corporation - Philippines
- Romanian Commodities Exchange
- AsiaOL BioFuels Corp., Philippines
- Tamil Nadu electricity Board
- Price Waterhouse Coopers - Russia
- Barasentosa Lestari - Indonesia
- Renaissance Capital - South Africa
- Maheswari Brothers Coal Limited - India
- Bharathi Cement Corporation - India
- Global Coal Blending Company Limited - Australia
- Cement Manufacturers Association - India
- Metalloyd Limited - United Kingdom
- The Treasury - Australian Government
- Meralco Power Generation, Philippines
- Pendopo Energi Batubara - Indonesia
- New Zealand Coal & Carbon
- Jindal Steel & Power Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Billiton Holdings Pty Ltd - Australia
- European Bulk Services B.V. - Netherlands
- Orica Australia Pty. Ltd.
- Indonesian Coal Mining Association
- Siam City Cement PLC, Thailand
- Simpson Spence & Young - Indonesia
- Essar Steel Hazira Ltd - India
- Kepco SPC Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Eastern Coal Council - USA
- Parry Sugars Refinery, India
- Commonwealth Bank - Australia
- Wood Mackenzie - Singapore
- Sakthi Sugars Limited - India
- PetroVietnam Power Coal Import and Supply Company
- McConnell Dowell - Australia
- Electricity Generating Authority of Thailand
- Edison Trading Spa - Italy
- Karbindo Abesyapradhi - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Larsen & Toubro Limited - India
- ASAPP Information Group - India
- Holcim Trading Pte Ltd - Singapore
- Interocean Group of Companies - India
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement - Thailand
- Port Waratah Coal Services - Australia
- Vizag Seaport Private Limited - India
- Manunggal Multi Energi - Indonesia
- Dalmia Cement Bharat India
- Salva Resources Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Videocon Industries ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Economic Council, Georgia
- LBH Netherlands Bv - Netherlands
- Bhoruka Overseas - Indonesia
- Kideco Jaya Agung - Indonesia
- Standard Chartered Bank - UAE
- Samtan Co., Ltd - South Korea
- India Bulls Power Limited - India
- Antam Resourcindo - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Orica Mining Services - Indonesia
- Makarim & Taira - Indonesia
- Formosa Plastics Group - Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- London Commodity Brokers - England
- Globalindo Alam Lestari - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Australian Coal Association
- Sical Logistics Limited - India
- Indo Tambangraya Megah - Indonesia
- Heidelberg Cement - Germany
- Asmin Koalindo Tuhup - Indonesia
- Iligan Light & Power Inc, Philippines
- Latin American Coal - Colombia
- Goldman Sachs - Singapore
- Cigading International Bulk Terminal - Indonesia
- Attock Cement Pakistan Limited
- Rashtriya Ispat Nigam Limited - India
- Alfred C Toepfer International GmbH - Germany
- Madhucon Powers Ltd - India
- Chettinad Cement Corporation Ltd - India
- PNOC Exploration Corporation - Philippines
- Indian Energy Exchange, India
- Independent Power Producers Association of India
- Sree Jayajothi Cements Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Central Java Power - Indonesia
- Timah Investasi Mineral - Indoneisa
- Chamber of Mines of South Africa
- Kapuas Tunggal Persada - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Baramulti Group, Indonesia
- Africa Commodities Group - South Africa
- Altura Mining Limited, Indonesia
- Borneo Indobara - Indonesia
- Bhushan Steel Limited - India
- Meenaskhi Energy Private Limited - India
- Kaltim Prima Coal - Indonesia
- Ind-Barath Power Infra Limited - India
- Malabar Cements Ltd - India
- Binh Thuan Hamico - Vietnam
- Bayan Resources Tbk. - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Directorate Of Revenue Intelligence - India
- Kartika Selabumi Mining - Indonesia
- Mercuria Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- White Energy Company Limited
- Riau Bara Harum - Indonesia
- SMC Global Power, Philippines
- Power Finance Corporation Ltd., India
- Jorong Barutama Greston.PT - Indonesia
- Energy Development Corp, Philippines
- Medco Energi Mining Internasional
- Coal and Oil Company - UAE
- Global Green Power PLC Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- The State Trading Corporation of India Ltd
- Carbofer General Trading SA - India
- Toyota Tsusho Corporation, Japan
- Lanco Infratech Ltd - India
- ICICI Bank Limited - India
- Mercator Lines Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Agrawal Coal Company - India
- PowerSource Philippines DevCo
- Marubeni Corporation - India
- Parliament of New Zealand
- Banpu Public Company Limited - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Savvy Resources Ltd - HongKong
- Rio Tinto Coal - Australia
- Bhatia International Limited - India
- Xindia Steels Limited - India
- Star Paper Mills Limited - India
- Oldendorff Carriers - Singapore
- Straits Asia Resources Limited - Singapore
- Sindya Power Generating Company Private Ltd
- Petron Corporation, Philippines
- GVK Power & Infra Limited - India
- Kumho Petrochemical, South Korea
- GN Power Mariveles Coal Plant, Philippines
- Uttam Galva Steels Limited - India
- GMR Energy Limited - India
- Merrill Lynch Commodities Europe
- Eastern Energy - Thailand
- Sarangani Energy Corporation, Philippines
- Mintek Dendrill Indonesia
- Krishnapatnam Port Company Ltd. - India
- PTC India Limited - India
- Ministry of Transport, Egypt
- Planning Commission, India
- CIMB Investment Bank - Malaysia
- Energy Link Ltd, New Zealand
- VISA Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Ministry of Finance - Indonesia
- IEA Clean Coal Centre - UK
- Leighton Contractors Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Deloitte Consulting - India
- Bukit Makmur.PT - Indonesia
- Trasteel International SA, Italy
- Jaiprakash Power Ventures ltd
- OPG Power Generation Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Gujarat Sidhee Cement - India
- Thai Mozambique Logistica
- Indogreen Group - Indonesia
- Wilmar Investment Holdings
- Minerals Council of Australia
- Anglo American - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Electricity Authority, New Zealand
- International Coal Ventures Pvt Ltd - India
- Vedanta Resources Plc - India
- SMG Consultants - Indonesia
- Karaikal Port Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Georgia Ports Authority, United States
- Central Electricity Authority - India
- Australian Commodity Traders Exchange
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