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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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Monday, 09 March 15
CHINA'S IMPORTS - NEVER MORE IMPORTANT TO SHIPPING? - CLARKSONS
Over the last 15 years China has led maritime forecasters a right old dance. In 2002, rumours that Chinese iron ore imports were about to take off ...
Sunday, 08 March 15
FREIGHT RATES FROM INDONESIA TO INDIA IS TRENDING UP
COALspot.com: The freight market continued to see gains this week and all the indices were rose except for Cape index. The BDI was increased 4.62 p ...
Friday, 06 March 15
BALTIC DRY INDEX: IS THIS POWERFUL INDICATOR SIGNALING A GLOBAL RECESSION? - STREET AUTHORITY
Although memories of the Great Recession linger, a case can be made that better days lie ahead.
That’s because central banks around the ...
Friday, 06 March 15
U.S. WEEKLY COAL PRODUCTION ROSE 3.5% WEEK ON WEEK
COALspot.com – United States the world's one of the largest coal producers, produced approximately 17.1 million short tons (mmst) of coal ...
Thursday, 05 March 15
PANAMAX : THE ATLANTIC ROUND IS NOW PAYING AROUND US$ 5K PER DAY
COALspot.com: Handy - The activity in the handy/supra segment is back. “ We see more fresh cargo in the market for 2nd half March dates ...
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- Coal and Oil Company - UAE
- Edison Trading Spa - Italy
- Orica Australia Pty. Ltd.
- Bukit Asam (Persero) Tbk - Indonesia
- Bangladesh Power Developement Board
- Cement Manufacturers Association - India
- GMR Energy Limited - India
- Ministry of Transport, Egypt
- Global Business Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Baramulti Group, Indonesia
- Coalindo Energy - Indonesia
- IEA Clean Coal Centre - UK
- McConnell Dowell - Australia
- Mjunction Services Limited - India
- Rashtriya Ispat Nigam Limited - India
- The Treasury - Australian Government
- GVK Power & Infra Limited - India
- Merrill Lynch Commodities Europe
- White Energy Company Limited
- Salva Resources Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Sindya Power Generating Company Private Ltd
- Ambuja Cements Ltd - India
- Deloitte Consulting - India
- Meralco Power Generation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Agrawal Coal Company - India
- Manunggal Multi Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Star Paper Mills Limited - India
- Leighton Contractors Pty Ltd - Australia
- CNBM International Corporation - China
- Africa Commodities Group - South Africa
- Oldendorff Carriers - Singapore
- Jaiprakash Power Ventures ltd
- Tamil Nadu electricity Board
- Indika Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- SMG Consultants - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Attock Cement Pakistan Limited
- Sinarmas Energy and Mining - Indonesia
- Romanian Commodities Exchange
- Sarangani Energy Corporation, Philippines
- Malabar Cements Ltd - India
- Planning Commission, India
- Holcim Trading Pte Ltd - Singapore
- Metalloyd Limited - United Kingdom
- Independent Power Producers Association of India
- Bahari Cakrawala Sebuku - Indonesia
- PTC India Limited - India
- LBH Netherlands Bv - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Tata Chemicals Ltd - India
- Toyota Tsusho Corporation, Japan
- Bharathi Cement Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Electricity Regulatory Commission - India
- Dalmia Cement Bharat India
- TeaM Sual Corporation - Philippines
- Eastern Energy - Thailand
- Standard Chartered Bank - UAE
- GAC Shipping (India) Pvt Ltd
- PowerSource Philippines DevCo
- Singapore Mercantile Exchange
- Bhushan Steel Limited - India
- Heidelberg Cement - Germany
- The State Trading Corporation of India Ltd
- Petron Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Marubeni Corporation - India
- Global Green Power PLC Corporation, Philippines
- Trasteel International SA, Italy
- Vedanta Resources Plc - India
- Wood Mackenzie - Singapore
- Orica Mining Services - Indonesia
- India Bulls Power Limited - India
- Electricity Authority, New Zealand
- Sree Jayajothi Cements Limited - India
- Pendopo Energi Batubara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Intertek Mineral Services - Indonesia
- South Luzon Thermal Energy Corporation
- Directorate General of MIneral and Coal - Indonesia
- Anglo American - United Kingdom
- Mercuria Energy - Indonesia
- Wilmar Investment Holdings
- Neyveli Lignite Corporation Ltd, - India
- Bukit Makmur.PT - Indonesia
- Siam City Cement PLC, Thailand
- Kideco Jaya Agung - Indonesia
- Price Waterhouse Coopers - Russia
- Xindia Steels Limited - India
- Bhoruka Overseas - Indonesia
- ICICI Bank Limited - India
- Indian Energy Exchange, India
- Chettinad Cement Corporation Ltd - India
- Eastern Coal Council - USA
- Gujarat Sidhee Cement - India
- Sical Logistics Limited - India
- Samtan Co., Ltd - South Korea
- Parliament of New Zealand
- OPG Power Generation Pvt Ltd - India
- Rio Tinto Coal - Australia
- Kartika Selabumi Mining - Indonesia
- PNOC Exploration Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Carbofer General Trading SA - India
- SN Aboitiz Power Inc, Philippines
- Formosa Plastics Group - Taiwan
- Banpu Public Company Limited - Thailand
- CIMB Investment Bank - Malaysia
- Siam City Cement - Thailand
- ASAPP Information Group - India
- Ministry of Mines - Canada
- Australian Commodity Traders Exchange
- Semirara Mining Corp, Philippines
- New Zealand Coal & Carbon
- Vizag Seaport Private Limited - India
- Australian Coal Association
- Maheswari Brothers Coal Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Timah Investasi Mineral - Indoneisa
- Sakthi Sugars Limited - India
- International Coal Ventures Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- San Jose City I Power Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Bhatia International Limited - India
- Globalindo Alam Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Minerals Council of Australia
- Bulk Trading Sa - Switzerland
- Chamber of Mines of South Africa
- Mercator Lines Limited - India
- Ministry of Finance - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ind-Barath Power Infra Limited - India
- Goldman Sachs - Singapore
- Electricity Generating Authority of Thailand
- Kumho Petrochemical, South Korea
- Thiess Contractors Indonesia
- Energy Link Ltd, New Zealand
- Larsen & Toubro Limited - India
- Simpson Spence & Young - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Straits Asia Resources Limited - Singapore
- Indonesian Coal Mining Association
- Ceylon Electricity Board - Sri Lanka
- Alfred C Toepfer International GmbH - Germany
- Indian Oil Corporation Limited
- Parry Sugars Refinery, India
- Madhucon Powers Ltd - India
- MS Steel International - UAE
- Sojitz Corporation - Japan
- Vijayanagar Sugar Pvt Ltd - India
- Lanco Infratech Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Commonwealth Bank - Australia
- PetroVietnam Power Coal Import and Supply Company
- Posco Energy - South Korea
- Makarim & Taira - Indonesia
- Antam Resourcindo - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Borneo Indobara - Indonesia
- Aboitiz Power Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Mintek Dendrill Indonesia
- SMC Global Power, Philippines
- Bayan Resources Tbk. - Indonesia
- Indogreen Group - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Savvy Resources Ltd - HongKong
- Riau Bara Harum - Indonesia
- Interocean Group of Companies - India
- The University of Queensland
- Kepco SPC Power Corporation, Philippines
- Aditya Birla Group - India
- Barasentosa Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- London Commodity Brokers - England
- Kaltim Prima Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Energy Development Corp, Philippines
- Uttam Galva Steels Limited - India
- Economic Council, Georgia
- Thai Mozambique Logistica
- VISA Power Limited - India
- Global Coal Blending Company Limited - Australia
- Iligan Light & Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Karaikal Port Pvt Ltd - India
- Central Java Power - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Bukit Baiduri Energy - Indonesia
- Renaissance Capital - South Africa
- Central Electricity Authority - India
- Latin American Coal - Colombia
- Power Finance Corporation Ltd., India
- Kobexindo Tractors - Indoneisa
- Coastal Gujarat Power Limited - India
- Binh Thuan Hamico - Vietnam
- AsiaOL BioFuels Corp., Philippines
- Videocon Industries ltd - India
- Georgia Ports Authority, United States
- Grasim Industreis Ltd - India
- Therma Luzon, Inc, Philippines
- Port Waratah Coal Services - Australia
- Medco Energi Mining Internasional
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