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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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Thursday, 05 March 15
INDIA WILL BE THE LARGEST DRIVER OF GLOBAL SEABORNE COKING COAL DEMAND GROWTH IN 2015 - WOOD MACKENZIE
Global demand growth will remain weak because of China’s negative demand growth.
COALspot.com: At Coaltrans India, Wood Mackenzie says I ...
Thursday, 05 March 15
BUKIT ASAM BOOKED US$ 1 BILLION REVENUE IN 2014
COALspot.com: Indonesian publicly listed and state owned coal miner PT. Bukit Asam, has announced that, the revenue of the company for the period J ...
Wednesday, 04 March 15
AN AGENDA FOR CHANGE - FITCH INDONESIA CONFERENCE
Fitch Indonesia Conference - 5 March 2015
Fitch Ratings will host its annual Indonesia conference on 5 March 2015.
The theme of this year ...
Wednesday, 04 March 15
KEEP CALM AND INVEST IN DRY - THEODORE NTALAKOS
Keep Calm and Carry On was originally a motivational poster, intended to raise the morale of the British public, produced by the British government ...
Tuesday, 03 March 15
INDONESIAN COAL EXPORT VOLUME TO DECLINE 50% BY 2019
COALspot.com: The Indonesian government is planning to reduce coal export volume by 50% within the next five years while keeping its coal productio ...
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- Bhushan Steel Limited - India
- Parliament of New Zealand
- Ambuja Cements Ltd - India
- Jaiprakash Power Ventures ltd
- Cement Manufacturers Association - India
- Bukit Makmur.PT - Indonesia
- San Jose City I Power Corp, Philippines
- Energy Development Corp, Philippines
- New Zealand Coal & Carbon
- Vijayanagar Sugar Pvt Ltd - India
- Georgia Ports Authority, United States
- Straits Asia Resources Limited - Singapore
- Savvy Resources Ltd - HongKong
- Directorate General of MIneral and Coal - Indonesia
- European Bulk Services B.V. - Netherlands
- The State Trading Corporation of India Ltd
- Miang Besar Coal Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Tata Chemicals Ltd - India
- MS Steel International - UAE
- Orica Australia Pty. Ltd.
- Renaissance Capital - South Africa
- Sarangani Energy Corporation, Philippines
- Borneo Indobara - Indonesia
- Gujarat Sidhee Cement - India
- Interocean Group of Companies - India
- Makarim & Taira - Indonesia
- Holcim Trading Pte Ltd - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Power Finance Corporation Ltd., India
- Madhucon Powers Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- India Bulls Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Semirara Mining Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Mercuria Energy - Indonesia
- Parry Sugars Refinery, India
- Banpu Public Company Limited - Thailand
- Trasteel International SA, Italy
- Simpson Spence & Young - Indonesia
- Riau Bara Harum - Indonesia
- Intertek Mineral Services - Indonesia
- Oldendorff Carriers - Singapore
- Ceylon Electricity Board - Sri Lanka
- Bahari Cakrawala Sebuku - Indonesia
- Barasentosa Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- Directorate Of Revenue Intelligence - India
- SN Aboitiz Power Inc, Philippines
- Antam Resourcindo - Indonesia
- Orica Mining Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- Mintek Dendrill Indonesia
- Star Paper Mills Limited - India
- Ministry of Transport, Egypt
- Agrawal Coal Company - India
- Attock Cement Pakistan Limited
- London Commodity Brokers - England
- Petrochimia International Co. Ltd.- Taiwan
- Lanco Infratech Ltd - India
- Petron Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- South Luzon Thermal Energy Corporation
- Vedanta Resources Plc - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kumho Petrochemical, South Korea
- ICICI Bank Limited - India
- Romanian Commodities Exchange
- LBH Netherlands Bv - Netherlands
- Videocon Industries ltd - India
- Kartika Selabumi Mining - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Price Waterhouse Coopers - Russia
- CNBM International Corporation - China
- Indian Energy Exchange, India
- IEA Clean Coal Centre - UK
- Independent Power Producers Association of India
- Alfred C Toepfer International GmbH - Germany
- Samtan Co., Ltd - South Korea
- Timah Investasi Mineral - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karaikal Port Pvt Ltd - India
- Siam City Cement - Thailand
- Standard Chartered Bank - UAE
- Commonwealth Bank - Australia
- Coastal Gujarat Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indogreen Group - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Africa Commodities Group - South Africa
- Indika Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Indo Tambangraya Megah - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sinarmas Energy and Mining - Indonesia
- Indonesian Coal Mining Association
- Electricity Authority, New Zealand
- Planning Commission, India
- Goldman Sachs - Singapore
- Thai Mozambique Logistica
- Tamil Nadu electricity Board
- Australian Coal Association
- Gujarat Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- The University of Queensland
- Altura Mining Limited, Indonesia
- Kobexindo Tractors - Indoneisa
- Aboitiz Power Corporation - Philippines
- Singapore Mercantile Exchange
- Rio Tinto Coal - Australia
- Economic Council, Georgia
- Heidelberg Cement - Germany
- SMC Global Power, Philippines
- Electricity Generating Authority of Thailand
- Cigading International Bulk Terminal - Indonesia
- Eastern Energy - Thailand
- Manunggal Multi Energi - Indonesia
- Sree Jayajothi Cements Limited - India
- TeaM Sual Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Sojitz Corporation - Japan
- ASAPP Information Group - India
- Bulk Trading Sa - Switzerland
- Kohat Cement Company Ltd. - Pakistan
- Coalindo Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Grasim Industreis Ltd - India
- Meralco Power Generation, Philippines
- Australian Commodity Traders Exchange
- Aditya Birla Group - India
- Eastern Coal Council - USA
- Medco Energi Mining Internasional
- Iligan Light & Power Inc, Philippines
- Marubeni Corporation - India
- Rashtriya Ispat Nigam Limited - India
- Larsen & Toubro Limited - India
- Posco Energy - South Korea
- Leighton Contractors Pty Ltd - Australia
- Bukit Baiduri Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Sical Logistics Limited - India
- VISA Power Limited - India
- IHS Mccloskey Coal Group - USA
- Central Java Power - Indonesia
- Toyota Tsusho Corporation, Japan
- Central Electricity Authority - India
- Karbindo Abesyapradhi - Indoneisa
- Wood Mackenzie - Singapore
- Uttam Galva Steels Limited - India
- Merrill Lynch Commodities Europe
- GVK Power & Infra Limited - India
- Chamber of Mines of South Africa
- Therma Luzon, Inc, Philippines
- Thiess Contractors Indonesia
- OPG Power Generation Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Deloitte Consulting - India
- Xindia Steels Limited - India
- Malabar Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- GMR Energy Limited - India
- PNOC Exploration Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Energy Link Ltd, New Zealand
- PowerSource Philippines DevCo
- Mjunction Services Limited - India
- International Coal Ventures Pvt Ltd - India
- Dalmia Cement Bharat India
- Global Green Power PLC Corporation, Philippines
- Sakthi Sugars Limited - India
- SMG Consultants - Indonesia
- Indian Oil Corporation Limited
- PTC India Limited - India
- McConnell Dowell - Australia
- Anglo American - United Kingdom
- White Energy Company Limited
- Ind-Barath Power Infra Limited - India
- Minerals Council of Australia
- CIMB Investment Bank - Malaysia
- Baramulti Group, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wilmar Investment Holdings
- Bukit Asam (Persero) Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- Siam City Cement PLC, Thailand
- Billiton Holdings Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Mines - Canada
- Jindal Steel & Power Ltd - India
- Carbofer General Trading SA - India
- Bangladesh Power Developement Board
- Edison Trading Spa - Italy
- Salva Resources Pvt Ltd - India
- Bharathi Cement Corporation - India
- Port Waratah Coal Services - Australia
- Coal and Oil Company - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Chettinad Cement Corporation Ltd - India
- The Treasury - Australian Government
- Meenaskhi Energy Private Limited - India
- Ministry of Finance - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Kepco SPC Power Corporation, Philippines
- Latin American Coal - Colombia
- Essar Steel Hazira Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Mercator Lines Limited - India
- Bhatia International Limited - India
- Kideco Jaya Agung - Indonesia
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