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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, 02 March 15
FOB NEWCASTLE COAL SWAP ROSE 6.89% MONTH OVER MONTH
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery rose US$ 3.35 per MT (+6.89%) month over month and US$ 0.40 (0.78%) week on ...
Sunday, 01 March 15
BDI INDEX SLIGHTLY UP CAUSED AN INCREASE IN THE PANAMAX, SUPARAMAX AND HANDY SIZE INDICES
COALspot.com: The freight market saw some gains this week and BDI was up 5.26 pct closed at 540 points. However the Cape index failed to follow BDI ...
Friday, 27 February 15
WEEKLY US COAL PRODUCTION DOWN AN ESTIMATED 14.0% FROM LAST WEEK - EIA
COALspot.com – United States the world's one of the largest coal producers, produced approximately 16.5 million short tons (mmst) of coal ...
Thursday, 26 February 15
DRY BULK MARKET COULD REBOUND FROM HISTORICAL LOWS IN THE COMING WEEKS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market could exit from its historical lows in the coming weeks, as Chinese buyers reenter the market after the holiday celebrations. T ...
Thursday, 26 February 15
COAL POLICY RISK: HIGHER ROYALTIES FOR IUP HOLDERS - BAHANA SECURITIES | JAKARTA POST
The Energy and Mineral Resources Ministry plans to raise coal royalties charged to mining operation permit (IUP) holders by the end of the first qu ...
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- PTC India Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Port Waratah Coal Services - Australia
- Maharashtra Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Intertek Mineral Services - Indonesia
- Medco Energi Mining Internasional
- Samtan Co., Ltd - South Korea
- Standard Chartered Bank - UAE
- Central Java Power - Indonesia
- Timah Investasi Mineral - Indoneisa
- South Luzon Thermal Energy Corporation
- PetroVietnam Power Coal Import and Supply Company
- Lanco Infratech Ltd - India
- Anglo American - United Kingdom
- San Jose City I Power Corp, Philippines
- Savvy Resources Ltd - HongKong
- Australian Commodity Traders Exchange
- Meenaskhi Energy Private Limited - India
- Bukit Baiduri Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Indogreen Group - Indonesia
- TeaM Sual Corporation - Philippines
- MS Steel International - UAE
- Independent Power Producers Association of India
- Central Electricity Authority - India
- Xindia Steels Limited - India
- Bulk Trading Sa - Switzerland
- Ind-Barath Power Infra Limited - India
- Madhucon Powers Ltd - India
- Bukit Makmur.PT - Indonesia
- GMR Energy Limited - India
- Meralco Power Generation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Price Waterhouse Coopers - Russia
- Wood Mackenzie - Singapore
- Antam Resourcindo - Indonesia
- Star Paper Mills Limited - India
- Karaikal Port Pvt Ltd - India
- ICICI Bank Limited - India
- Thai Mozambique Logistica
- Dalmia Cement Bharat India
- Miang Besar Coal Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Orica Australia Pty. Ltd.
- Deloitte Consulting - India
- Sindya Power Generating Company Private Ltd
- Agrawal Coal Company - India
- Vedanta Resources Plc - India
- Indonesian Coal Mining Association
- Merrill Lynch Commodities Europe
- PNOC Exploration Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Trasteel International SA, Italy
- The Treasury - Australian Government
- Makarim & Taira - Indonesia
- Sree Jayajothi Cements Limited - India
- Mintek Dendrill Indonesia
- Vizag Seaport Private Limited - India
- Posco Energy - South Korea
- Rio Tinto Coal - Australia
- Krishnapatnam Port Company Ltd. - India
- White Energy Company Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Larsen & Toubro Limited - India
- Tamil Nadu electricity Board
- IHS Mccloskey Coal Group - USA
- Cigading International Bulk Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- SMC Global Power, Philippines
- Mjunction Services Limited - India
- Formosa Plastics Group - Taiwan
- Simpson Spence & Young - Indonesia
- Gujarat Sidhee Cement - India
- Riau Bara Harum - Indonesia
- Indian Oil Corporation Limited
- Romanian Commodities Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Bayan Resources Tbk. - Indonesia
- Siam City Cement - Thailand
- Bangladesh Power Developement Board
- Ministry of Transport, Egypt
- Bhushan Steel Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Electricity Generating Authority of Thailand
- Gujarat Mineral Development Corp Ltd - India
- Parliament of New Zealand
- Wilmar Investment Holdings
- Goldman Sachs - Singapore
- Eastern Energy - Thailand
- Coastal Gujarat Power Limited - India
- Sakthi Sugars Limited - India
- Leighton Contractors Pty Ltd - Australia
- LBH Netherlands Bv - Netherlands
- Therma Luzon, Inc, Philippines
- Economic Council, Georgia
- Chamber of Mines of South Africa
- Altura Mining Limited, Indonesia
- Global Green Power PLC Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Marubeni Corporation - India
- Ministry of Mines - Canada
- Malabar Cements Ltd - India
- Aditya Birla Group - India
- Toyota Tsusho Corporation, Japan
- Salva Resources Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Indo Tambangraya Megah - Indonesia
- Borneo Indobara - Indonesia
- Coal and Oil Company - UAE
- Pendopo Energi Batubara - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- Eastern Coal Council - USA
- Carbofer General Trading SA - India
- Africa Commodities Group - South Africa
- New Zealand Coal & Carbon
- Global Business Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Billiton Holdings Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Minerals Council of Australia
- International Coal Ventures Pvt Ltd - India
- Singapore Mercantile Exchange
- Thiess Contractors Indonesia
- Manunggal Multi Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Orica Mining Services - Indonesia
- Coalindo Energy - Indonesia
- The University of Queensland
- Electricity Authority, New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maheswari Brothers Coal Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Siam City Cement PLC, Thailand
- McConnell Dowell - Australia
- Directorate Of Revenue Intelligence - India
- Sojitz Corporation - Japan
- PowerSource Philippines DevCo
- Baramulti Group, Indonesia
- Australian Coal Association
- CIMB Investment Bank - Malaysia
- Edison Trading Spa - Italy
- ASAPP Information Group - India
- Mercuria Energy - Indonesia
- Commonwealth Bank - Australia
- Bharathi Cement Corporation - India
- Pipit Mutiara Jaya. PT, Indonesia
- CNBM International Corporation - China
- Semirara Mining Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Sical Logistics Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Georgia Ports Authority, United States
- Oldendorff Carriers - Singapore
- European Bulk Services B.V. - Netherlands
- Binh Thuan Hamico - Vietnam
- Bhoruka Overseas - Indonesia
- Mercator Lines Limited - India
- GAC Shipping (India) Pvt Ltd
- Energy Development Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- SMG Consultants - Indonesia
- India Bulls Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Bhatia International Limited - India
- Parry Sugars Refinery, India
- Kumho Petrochemical, South Korea
- IEA Clean Coal Centre - UK
- Uttam Galva Steels Limited - India
- VISA Power Limited - India
- Ministry of Finance - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Tata Chemicals Ltd - India
- Jaiprakash Power Ventures ltd
- Interocean Group of Companies - India
- Cement Manufacturers Association - India
- Planning Commission, India
- Sinarmas Energy and Mining - Indonesia
- Barasentosa Lestari - Indonesia
- GVK Power & Infra Limited - India
- Latin American Coal - Colombia
- Indika Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Energy Link Ltd, New Zealand
- OPG Power Generation Pvt Ltd - India
- Indian Energy Exchange, India
- Metalloyd Limited - United Kingdom
- Renaissance Capital - South Africa
- Heidelberg Cement - Germany
- Kapuas Tunggal Persada - Indonesia
- Videocon Industries ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Straits Asia Resources Limited - Singapore
- Petron Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- London Commodity Brokers - England
- Essar Steel Hazira Ltd - India
- Banpu Public Company Limited - Thailand
- Grasim Industreis Ltd - India
- AsiaOL BioFuels Corp., Philippines
- The State Trading Corporation of India Ltd
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