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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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Tuesday, 24 February 15
IHS ENERGY COAL CONFERENCE OF THE AMERICAS
Attend the IHS Energy Coal Conference of the Americas 17-19 March in Cartagena, Colombia and learn about timely concerns in today's coal indust ...
Monday, 23 February 15
Q2' CFR SOUTH CHINA COAL SWAP FOR Q2 ROSE 3.39% M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery rose US$ 1.90 (+3.39%) per MT month over month and declined US$ 0.08 ...
Monday, 23 February 15
Q2' API 5 FOB NEWCASTLE COAL SWAP CLOSED $1 HIGHER THAN Q3
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery rose US$ 3.12 per MT (+6.44%) month over month and fall US$ 0.43 (-0.83%) w ...
Sunday, 22 February 15
THE BALTIC DRY INDEX LOST ALMOST 3.2% OR 17 POINTS WEEK ON WEEK
COALspot.com: The Baltic Dry Index, one of the economic indicators that monitors the health of the world's economy by tracking the price of shi ...
Friday, 20 February 15
GOVT SET TO INCREASE COAL OUTPUT TARGET THIS YEAR - JAKARTA POST
The Energy and Mineral Resources Ministry is planning to increase its coal output target this year as the government seeks to offset the ongoing de ...
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- Independent Power Producers Association of India
- Thiess Contractors Indonesia
- Jaiprakash Power Ventures ltd
- SMG Consultants - Indonesia
- Altura Mining Limited, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- Merrill Lynch Commodities Europe
- Edison Trading Spa - Italy
- Attock Cement Pakistan Limited
- Global Green Power PLC Corporation, Philippines
- Orica Australia Pty. Ltd.
- Cement Manufacturers Association - India
- Borneo Indobara - Indonesia
- Iligan Light & Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Formosa Plastics Group - Taiwan
- Malabar Cements Ltd - India
- Indian Oil Corporation Limited
- Simpson Spence & Young - Indonesia
- Indian Energy Exchange, India
- Directorate General of MIneral and Coal - Indonesia
- Ind-Barath Power Infra Limited - India
- Wood Mackenzie - Singapore
- Lanco Infratech Ltd - India
- Africa Commodities Group - South Africa
- Kartika Selabumi Mining - Indonesia
- Bulk Trading Sa - Switzerland
- Sical Logistics Limited - India
- Kideco Jaya Agung - Indonesia
- Sakthi Sugars Limited - India
- Ambuja Cements Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Mercator Lines Limited - India
- Goldman Sachs - Singapore
- Riau Bara Harum - Indonesia
- Wilmar Investment Holdings
- Ministry of Mines - Canada
- Timah Investasi Mineral - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Eastern Energy - Thailand
- Planning Commission, India
- European Bulk Services B.V. - Netherlands
- MS Steel International - UAE
- Alfred C Toepfer International GmbH - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Authority, New Zealand
- Trasteel International SA, Italy
- McConnell Dowell - Australia
- Energy Link Ltd, New Zealand
- International Coal Ventures Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Ministry of Transport, Egypt
- Posco Energy - South Korea
- Australian Coal Association
- Bhoruka Overseas - Indonesia
- IHS Mccloskey Coal Group - USA
- Holcim Trading Pte Ltd - Singapore
- Videocon Industries ltd - India
- Meralco Power Generation, Philippines
- Chamber of Mines of South Africa
- Australian Commodity Traders Exchange
- Karbindo Abesyapradhi - Indoneisa
- Price Waterhouse Coopers - Russia
- Metalloyd Limited - United Kingdom
- Latin American Coal - Colombia
- Vedanta Resources Plc - India
- Coalindo Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Aditya Birla Group - India
- Rio Tinto Coal - Australia
- Petron Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Mjunction Services Limited - India
- Madhucon Powers Ltd - India
- Power Finance Corporation Ltd., India
- TeaM Sual Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Makarim & Taira - Indonesia
- Vizag Seaport Private Limited - India
- Economic Council, Georgia
- Indika Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Dalmia Cement Bharat India
- CNBM International Corporation - China
- Ceylon Electricity Board - Sri Lanka
- Georgia Ports Authority, United States
- Semirara Mining and Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- OPG Power Generation Pvt Ltd - India
- Commonwealth Bank - Australia
- Uttam Galva Steels Limited - India
- VISA Power Limited - India
- Meenaskhi Energy Private Limited - India
- Chettinad Cement Corporation Ltd - India
- San Jose City I Power Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Anglo American - United Kingdom
- Cigading International Bulk Terminal - Indonesia
- Energy Development Corp, Philippines
- Renaissance Capital - South Africa
- Essar Steel Hazira Ltd - India
- Parliament of New Zealand
- Central Electricity Authority - India
- Karaikal Port Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Agrawal Coal Company - India
- Sinarmas Energy and Mining - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Central Java Power - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Star Paper Mills Limited - India
- LBH Netherlands Bv - Netherlands
- Gujarat Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Xindia Steels Limited - India
- Bharathi Cement Corporation - India
- Tamil Nadu electricity Board
- PowerSource Philippines DevCo
- Indogreen Group - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Electricity Generating Authority of Thailand
- Savvy Resources Ltd - HongKong
- ICICI Bank Limited - India
- Grasim Industreis Ltd - India
- PNOC Exploration Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Ministry of Finance - Indonesia
- SMC Global Power, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- The State Trading Corporation of India Ltd
- Port Waratah Coal Services - Australia
- Thai Mozambique Logistica
- Minerals Council of Australia
- Siam City Cement PLC, Thailand
- Straits Asia Resources Limited - Singapore
- Salva Resources Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Coal and Oil Company - UAE
- Orica Mining Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- Carbofer General Trading SA - India
- Medco Energi Mining Internasional
- PetroVietnam Power Coal Import and Supply Company
- Bangladesh Power Developement Board
- ASAPP Information Group - India
- India Bulls Power Limited - India
- Mercuria Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Binh Thuan Hamico - Vietnam
- Romanian Commodities Exchange
- Kobexindo Tractors - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Antam Resourcindo - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Tata Chemicals Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Oldendorff Carriers - Singapore
- Samtan Co., Ltd - South Korea
- PTC India Limited - India
- Gujarat Sidhee Cement - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Therma Luzon, Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Interocean Group of Companies - India
- Deloitte Consulting - India
- GVK Power & Infra Limited - India
- Baramulti Group, Indonesia
- Bhatia International Limited - India
- Sindya Power Generating Company Private Ltd
- Sojitz Corporation - Japan
- Pendopo Energi Batubara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Marubeni Corporation - India
- Toyota Tsusho Corporation, Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- White Energy Company Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Sarangani Energy Corporation, Philippines
- Kumho Petrochemical, South Korea
- Directorate Of Revenue Intelligence - India
- Siam City Cement - Thailand
- New Zealand Coal & Carbon
- Global Business Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Indonesian Coal Mining Association
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining Corp, Philippines
- GMR Energy Limited - India
- IEA Clean Coal Centre - UK
- The University of Queensland
- Singapore Mercantile Exchange
- Kepco SPC Power Corporation, Philippines
- Parry Sugars Refinery, India
- The Treasury - Australian Government
- Manunggal Multi Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Heidelberg Cement - Germany
- Bukit Makmur.PT - Indonesia
- Eastern Coal Council - USA
- Intertek Mineral Services - Indonesia
- Bhushan Steel Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Larsen & Toubro Limited - India
- CIMB Investment Bank - Malaysia
- Billiton Holdings Pty Ltd - Australia
- London Commodity Brokers - England
- Standard Chartered Bank - UAE
- Mintek Dendrill Indonesia
- Bukit Baiduri Energy - Indonesia
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