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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, 20 February 15
U.S. PRODUCED AROUND 19.2 MILLION SHORT TONS OF COAL WEEK ON WEEK
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.2 million short tons (mmst) of coal ...
Thursday, 19 February 15
PANAMAX: NOPAC AND AUSSIE ROUNDS ARE DONE IN LOW/MID $ 4000; TRIPS VIA INDONESIA TO INDIA CLOSER TO THE $5000 MARK - FEARNLEYS
Handy
The handy and supra market has not seen any firming rates in front of the Chinese New Year and still suffering on low activity in both hemi ...
Wednesday, 18 February 15
DRY BULK SHIPPING TO RECOVER IN LATE 2015 - DREWRY MARITIME RESEARCH
Strong trade growth, moderating fleet development and deployment of new fuel efficient vessels are expected to lead to a recovery in dry bulk shipp ...
Tuesday, 17 February 15
WHO PAYS THE SUEZ CANAL FEES? - INCE & CO
KNOWLEDGE TO ELEVATE
This was an appeal from an arbitration award on a point of construction in relation to the wording of an addendum to a ch ...
Tuesday, 17 February 15
BUOYANT WAVES IN RECENT YEARS: GLOBAL SHIP INVESTMENT SINCE THE CRASH - HELLENIC SHIPPING NEWS
Anxiety about fleet expansion is a recurring feature of world shipping markets. Within the global maritime community, worries about the vast amount ...
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- Vedanta Resources Plc - India
- Agrawal Coal Company - India
- London Commodity Brokers - England
- Attock Cement Pakistan Limited
- Tamil Nadu electricity Board
- Directorate General of MIneral and Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Binh Thuan Hamico - Vietnam
- IEA Clean Coal Centre - UK
- CIMB Investment Bank - Malaysia
- Bukit Makmur.PT - Indonesia
- Renaissance Capital - South Africa
- Bharathi Cement Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Carbofer General Trading SA - India
- Asmin Koalindo Tuhup - Indonesia
- Pendopo Energi Batubara - Indonesia
- Minerals Council of Australia
- Kepco SPC Power Corporation, Philippines
- Georgia Ports Authority, United States
- Planning Commission, India
- Indian Energy Exchange, India
- Bulk Trading Sa - Switzerland
- Sindya Power Generating Company Private Ltd
- Mjunction Services Limited - India
- Africa Commodities Group - South Africa
- Indian Oil Corporation Limited
- Bukit Asam (Persero) Tbk - Indonesia
- PowerSource Philippines DevCo
- Aboitiz Power Corporation - Philippines
- Ministry of Transport, Egypt
- SN Aboitiz Power Inc, Philippines
- Meralco Power Generation, Philippines
- Thiess Contractors Indonesia
- Madhucon Powers Ltd - India
- The Treasury - Australian Government
- Therma Luzon, Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Energy Link Ltd, New Zealand
- Heidelberg Cement - Germany
- Central Electricity Authority - India
- GMR Energy Limited - India
- Rio Tinto Coal - Australia
- Meenaskhi Energy Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Mineral Development Corp Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Baramulti Group, Indonesia
- Economic Council, Georgia
- Straits Asia Resources Limited - Singapore
- Krishnapatnam Port Company Ltd. - India
- Karaikal Port Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Coal Council - USA
- Vizag Seaport Private Limited - India
- Malabar Cements Ltd - India
- Jaiprakash Power Ventures ltd
- Indika Energy - Indonesia
- Interocean Group of Companies - India
- ASAPP Information Group - India
- Bhoruka Overseas - Indonesia
- Wilmar Investment Holdings
- Semirara Mining and Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Singapore Mercantile Exchange
- Iligan Light & Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Ind-Barath Power Infra Limited - India
- Coalindo Energy - Indonesia
- Antam Resourcindo - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- GVK Power & Infra Limited - India
- Jindal Steel & Power Ltd - India
- New Zealand Coal & Carbon
- Mintek Dendrill Indonesia
- Anglo American - United Kingdom
- Formosa Plastics Group - Taiwan
- Holcim Trading Pte Ltd - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Trasteel International SA, Italy
- Petrochimia International Co. Ltd.- Taiwan
- Sojitz Corporation - Japan
- Sical Logistics Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Toyota Tsusho Corporation, Japan
- Ceylon Electricity Board - Sri Lanka
- Goldman Sachs - Singapore
- IHS Mccloskey Coal Group - USA
- Indonesian Coal Mining Association
- Bayan Resources Tbk. - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Maheswari Brothers Coal Limited - India
- AsiaOL BioFuels Corp., Philippines
- India Bulls Power Limited - India
- Dalmia Cement Bharat India
- Merrill Lynch Commodities Europe
- Banpu Public Company Limited - Thailand
- Kapuas Tunggal Persada - Indonesia
- SMG Consultants - Indonesia
- Riau Bara Harum - Indonesia
- Timah Investasi Mineral - Indoneisa
- Bhushan Steel Limited - India
- Siam City Cement PLC, Thailand
- San Jose City I Power Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- White Energy Company Limited
- Australian Coal Association
- Grasim Industreis Ltd - India
- Videocon Industries ltd - India
- Bukit Baiduri Energy - Indonesia
- CNBM International Corporation - China
- Orica Australia Pty. Ltd.
- International Coal Ventures Pvt Ltd - India
- Siam City Cement - Thailand
- Standard Chartered Bank - UAE
- PTC India Limited - India
- Tata Chemicals Ltd - India
- VISA Power Limited - India
- Wood Mackenzie - Singapore
- Sinarmas Energy and Mining - Indonesia
- Power Finance Corporation Ltd., India
- South Luzon Thermal Energy Corporation
- Star Paper Mills Limited - India
- Kumho Petrochemical, South Korea
- Parliament of New Zealand
- Billiton Holdings Pty Ltd - Australia
- SMC Global Power, Philippines
- Electricity Authority, New Zealand
- Globalindo Alam Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Miang Besar Coal Terminal - Indonesia
- Altura Mining Limited, Indonesia
- Ministry of Mines - Canada
- Indogreen Group - Indonesia
- Ambuja Cements Ltd - India
- Salva Resources Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Mercator Lines Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Bhatia International Limited - India
- Parry Sugars Refinery, India
- Deloitte Consulting - India
- Kaltim Prima Coal - Indonesia
- Bangladesh Power Developement Board
- Manunggal Multi Energi - Indonesia
- Oldendorff Carriers - Singapore
- Port Waratah Coal Services - Australia
- Savvy Resources Ltd - HongKong
- Ministry of Finance - Indonesia
- Marubeni Corporation - India
- Petron Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Latin American Coal - Colombia
- Orica Mining Services - Indonesia
- Cigading International Bulk Terminal - Indonesia
- LBH Netherlands Bv - Netherlands
- Electricity Generating Authority of Thailand
- Barasentosa Lestari - Indonesia
- Gujarat Sidhee Cement - India
- Sree Jayajothi Cements Limited - India
- Essar Steel Hazira Ltd - India
- Coastal Gujarat Power Limited - India
- Posco Energy - South Korea
- Samtan Co., Ltd - South Korea
- The State Trading Corporation of India Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Uttam Galva Steels Limited - India
- The University of Queensland
- Medco Energi Mining Internasional
- Lanco Infratech Ltd - India
- Thai Mozambique Logistica
- Australian Commodity Traders Exchange
- Energy Development Corp, Philippines
- Central Java Power - Indonesia
- Intertek Mineral Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Larsen & Toubro Limited - India
- Xindia Steels Limited - India
- Romanian Commodities Exchange
- ICICI Bank Limited - India
- Indo Tambangraya Megah - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Chamber of Mines of South Africa
- Coal and Oil Company - UAE
- GAC Shipping (India) Pvt Ltd
- Aditya Birla Group - India
- PNOC Exploration Corporation - Philippines
- Mercuria Energy - Indonesia
- McConnell Dowell - Australia
- Kideco Jaya Agung - Indonesia
- Edison Trading Spa - Italy
- Karbindo Abesyapradhi - Indoneisa
- Global Business Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Independent Power Producers Association of India
- European Bulk Services B.V. - Netherlands
- Chettinad Cement Corporation Ltd - India
- OPG Power Generation Pvt Ltd - India
- Eastern Energy - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Price Waterhouse Coopers - Russia
- MS Steel International - UAE
- TeaM Sual Corporation - Philippines
- Sakthi Sugars Limited - India
- Borneo Indobara - Indonesia
- Directorate Of Revenue Intelligence - India
- Metalloyd Limited - United Kingdom
- Cement Manufacturers Association - India
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