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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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Sunday, 15 February 15
BALTIC DRY INDEX CONTINUALLY DIPPED IN RED
COALspot.com: The Baltic Dry Index continues its decline and fell 5.18 pct to 530 points week on week due to falling commodity prices and declining ...
Saturday, 14 February 15
SHALE GAS AND TIGHT OIL ARE COMMERCIALLY PRODUCED IN JUST FOUR COUNTRIES - EIA
KNOWLEDGE TO ELEVATE
The United States, Canada, China, and Argentina are currently the only four countries in the world that are producing com ...
Friday, 13 February 15
U.S. WEEKLY COAL PRODUCTION SHOWS 10% DECLINE
COALspot.com – United States the world's one of the largest coal producers, produced approximately 18.1 million short tons (mmst) of coal ...
Friday, 13 February 15
SMALL AND MEDIUM-SIZED SHIP OWNERS SQUEEZED OUT OF THE MARKET ON CRASHING DRY BULK MARKET AND EUROZONE CRISIS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Financing issues have started to tighten the noose in the throats of small and medium-size ship owners, who were already facing problems over the p ...
Thursday, 12 February 15
CAPESIZE: THE BEST DESCRIPTION FOR THE MARKET IS, FLAT - FEARNRESEARCH
Handy
The handy and supra market is also being affected by the marginal volume of activity in the commodity sales. We see a small upturn in the T ...
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- Interocean Group of Companies - India
- Merrill Lynch Commodities Europe
- Price Waterhouse Coopers - Russia
- Pipit Mutiara Jaya. PT, Indonesia
- Latin American Coal - Colombia
- Eastern Coal Council - USA
- Jorong Barutama Greston.PT - Indonesia
- CIMB Investment Bank - Malaysia
- Kaltim Prima Coal - Indonesia
- European Bulk Services B.V. - Netherlands
- Ambuja Cements Ltd - India
- Indogreen Group - Indonesia
- Samtan Co., Ltd - South Korea
- Bulk Trading Sa - Switzerland
- Renaissance Capital - South Africa
- Baramulti Group, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- AsiaOL BioFuels Corp., Philippines
- GN Power Mariveles Coal Plant, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Planning Commission, India
- Altura Mining Limited, Indonesia
- Sarangani Energy Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Singapore Mercantile Exchange
- PetroVietnam Power Coal Import and Supply Company
- ICICI Bank Limited - India
- Borneo Indobara - Indonesia
- SMC Global Power, Philippines
- Kartika Selabumi Mining - Indonesia
- Bhatia International Limited - India
- Thai Mozambique Logistica
- Salva Resources Pvt Ltd - India
- Videocon Industries ltd - India
- Bukit Makmur.PT - Indonesia
- Tamil Nadu electricity Board
- Maheswari Brothers Coal Limited - India
- Global Business Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Georgia Ports Authority, United States
- Madhucon Powers Ltd - India
- Electricity Generating Authority of Thailand
- The Treasury - Australian Government
- GMR Energy Limited - India
- Globalindo Alam Lestari - Indonesia
- Sree Jayajothi Cements Limited - India
- Cigading International Bulk Terminal - Indonesia
- Medco Energi Mining Internasional
- Indonesian Coal Mining Association
- GAC Shipping (India) Pvt Ltd
- Meenaskhi Energy Private Limited - India
- Bhushan Steel Limited - India
- New Zealand Coal & Carbon
- Kumho Petrochemical, South Korea
- Energy Link Ltd, New Zealand
- Dalmia Cement Bharat India
- Iligan Light & Power Inc, Philippines
- Power Finance Corporation Ltd., India
- PowerSource Philippines DevCo
- Energy Development Corp, Philippines
- Oldendorff Carriers - Singapore
- Coastal Gujarat Power Limited - India
- Ind-Barath Power Infra Limited - India
- Edison Trading Spa - Italy
- Rio Tinto Coal - Australia
- Bangladesh Power Developement Board
- Xindia Steels Limited - India
- Grasim Industreis Ltd - India
- Uttam Galva Steels Limited - India
- Sical Logistics Limited - India
- Siam City Cement - Thailand
- SMG Consultants - Indonesia
- Chettinad Cement Corporation Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Electricity Authority, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Semirara Mining and Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- PTC India Limited - India
- Vizag Seaport Private Limited - India
- Wilmar Investment Holdings
- Metalloyd Limited - United Kingdom
- Attock Cement Pakistan Limited
- Indo Tambangraya Megah - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Central Java Power - Indonesia
- London Commodity Brokers - England
- Therma Luzon, Inc, Philippines
- Anglo American - United Kingdom
- Orica Australia Pty. Ltd.
- Indian Energy Exchange, India
- Kohat Cement Company Ltd. - Pakistan
- Straits Asia Resources Limited - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- International Coal Ventures Pvt Ltd - India
- Gujarat Sidhee Cement - India
- CNBM International Corporation - China
- Trasteel International SA, Italy
- McConnell Dowell - Australia
- Bukit Baiduri Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Mercator Lines Limited - India
- Central Electricity Authority - India
- Maharashtra Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- Goldman Sachs - Singapore
- ASAPP Information Group - India
- Petron Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Kepco SPC Power Corporation, Philippines
- Marubeni Corporation - India
- White Energy Company Limited
- Manunggal Multi Energi - Indonesia
- Parliament of New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- Holcim Trading Pte Ltd - Singapore
- Billiton Holdings Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Wood Mackenzie - Singapore
- Ceylon Electricity Board - Sri Lanka
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Timah Investasi Mineral - Indoneisa
- Vedanta Resources Plc - India
- Lanco Infratech Ltd - India
- Jaiprakash Power Ventures ltd
- Jindal Steel & Power Ltd - India
- Agrawal Coal Company - India
- OPG Power Generation Pvt Ltd - India
- Makarim & Taira - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Simpson Spence & Young - Indonesia
- Aditya Birla Group - India
- LBH Netherlands Bv - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Mines - Canada
- Leighton Contractors Pty Ltd - Australia
- Bharathi Cement Corporation - India
- Deloitte Consulting - India
- Bahari Cakrawala Sebuku - Indonesia
- Antam Resourcindo - Indonesia
- Ministry of Finance - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Africa Commodities Group - South Africa
- Mintek Dendrill Indonesia
- Savvy Resources Ltd - HongKong
- Global Coal Blending Company Limited - Australia
- Bhoruka Overseas - Indonesia
- Malabar Cements Ltd - India
- Intertek Mineral Services - Indonesia
- The University of Queensland
- Romanian Commodities Exchange
- Tata Chemicals Ltd - India
- Sakthi Sugars Limited - India
- Posco Energy - South Korea
- Independent Power Producers Association of India
- Sojitz Corporation - Japan
- Rashtriya Ispat Nigam Limited - India
- Star Paper Mills Limited - India
- Parry Sugars Refinery, India
- Indika Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Semirara Mining Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Bukit Asam (Persero) Tbk - Indonesia
- India Bulls Power Limited - India
- Binh Thuan Hamico - Vietnam
- Economic Council, Georgia
- Siam City Cement PLC, Thailand
- Standard Chartered Bank - UAE
- Aboitiz Power Corporation - Philippines
- Mjunction Services Limited - India
- TeaM Sual Corporation - Philippines
- Ministry of Transport, Egypt
- Chamber of Mines of South Africa
- Thiess Contractors Indonesia
- Orica Mining Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- The State Trading Corporation of India Ltd
- Indian Oil Corporation Limited
- Eastern Energy - Thailand
- SN Aboitiz Power Inc, Philippines
- Cement Manufacturers Association - India
- IHS Mccloskey Coal Group - USA
- San Jose City I Power Corp, Philippines
- Minerals Council of Australia
- Port Waratah Coal Services - Australia
- Carbofer General Trading SA - India
- Riau Bara Harum - Indonesia
- Mercuria Energy - Indonesia
- Larsen & Toubro Limited - India
- South Luzon Thermal Energy Corporation
- Coal and Oil Company - UAE
- Barasentosa Lestari - Indonesia
- Commonwealth Bank - Australia
- Krishnapatnam Port Company Ltd. - India
- MS Steel International - UAE
- Australian Coal Association
- Heidelberg Cement - Germany
- Neyveli Lignite Corporation Ltd, - India
- Karaikal Port Pvt Ltd - India
- Meralco Power Generation, Philippines
- Coalindo Energy - Indonesia
- Australian Commodity Traders Exchange
- Formosa Plastics Group - Taiwan
- IEA Clean Coal Centre - UK
- Sinarmas Energy and Mining - Indonesia
- VISA Power Limited - India
- Kobexindo Tractors - Indoneisa
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