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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, 12 February 15
DRY BULK OWNERS SCRAP MORE VESSELS, AS MARKET REACHES HISTORICAL LOWS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has reached historical lows this week, with the Baltic Dry Index (BDI) now trading at levels below operating expense levels for ...
Thursday, 12 February 15
INDONESIAN COAL PRICE REFERENCE INCHED DOWN 1.44% IN FEBRUARY
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down Indonesian coal bench mark price this month to US$ 62.92 pe ...
Thursday, 12 February 15
NEWBUILDING ORDERING ACTIVITY DRAGS ON, AS OWNERS ARE LOOKING FOR LOWER PRICES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Ship owners appear to be waiting for lower prices in their dealings with Asian shipyards, as the dry bulk market is at historical lows. According t ...
Wednesday, 11 February 15
DRY BULK MARKET REMAINED UNDER PRESSURE : STABILIZING CAPE MARKET HARDLY HELPED SENTIMENT
COALspot.com: The Dry Bulk market remained under pressure last week, while the stabilizing Cape market hardly helped sentiment.
Greece based s ...
Wednesday, 11 February 15
BDI HITTING THE ALL-TIME LOW; FFA MARKETS NOT SHOWING ANY POSITIVE SIGNS
With the BDI hitting the all-time low and with FFA markets not showing any positive signs for a possible recovery in the near future, pessimism is ...
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- Mercuria Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Indian Oil Corporation Limited
- Sarangani Energy Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Madhucon Powers Ltd - India
- Siam City Cement PLC, Thailand
- The Treasury - Australian Government
- Tata Chemicals Ltd - India
- Ministry of Mines - Canada
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Singapore Mercantile Exchange
- Indogreen Group - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Goldman Sachs - Singapore
- Bangladesh Power Developement Board
- PowerSource Philippines DevCo
- Simpson Spence & Young - Indonesia
- Central Java Power - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Xindia Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- Toyota Tsusho Corporation, Japan
- Wood Mackenzie - Singapore
- OPG Power Generation Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Semirara Mining Corp, Philippines
- Edison Trading Spa - Italy
- CIMB Investment Bank - Malaysia
- Thiess Contractors Indonesia
- Ambuja Cements Ltd - India
- GMR Energy Limited - India
- Anglo American - United Kingdom
- Barasentosa Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Kaltim Prima Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Star Paper Mills Limited - India
- Ministry of Finance - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- Carbofer General Trading SA - India
- Makarim & Taira - Indonesia
- Planning Commission, India
- Energy Link Ltd, New Zealand
- Renaissance Capital - South Africa
- Latin American Coal - Colombia
- Kartika Selabumi Mining - Indonesia
- Power Finance Corporation Ltd., India
- Videocon Industries ltd - India
- Vedanta Resources Plc - India
- IHS Mccloskey Coal Group - USA
- White Energy Company Limited
- Therma Luzon, Inc, Philippines
- Deloitte Consulting - India
- PTC India Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coal and Oil Company - UAE
- Malabar Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- Eastern Coal Council - USA
- Vizag Seaport Private Limited - India
- Georgia Ports Authority, United States
- Grasim Industreis Ltd - India
- India Bulls Power Limited - India
- Karaikal Port Pvt Ltd - India
- Rio Tinto Coal - Australia
- Larsen & Toubro Limited - India
- Holcim Trading Pte Ltd - Singapore
- Billiton Holdings Pty Ltd - Australia
- Sakthi Sugars Limited - India
- CNBM International Corporation - China
- Bharathi Cement Corporation - India
- Global Business Power Corporation, Philippines
- Indian Energy Exchange, India
- Siam City Cement - Thailand
- Wilmar Investment Holdings
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhushan Steel Limited - India
- Metalloyd Limited - United Kingdom
- Interocean Group of Companies - India
- Riau Bara Harum - Indonesia
- VISA Power Limited - India
- Ind-Barath Power Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Jindal Steel & Power Ltd - India
- Heidelberg Cement - Germany
- Sree Jayajothi Cements Limited - India
- Jaiprakash Power Ventures ltd
- Bulk Trading Sa - Switzerland
- Mjunction Services Limited - India
- Agrawal Coal Company - India
- Economic Council, Georgia
- McConnell Dowell - Australia
- Altura Mining Limited, Indonesia
- Posco Energy - South Korea
- PetroVietnam Power Coal Import and Supply Company
- Samtan Co., Ltd - South Korea
- Maharashtra Electricity Regulatory Commission - India
- Neyveli Lignite Corporation Ltd, - India
- GAC Shipping (India) Pvt Ltd
- London Commodity Brokers - England
- Kumho Petrochemical, South Korea
- Global Green Power PLC Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Baramulti Group, Indonesia
- Parliament of New Zealand
- Sojitz Corporation - Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Borneo Indobara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- ICICI Bank Limited - India
- Indo Tambangraya Megah - Indonesia
- Sindya Power Generating Company Private Ltd
- Central Electricity Authority - India
- Banpu Public Company Limited - Thailand
- PNOC Exploration Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pendopo Energi Batubara - Indonesia
- SMG Consultants - Indonesia
- Bhatia International Limited - India
- Romanian Commodities Exchange
- MS Steel International - UAE
- Commonwealth Bank - Australia
- Meralco Power Generation, Philippines
- South Luzon Thermal Energy Corporation
- Eastern Energy - Thailand
- European Bulk Services B.V. - Netherlands
- Electricity Authority, New Zealand
- Iligan Light & Power Inc, Philippines
- Trasteel International SA, Italy
- Straits Asia Resources Limited - Singapore
- New Zealand Coal & Carbon
- Sical Logistics Limited - India
- Africa Commodities Group - South Africa
- Price Waterhouse Coopers - Russia
- SN Aboitiz Power Inc, Philippines
- Savvy Resources Ltd - HongKong
- Rashtriya Ispat Nigam Limited - India
- Meenaskhi Energy Private Limited - India
- Port Waratah Coal Services - Australia
- Timah Investasi Mineral - Indoneisa
- Global Coal Blending Company Limited - Australia
- Australian Coal Association
- Formosa Plastics Group - Taiwan
- Miang Besar Coal Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Aboitiz Power Corporation - Philippines
- Mercator Lines Limited - India
- IEA Clean Coal Centre - UK
- Alfred C Toepfer International GmbH - Germany
- Indika Energy - Indonesia
- GVK Power & Infra Limited - India
- Standard Chartered Bank - UAE
- LBH Netherlands Bv - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Australian Commodity Traders Exchange
- ASAPP Information Group - India
- Orica Mining Services - Indonesia
- Tamil Nadu electricity Board
- Vijayanagar Sugar Pvt Ltd - India
- Mintek Dendrill Indonesia
- Manunggal Multi Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Cement Manufacturers Association - India
- Bukit Makmur.PT - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining and Power Corporation, Philippines
- SMC Global Power, Philippines
- Bhoruka Overseas - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- The University of Queensland
- Electricity Generating Authority of Thailand
- Essar Steel Hazira Ltd - India
- Antam Resourcindo - Indonesia
- Medco Energi Mining Internasional
- Ceylon Electricity Board - Sri Lanka
- Attock Cement Pakistan Limited
- Salva Resources Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Orica Australia Pty. Ltd.
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Parry Sugars Refinery, India
- GN Power Mariveles Coal Plant, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Coalindo Energy - Indonesia
- Indonesian Coal Mining Association
- Oldendorff Carriers - Singapore
- International Coal Ventures Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Aditya Birla Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- Chamber of Mines of South Africa
- Lanco Infratech Ltd - India
- Minerals Council of Australia
- Ministry of Transport, Egypt
- Uttam Galva Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- TeaM Sual Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Merrill Lynch Commodities Europe
- Independent Power Producers Association of India
- Petron Corporation, Philippines
- Thai Mozambique Logistica
- Dalmia Cement Bharat India
- Coastal Gujarat Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- The State Trading Corporation of India Ltd
- Energy Development Corp, Philippines
- Marubeni Corporation - India
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