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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, 10 February 15
IRON ORE MARKET TO REMAIN OVERSUPPLIED IN 2015: PRICE FORECAST $70/T - WOOD MACKENZIE
COALspot.com: With January witnessing the price of iron ore falling to its lowest levels since May 2009, Roger Emslie, Principal Metals & ...
Tuesday, 10 February 15
SUB-BIT FOB INDONESIA COAL SWAP ADVANCES 3.79% WEEK ON WEEK
COALspot.com: Indonesian coal swaps for delivery Q2' 2015 rose week over week and month on month.
The Q2 swap up US$ 0.85 (+1.81%) month o ...
Tuesday, 10 February 15
FOB NEWCASTLE COAL SWAPS SURGE WEEK OVER WEEK, RAISING HOPES?
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery rose US$ 0.95 per MT (+1.91%) week over week and declined US$ 0.06 (-0.12%) ...
Monday, 09 February 15
FOB RICHARDS BAY COAL SWAP GAINS 3.65% TO ONE-MONTH HIGH
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q2' 2015 surge month over month and day on day.
The Q2 swap has soared US$ 2.1 ...
Monday, 09 February 15
Q2' CFR SOUTH CHINA COAL SWAP DECLINED 3.28% TO $ 56.92 W-O-W
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery declined US$ 1.93 (-3.28%) per MT month over month and US$ 0.10 (-0 ...
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- Commonwealth Bank - Australia
- Energy Link Ltd, New Zealand
- Tata Chemicals Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mintek Dendrill Indonesia
- Global Coal Blending Company Limited - Australia
- Salva Resources Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- ICICI Bank Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Krishnapatnam Port Company Ltd. - India
- European Bulk Services B.V. - Netherlands
- Simpson Spence & Young - Indonesia
- The University of Queensland
- Bhatia International Limited - India
- Indogreen Group - Indonesia
- Singapore Mercantile Exchange
- Georgia Ports Authority, United States
- Parliament of New Zealand
- Ministry of Finance - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Lanco Infratech Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CIMB Investment Bank - Malaysia
- Coalindo Energy - Indonesia
- CNBM International Corporation - China
- Siam City Cement - Thailand
- Aditya Birla Group - India
- Jaiprakash Power Ventures ltd
- Central Electricity Authority - India
- Interocean Group of Companies - India
- Bahari Cakrawala Sebuku - Indonesia
- Coastal Gujarat Power Limited - India
- Vedanta Resources Plc - India
- IHS Mccloskey Coal Group - USA
- Aboitiz Power Corporation - Philippines
- The Treasury - Australian Government
- Intertek Mineral Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Wood Mackenzie - Singapore
- ASAPP Information Group - India
- Miang Besar Coal Terminal - Indonesia
- Larsen & Toubro Limited - India
- Kapuas Tunggal Persada - Indonesia
- Renaissance Capital - South Africa
- Mercator Lines Limited - India
- Electricity Generating Authority of Thailand
- Trasteel International SA, Italy
- Latin American Coal - Colombia
- Ministry of Transport, Egypt
- Globalindo Alam Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Manunggal Multi Energi - Indonesia
- Economic Council, Georgia
- Rio Tinto Coal - Australia
- Medco Energi Mining Internasional
- Sical Logistics Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Mercuria Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Indian Energy Exchange, India
- Samtan Co., Ltd - South Korea
- Vizag Seaport Private Limited - India
- Anglo American - United Kingdom
- Maheswari Brothers Coal Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Posco Energy - South Korea
- Savvy Resources Ltd - HongKong
- Jorong Barutama Greston.PT - Indonesia
- Agrawal Coal Company - India
- Rashtriya Ispat Nigam Limited - India
- Port Waratah Coal Services - Australia
- Carbofer General Trading SA - India
- IEA Clean Coal Centre - UK
- Gujarat Mineral Development Corp Ltd - India
- Global Business Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Electricity Authority, New Zealand
- Ambuja Cements Ltd - India
- White Energy Company Limited
- Coal and Oil Company - UAE
- London Commodity Brokers - England
- Metalloyd Limited - United Kingdom
- Offshore Bulk Terminal Pte Ltd, Singapore
- Toyota Tsusho Corporation, Japan
- Formosa Plastics Group - Taiwan
- SMG Consultants - Indonesia
- Ministry of Mines - Canada
- Asmin Koalindo Tuhup - Indonesia
- Indika Energy - Indonesia
- Goldman Sachs - Singapore
- Madhucon Powers Ltd - India
- Heidelberg Cement - Germany
- Central Java Power - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Semirara Mining Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Bharathi Cement Corporation - India
- Iligan Light & Power Inc, Philippines
- Australian Coal Association
- Antam Resourcindo - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Cement Manufacturers Association - India
- Vijayanagar Sugar Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Meralco Power Generation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Videocon Industries ltd - India
- Kumho Petrochemical, South Korea
- Chamber of Mines of South Africa
- Ind-Barath Power Infra Limited - India
- Borneo Indobara - Indonesia
- Price Waterhouse Coopers - Russia
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Bayan Resources Tbk. - Indonesia
- Romanian Commodities Exchange
- Dalmia Cement Bharat India
- Kartika Selabumi Mining - Indonesia
- Marubeni Corporation - India
- Thiess Contractors Indonesia
- Gujarat Sidhee Cement - India
- Therma Luzon, Inc, Philippines
- PTC India Limited - India
- MS Steel International - UAE
- SN Aboitiz Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Malabar Cements Ltd - India
- Riau Bara Harum - Indonesia
- San Jose City I Power Corp, Philippines
- The State Trading Corporation of India Ltd
- Bulk Trading Sa - Switzerland
- Sarangani Energy Corporation, Philippines
- Thai Mozambique Logistica
- Petrochimia International Co. Ltd.- Taiwan
- Mjunction Services Limited - India
- Indonesian Coal Mining Association
- GMR Energy Limited - India
- Orica Mining Services - Indonesia
- LBH Netherlands Bv - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- Bangladesh Power Developement Board
- Leighton Contractors Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Global Green Power PLC Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- PowerSource Philippines DevCo
- GVK Power & Infra Limited - India
- Wilmar Investment Holdings
- Sree Jayajothi Cements Limited - India
- Indian Oil Corporation Limited
- Petron Corporation, Philippines
- Baramulti Group, Indonesia
- Essar Steel Hazira Ltd - India
- Grasim Industreis Ltd - India
- PNOC Exploration Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Planning Commission, India
- Edison Trading Spa - Italy
- Bhushan Steel Limited - India
- SMC Global Power, Philippines
- Africa Commodities Group - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Star Paper Mills Limited - India
- Ceylon Electricity Board - Sri Lanka
- Altura Mining Limited, Indonesia
- McConnell Dowell - Australia
- Uttam Galva Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- GN Power Mariveles Coal Plant, Philippines
- Kepco SPC Power Corporation, Philippines
- Sojitz Corporation - Japan
- Binh Thuan Hamico - Vietnam
- Eastern Coal Council - USA
- Merrill Lynch Commodities Europe
- Attock Cement Pakistan Limited
- TeaM Sual Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Standard Chartered Bank - UAE
- Energy Development Corp, Philippines
- Eastern Energy - Thailand
- Timah Investasi Mineral - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Parry Sugars Refinery, India
- Tamil Nadu electricity Board
- New Zealand Coal & Carbon
- Kobexindo Tractors - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Bukit Baiduri Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Makarim & Taira - Indonesia
- Jindal Steel & Power Ltd - India
- Xindia Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Commodity Traders Exchange
- South Luzon Thermal Energy Corporation
- Power Finance Corporation Ltd., India
- Sakthi Sugars Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- VISA Power Limited - India
- Minerals Council of Australia
- GAC Shipping (India) Pvt Ltd
- India Bulls Power Limited - India
- Deloitte Consulting - India
- Independent Power Producers Association of India
- Bhoruka Overseas - Indonesia
- Orica Australia Pty. Ltd.
- Pipit Mutiara Jaya. PT, Indonesia
- OPG Power Generation Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Oldendorff Carriers - Singapore
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