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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, 08 February 15
BDI FELL CONTINUOUSLY HIT A THREE DECADES LOW
COALspot.com: This week Baltic Exchange Dry Freight Index (BDI) fell continuously hit a three decades low.
The BDI continuously fell and was d ...
Friday, 06 February 15
WEEKLY U.S. COAL PRODUCTION UP AN ESTIMATED 1.1% FROM LAST WEEK - EIA
COALspot.com – United States the world's one of the largest coal producers, produced approximately 20.1 million short tons (mmst) of coal ...
Friday, 06 February 15
SHIP DAMAGED BY FIRE CAUSED BY PIRATES FOUND TO BE CONSTRUCTIVE TOTAL LOSS - TAYLOR WESSING
KNOWLEDGE TO ELEVATE
The High Court was asked to determine a number of preliminary issues, including whether a vessel was a constructive total ...
Thursday, 05 February 15
BDI HAS NOW FALLEN A LEVEL CLOSE TO THE INDEX'S HISTORIC LOW - INTERMODAL
They say a picture is worth a thousand words and in this instance just one look at the tables above is enough to understand the great pressure the ...
Thursday, 05 February 15
ULTRAMAX LEVELS FROM INDIA TO CHINA IN THE MID US$ 5000'S - FEARNLEYS AS
Handy
Despite the overall weak sentiment, there is a scent of optimism in the Atlantic market for ppt dates. Continent is still struggling with o ...
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- Goldman Sachs - Singapore
- Thai Mozambique Logistica
- Iligan Light & Power Inc, Philippines
- Attock Cement Pakistan Limited
- Bayan Resources Tbk. - Indonesia
- London Commodity Brokers - England
- Ministry of Finance - Indonesia
- Energy Link Ltd, New Zealand
- Economic Council, Georgia
- Semirara Mining Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Bhatia International Limited - India
- Central Java Power - Indonesia
- Independent Power Producers Association of India
- Bahari Cakrawala Sebuku - Indonesia
- Essar Steel Hazira Ltd - India
- International Coal Ventures Pvt Ltd - India
- SMG Consultants - Indonesia
- Global Green Power PLC Corporation, Philippines
- Mercator Lines Limited - India
- Sojitz Corporation - Japan
- Jaiprakash Power Ventures ltd
- Wilmar Investment Holdings
- GMR Energy Limited - India
- Ceylon Electricity Board - Sri Lanka
- Directorate General of MIneral and Coal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Neyveli Lignite Corporation Ltd, - India
- CNBM International Corporation - China
- Global Coal Blending Company Limited - Australia
- Indika Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement - Thailand
- The Treasury - Australian Government
- Formosa Plastics Group - Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Renaissance Capital - South Africa
- Gujarat Sidhee Cement - India
- White Energy Company Limited
- Mintek Dendrill Indonesia
- PTC India Limited - India
- Bangladesh Power Developement Board
- Parliament of New Zealand
- Indo Tambangraya Megah - Indonesia
- Metalloyd Limited - United Kingdom
- Maheswari Brothers Coal Limited - India
- Standard Chartered Bank - UAE
- Makarim & Taira - Indonesia
- Ind-Barath Power Infra Limited - India
- Medco Energi Mining Internasional
- Salva Resources Pvt Ltd - India
- Romanian Commodities Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Aditya Birla Group - India
- Savvy Resources Ltd - HongKong
- Trasteel International SA, Italy
- Binh Thuan Hamico - Vietnam
- Kaltim Prima Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Parry Sugars Refinery, India
- Krishnapatnam Port Company Ltd. - India
- GAC Shipping (India) Pvt Ltd
- India Bulls Power Limited - India
- SMC Global Power, Philippines
- AsiaOL BioFuels Corp., Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Leighton Contractors Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- Anglo American - United Kingdom
- Karaikal Port Pvt Ltd - India
- MS Steel International - UAE
- Bhoruka Overseas - Indonesia
- CIMB Investment Bank - Malaysia
- Coastal Gujarat Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Heidelberg Cement - Germany
- Pipit Mutiara Jaya. PT, Indonesia
- Central Electricity Authority - India
- The State Trading Corporation of India Ltd
- Mjunction Services Limited - India
- Sical Logistics Limited - India
- Riau Bara Harum - Indonesia
- Lanco Infratech Ltd - India
- Malabar Cements Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate Of Revenue Intelligence - India
- Timah Investasi Mineral - Indoneisa
- Coalindo Energy - Indonesia
- Madhucon Powers Ltd - India
- Planning Commission, India
- Rio Tinto Coal - Australia
- Kapuas Tunggal Persada - Indonesia
- Power Finance Corporation Ltd., India
- Africa Commodities Group - South Africa
- Agrawal Coal Company - India
- Toyota Tsusho Corporation, Japan
- Bhushan Steel Limited - India
- Bukit Baiduri Energy - Indonesia
- Sakthi Sugars Limited - India
- Energy Development Corp, Philippines
- McConnell Dowell - Australia
- Simpson Spence & Young - Indonesia
- Bulk Trading Sa - Switzerland
- Altura Mining Limited, Indonesia
- New Zealand Coal & Carbon
- Electricity Generating Authority of Thailand
- Georgia Ports Authority, United States
- Port Waratah Coal Services - Australia
- South Luzon Thermal Energy Corporation
- Tamil Nadu electricity Board
- PNOC Exploration Corporation - Philippines
- Orica Australia Pty. Ltd.
- Meenaskhi Energy Private Limited - India
- European Bulk Services B.V. - Netherlands
- VISA Power Limited - India
- Jindal Steel & Power Ltd - India
- Latin American Coal - Colombia
- PetroVietnam Power Coal Import and Supply Company
- Alfred C Toepfer International GmbH - Germany
- GVK Power & Infra Limited - India
- Petron Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Videocon Industries ltd - India
- SN Aboitiz Power Inc, Philippines
- Larsen & Toubro Limited - India
- Borneo Indobara - Indonesia
- Tata Chemicals Ltd - India
- IEA Clean Coal Centre - UK
- ASAPP Information Group - India
- Commonwealth Bank - Australia
- Eastern Coal Council - USA
- Siam City Cement PLC, Thailand
- OPG Power Generation Pvt Ltd - India
- Singapore Mercantile Exchange
- Antam Resourcindo - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Indian Oil Corporation Limited
- Bharathi Cement Corporation - India
- Edison Trading Spa - Italy
- ICICI Bank Limited - India
- Manunggal Multi Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- Star Paper Mills Limited - India
- Dalmia Cement Bharat India
- Therma Luzon, Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kideco Jaya Agung - Indonesia
- Baramulti Group, Indonesia
- Interocean Group of Companies - India
- Ministry of Transport, Egypt
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Samtan Co., Ltd - South Korea
- Kepco SPC Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Aboitiz Power Corporation - Philippines
- Xindia Steels Limited - India
- San Jose City I Power Corp, Philippines
- The University of Queensland
- Chettinad Cement Corporation Ltd - India
- Electricity Authority, New Zealand
- Vedanta Resources Plc - India
- Uttam Galva Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Intertek Mineral Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Orica Mining Services - Indonesia
- LBH Netherlands Bv - Netherlands
- Meralco Power Generation, Philippines
- Vizag Seaport Private Limited - India
- Australian Commodity Traders Exchange
- Mercuria Energy - Indonesia
- Ministry of Mines - Canada
- Australian Coal Association
- Indonesian Coal Mining Association
- Sindya Power Generating Company Private Ltd
- Indogreen Group - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Minerals Council of Australia
- Banpu Public Company Limited - Thailand
- Ambuja Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Gujarat Electricity Regulatory Commission - India
- Oldendorff Carriers - Singapore
- Deloitte Consulting - India
- Merrill Lynch Commodities Europe
- Thiess Contractors Indonesia
- Eastern Energy - Thailand
- Sarangani Energy Corporation, Philippines
- Coal and Oil Company - UAE
- Carbofer General Trading SA - India
- Straits Asia Resources Limited - Singapore
- Price Waterhouse Coopers - Russia
- Cement Manufacturers Association - India
- Kobexindo Tractors - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Global Business Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Kohat Cement Company Ltd. - Pakistan
- Kalimantan Lumbung Energi - Indonesia
- Indian Energy Exchange, India
- TeaM Sual Corporation - Philippines
- Chamber of Mines of South Africa
- Marubeni Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Wood Mackenzie - Singapore
- PowerSource Philippines DevCo
- Posco Energy - South Korea
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