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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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Wednesday, 04 February 15
MARKET INSIGHT - LINOS KOGEVINAS
It has been just about over 2 months since, in a move that surprised many and caused widespread apprehension, OPEC decided to maintain its producti ...
Tuesday, 03 February 15
Q1'15 FOB INDONESIA COAL SWAP CLOSED $ 3.29 HIGHER COMPARED TO Q4'15 DELIVERY PRICE
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 rose week over week and month on month.
The Q1 swap up US$ 0.68 (+1.41%) month o ...
Tuesday, 03 February 15
FOB NEWCASTLE COAL SWAP FOR Q4 DELIVERY CLOSED 5.86% LOWER THAN Q1 PRICE
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery rose US$ 0.26 per MT (+0.51%) week over week and declined US$ 0.02 (-0.04%) ...
Monday, 02 February 15
API 4 FOB RICHARDS BAY COAL SWAP ROSE WEEK OVER WEEK
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q1' 2015 declined month over month and day on day.
The Q1 swap has decli ...
Monday, 02 February 15
INDONESIA'S ADARO ENERGY PRODUCED 56.21 MILLION TONNES OF COAL IN 2014; UP 8% Y-O-Y
COALspot.com: PT. Adaro Energy, Indonesia’s largest coal producer, has increased coal production by 8% to 56.21 million tonnes (Mt) from both ...
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- Energy Development Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Bhatia International Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Coal and Oil Company - UAE
- London Commodity Brokers - England
- Ceylon Electricity Board - Sri Lanka
- Altura Mining Limited, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining Corp, Philippines
- Wilmar Investment Holdings
- Australian Commodity Traders Exchange
- Alfred C Toepfer International GmbH - Germany
- Coalindo Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PTC India Limited - India
- Billiton Holdings Pty Ltd - Australia
- Kaltim Prima Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- The Treasury - Australian Government
- Essar Steel Hazira Ltd - India
- Renaissance Capital - South Africa
- GAC Shipping (India) Pvt Ltd
- VISA Power Limited - India
- Global Coal Blending Company Limited - Australia
- Siam City Cement PLC, Thailand
- International Coal Ventures Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Meralco Power Generation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Kobexindo Tractors - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Posco Energy - South Korea
- Ambuja Cements Ltd - India
- Orica Australia Pty. Ltd.
- Offshore Bulk Terminal Pte Ltd, Singapore
- Tamil Nadu electricity Board
- Bangladesh Power Developement Board
- Jaiprakash Power Ventures ltd
- Chettinad Cement Corporation Ltd - India
- Goldman Sachs - Singapore
- Karaikal Port Pvt Ltd - India
- Carbofer General Trading SA - India
- South Luzon Thermal Energy Corporation
- Grasim Industreis Ltd - India
- Kumho Petrochemical, South Korea
- Georgia Ports Authority, United States
- Pipit Mutiara Jaya. PT, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Anglo American - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- Power Finance Corporation Ltd., India
- Bukit Makmur.PT - Indonesia
- GVK Power & Infra Limited - India
- Malabar Cements Ltd - India
- Sakthi Sugars Limited - India
- Electricity Authority, New Zealand
- Oldendorff Carriers - Singapore
- Savvy Resources Ltd - HongKong
- Madhucon Powers Ltd - India
- Samtan Co., Ltd - South Korea
- Rio Tinto Coal - Australia
- TeaM Sual Corporation - Philippines
- Mercuria Energy - Indonesia
- Vedanta Resources Plc - India
- Vizag Seaport Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Deloitte Consulting - India
- Indonesian Coal Mining Association
- Indian Energy Exchange, India
- Indogreen Group - Indonesia
- PNOC Exploration Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Central Java Power - Indonesia
- Maheswari Brothers Coal Limited - India
- The State Trading Corporation of India Ltd
- Sinarmas Energy and Mining - Indonesia
- Antam Resourcindo - Indonesia
- CNBM International Corporation - China
- Bharathi Cement Corporation - India
- Port Waratah Coal Services - Australia
- Economic Council, Georgia
- Toyota Tsusho Corporation, Japan
- Tata Chemicals Ltd - India
- India Bulls Power Limited - India
- White Energy Company Limited
- The University of Queensland
- Heidelberg Cement - Germany
- Parliament of New Zealand
- Cigading International Bulk Terminal - Indonesia
- Agrawal Coal Company - India
- Ministry of Transport, Egypt
- Videocon Industries ltd - India
- CIMB Investment Bank - Malaysia
- Siam City Cement - Thailand
- Interocean Group of Companies - India
- Binh Thuan Hamico - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- San Jose City I Power Corp, Philippines
- Global Business Power Corporation, Philippines
- Medco Energi Mining Internasional
- Ministry of Mines - Canada
- Kalimantan Lumbung Energi - Indonesia
- Salva Resources Pvt Ltd - India
- Sical Logistics Limited - India
- McConnell Dowell - Australia
- Marubeni Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Timah Investasi Mineral - Indoneisa
- Chamber of Mines of South Africa
- Ind-Barath Power Infra Limited - India
- Metalloyd Limited - United Kingdom
- Xindia Steels Limited - India
- Lanco Infratech Ltd - India
- Mercator Lines Limited - India
- ASAPP Information Group - India
- PowerSource Philippines DevCo
- Formosa Plastics Group - Taiwan
- Aditya Birla Group - India
- Sojitz Corporation - Japan
- Edison Trading Spa - Italy
- Aboitiz Power Corporation - Philippines
- Africa Commodities Group - South Africa
- Indo Tambangraya Megah - Indonesia
- Manunggal Multi Energi - Indonesia
- Thai Mozambique Logistica
- Gujarat Electricity Regulatory Commission - India
- Gujarat Sidhee Cement - India
- Barasentosa Lestari - Indonesia
- Energy Link Ltd, New Zealand
- MS Steel International - UAE
- Mintek Dendrill Indonesia
- IEA Clean Coal Centre - UK
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Makarim & Taira - Indonesia
- Eastern Coal Council - USA
- Parry Sugars Refinery, India
- Sree Jayajothi Cements Limited - India
- Baramulti Group, Indonesia
- LBH Netherlands Bv - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Intertek Mineral Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Independent Power Producers Association of India
- Therma Luzon, Inc, Philippines
- Dalmia Cement Bharat India
- Uttam Galva Steels Limited - India
- Star Paper Mills Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Pendopo Energi Batubara - Indonesia
- Petron Corporation, Philippines
- SMC Global Power, Philippines
- Singapore Mercantile Exchange
- IHS Mccloskey Coal Group - USA
- Jindal Steel & Power Ltd - India
- Directorate Of Revenue Intelligence - India
- PetroVietnam Power Coal Import and Supply Company
- Bayan Resources Tbk. - Indonesia
- Mjunction Services Limited - India
- GMR Energy Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Cement Manufacturers Association - India
- Bukit Baiduri Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Iligan Light & Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Banpu Public Company Limited - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Sindya Power Generating Company Private Ltd
- Indika Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Attock Cement Pakistan Limited
- Romanian Commodities Exchange
- Price Waterhouse Coopers - Russia
- ICICI Bank Limited - India
- Kartika Selabumi Mining - Indonesia
- Bhushan Steel Limited - India
- Sarangani Energy Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Larsen & Toubro Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Standard Chartered Bank - UAE
- Indian Oil Corporation Limited
- Merrill Lynch Commodities Europe
- Meenaskhi Energy Private Limited - India
- New Zealand Coal & Carbon
- Commonwealth Bank - Australia
- Minerals Council of Australia
- Eastern Energy - Thailand
- Thiess Contractors Indonesia
- Bulk Trading Sa - Switzerland
- Riau Bara Harum - Indonesia
- Coastal Gujarat Power Limited - India
- Central Electricity Authority - India
- Straits Asia Resources Limited - Singapore
- Borneo Indobara - Indonesia
- Australian Coal Association
- Wood Mackenzie - Singapore
- SMG Consultants - Indonesia
- Planning Commission, India
- Latin American Coal - Colombia
- Orica Mining Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Bhoruka Overseas - Indonesia
- Ministry of Finance - Indonesia
- Trasteel International SA, Italy
- OPG Power Generation Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
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