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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, 27 January 15
Q1 FOB INDONESIA COAL SWAP CLOSED AT $ 47.87 FOR WEEK ENDING JAN. 23
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 gain week over week and declined month on month.
The Q1 swap has decline US$ 0.9 ...
Tuesday, 27 January 15
Q2 FOB NEWCASTLE COAL SWAP UP 4.5% W-O-W
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery declined US$ 0.28 per MT (-0.54%) month over month and increased US$ 1.23 ( ...
Monday, 26 January 15
OVERSUPPLY, AMPLE STOCKPILES, AND LACKLUSTER UNDERLYING STEEL DEMAND KEPT COKING COAL PRICES LOW IN 2014
COALspot.com: Coking coal prices (FOB & CFR) fell 15% and 18% respectively during the year, amidst persistent oversupply, ample inventory and s ...
Monday, 26 January 15
FOB RICHARDS BAY Q2 COAL SWAP CLOSED LOWER THAN Q1 CLOSING
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 fell ...
Monday, 26 January 15
API 8 CFR SOUTH CHINA COAL SWAP CONTINUE TO SLIDE M-O-M; ROSE W-O-W
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery declined US$ 0.79 (-1.33%) per MT month over month and gained US$ 2.10&nb ...
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- GAC Shipping (India) Pvt Ltd
- Indonesian Coal Mining Association
- Kaltim Prima Coal - Indonesia
- Bharathi Cement Corporation - India
- Bhoruka Overseas - Indonesia
- Oldendorff Carriers - Singapore
- Dalmia Cement Bharat India
- Metalloyd Limited - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Singapore Mercantile Exchange
- Iligan Light & Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- McConnell Dowell - Australia
- Global Green Power PLC Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Posco Energy - South Korea
- SN Aboitiz Power Inc, Philippines
- Rio Tinto Coal - Australia
- Mercator Lines Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Coal Council - USA
- OPG Power Generation Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Goldman Sachs - Singapore
- PTC India Limited - India
- Parliament of New Zealand
- Merrill Lynch Commodities Europe
- Bayan Resources Tbk. - Indonesia
- Planning Commission, India
- Agrawal Coal Company - India
- AsiaOL BioFuels Corp., Philippines
- Bulk Trading Sa - Switzerland
- IHS Mccloskey Coal Group - USA
- PNOC Exploration Corporation - Philippines
- Gujarat Sidhee Cement - India
- Attock Cement Pakistan Limited
- Simpson Spence & Young - Indonesia
- Petron Corporation, Philippines
- Standard Chartered Bank - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Georgia Ports Authority, United States
- Maheswari Brothers Coal Limited - India
- Uttam Galva Steels Limited - India
- India Bulls Power Limited - India
- Aboitiz Power Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Madhucon Powers Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Renaissance Capital - South Africa
- Deloitte Consulting - India
- PetroVietnam Power Coal Import and Supply Company
- The Treasury - Australian Government
- Maharashtra Electricity Regulatory Commission - India
- The University of Queensland
- Borneo Indobara - Indonesia
- Barasentosa Lestari - Indonesia
- Kartika Selabumi Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement PLC, Thailand
- ICICI Bank Limited - India
- CIMB Investment Bank - Malaysia
- Coalindo Energy - Indonesia
- Africa Commodities Group - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Energy Link Ltd, New Zealand
- Malabar Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kobexindo Tractors - Indoneisa
- Riau Bara Harum - Indonesia
- MS Steel International - UAE
- The State Trading Corporation of India Ltd
- Medco Energi Mining Internasional
- Directorate Of Revenue Intelligence - India
- Ministry of Finance - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- CNBM International Corporation - China
- Sical Logistics Limited - India
- London Commodity Brokers - England
- Savvy Resources Ltd - HongKong
- Indian Energy Exchange, India
- Meenaskhi Energy Private Limited - India
- Jaiprakash Power Ventures ltd
- Formosa Plastics Group - Taiwan
- Trasteel International SA, Italy
- ASAPP Information Group - India
- Bhatia International Limited - India
- Global Coal Blending Company Limited - Australia
- Holcim Trading Pte Ltd - Singapore
- Sree Jayajothi Cements Limited - India
- Star Paper Mills Limited - India
- Karaikal Port Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Thai Mozambique Logistica
- Kideco Jaya Agung - Indonesia
- Edison Trading Spa - Italy
- Grasim Industreis Ltd - India
- Binh Thuan Hamico - Vietnam
- Globalindo Alam Lestari - Indonesia
- Indika Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Sakthi Sugars Limited - India
- Vedanta Resources Plc - India
- Leighton Contractors Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Mercuria Energy - Indonesia
- Indian Oil Corporation Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- White Energy Company Limited
- Jindal Steel & Power Ltd - India
- Thiess Contractors Indonesia
- Timah Investasi Mineral - Indoneisa
- Interocean Group of Companies - India
- Essar Steel Hazira Ltd - India
- Vizag Seaport Private Limited - India
- Ministry of Mines - Canada
- Orica Australia Pty. Ltd.
- Meralco Power Generation, Philippines
- Indogreen Group - Indonesia
- Bukit Makmur.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Makarim & Taira - Indonesia
- Price Waterhouse Coopers - Russia
- San Jose City I Power Corp, Philippines
- Carbofer General Trading SA - India
- Port Waratah Coal Services - Australia
- Central Java Power - Indonesia
- Antam Resourcindo - Indonesia
- Straits Asia Resources Limited - Singapore
- Mintek Dendrill Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Samtan Co., Ltd - South Korea
- Central Electricity Authority - India
- Sindya Power Generating Company Private Ltd
- Romanian Commodities Exchange
- Asmin Koalindo Tuhup - Indonesia
- SMG Consultants - Indonesia
- Larsen & Toubro Limited - India
- Bangladesh Power Developement Board
- Anglo American - United Kingdom
- Cement Manufacturers Association - India
- Therma Luzon, Inc, Philippines
- Altura Mining Limited, Indonesia
- South Luzon Thermal Energy Corporation
- Pipit Mutiara Jaya. PT, Indonesia
- Economic Council, Georgia
- Krishnapatnam Port Company Ltd. - India
- Global Business Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Electricity Authority, New Zealand
- Baramulti Group, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Kumho Petrochemical, South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Semirara Mining Corp, Philippines
- SMC Global Power, Philippines
- Ceylon Electricity Board - Sri Lanka
- Commonwealth Bank - Australia
- European Bulk Services B.V. - Netherlands
- International Coal Ventures Pvt Ltd - India
- Marubeni Corporation - India
- Orica Mining Services - Indonesia
- Eastern Energy - Thailand
- Toyota Tsusho Corporation, Japan
- TeaM Sual Corporation - Philippines
- Electricity Generating Authority of Thailand
- Tata Chemicals Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- PowerSource Philippines DevCo
- Energy Development Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- Aditya Birla Group - India
- Intertek Mineral Services - Indonesia
- VISA Power Limited - India
- Sojitz Corporation - Japan
- Independent Power Producers Association of India
- Australian Commodity Traders Exchange
- Rashtriya Ispat Nigam Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Videocon Industries ltd - India
- Salva Resources Pvt Ltd - India
- Lanco Infratech Ltd - India
- Latin American Coal - Colombia
- Ministry of Transport, Egypt
- Wilmar Investment Holdings
- Gujarat Mineral Development Corp Ltd - India
- New Zealand Coal & Carbon
- Power Finance Corporation Ltd., India
- Xindia Steels Limited - India
- Siam City Cement - Thailand
- GVK Power & Infra Limited - India
- IEA Clean Coal Centre - UK
- Minerals Council of Australia
- Bhushan Steel Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Australian Coal Association
- Kepco SPC Power Corporation, Philippines
- Coal and Oil Company - UAE
- Parry Sugars Refinery, India
- Wood Mackenzie - Singapore
- GMR Energy Limited - India
- Cigading International Bulk Terminal - Indonesia
- Heidelberg Cement - Germany
- Mjunction Services Limited - India
- Semirara Mining and Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Tamil Nadu electricity Board
- Directorate General of MIneral and Coal - Indonesia
- Chamber of Mines of South Africa
- Pendopo Energi Batubara - Indonesia
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