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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, 25 January 15
PANAMAX FREIGHT RATES STILL FALLING
COALspot.com: The BDI was slightly down this week to 720 points. The BDI lost 2.83 pct week on week.
The cape index continued its upward trend ...
Friday, 23 January 15
U.S. WEEKLY COAL PRODUCTION FOR WEEK ENDING JAN. 17 UP 2.5%
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.4 million short tons (mmst) of coal ...
Thursday, 22 January 15
PANAMAX: A SOFTER TONE AND OVERALL A SLUGGISH MARKET - FEARNLEYS
Handy
The handy and supra market has experienced yet another week with slow activity and softening rates in both hemispheres, broker Fearnleys AS ...
Thursday, 22 January 15
BUMI RESOURCES POSTS NET INCOME OF $13.3 MILLION 9M-2014
COALspot.com: Bumi Resources, Indonesia’s largest coal miner, reported today that, the company has recorded a net income of $13.3 million for ...
Wednesday, 21 January 15
PANAMAX MARKET MOVED SIDEWAYS OVERALL LAST WEEK - INTERMODAL
COALspot.com: The positive sentiment in which the week prior ended carried on through-out last week as well, the end of which marked the first posi ...
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- Thiess Contractors Indonesia
- Oldendorff Carriers - Singapore
- Bukit Baiduri Energy - Indonesia
- ICICI Bank Limited - India
- Orica Mining Services - Indonesia
- Semirara Mining Corp, Philippines
- Altura Mining Limited, Indonesia
- Intertek Mineral Services - Indonesia
- CNBM International Corporation - China
- Chettinad Cement Corporation Ltd - India
- Thai Mozambique Logistica
- Edison Trading Spa - Italy
- Central Java Power - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Wilmar Investment Holdings
- Renaissance Capital - South Africa
- Alfred C Toepfer International GmbH - Germany
- Miang Besar Coal Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Interocean Group of Companies - India
- Price Waterhouse Coopers - Russia
- Indo Tambangraya Megah - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Minerals Council of Australia
- Coalindo Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Lanco Infratech Ltd - India
- Kaltim Prima Coal - Indonesia
- Power Finance Corporation Ltd., India
- European Bulk Services B.V. - Netherlands
- IHS Mccloskey Coal Group - USA
- Energy Link Ltd, New Zealand
- Bayan Resources Tbk. - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- PTC India Limited - India
- Sojitz Corporation - Japan
- Makarim & Taira - Indonesia
- Tata Chemicals Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Electricity Generating Authority of Thailand
- Orica Australia Pty. Ltd.
- Borneo Indobara - Indonesia
- Posco Energy - South Korea
- Gujarat Mineral Development Corp Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- The University of Queensland
- Anglo American - United Kingdom
- LBH Netherlands Bv - Netherlands
- Mjunction Services Limited - India
- Xindia Steels Limited - India
- Rio Tinto Coal - Australia
- Latin American Coal - Colombia
- Globalindo Alam Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Mercuria Energy - Indonesia
- White Energy Company Limited
- Ministry of Mines - Canada
- Tamil Nadu electricity Board
- Banpu Public Company Limited - Thailand
- Formosa Plastics Group - Taiwan
- IEA Clean Coal Centre - UK
- Ind-Barath Power Infra Limited - India
- Bhushan Steel Limited - India
- Indian Energy Exchange, India
- Pendopo Energi Batubara - Indonesia
- Petron Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Malabar Cements Ltd - India
- Africa Commodities Group - South Africa
- Australian Coal Association
- Independent Power Producers Association of India
- Karaikal Port Pvt Ltd - India
- Global Business Power Corporation, Philippines
- VISA Power Limited - India
- PowerSource Philippines DevCo
- Kalimantan Lumbung Energi - Indonesia
- Attock Cement Pakistan Limited
- TeaM Sual Corporation - Philippines
- London Commodity Brokers - England
- The Treasury - Australian Government
- Chamber of Mines of South Africa
- Iligan Light & Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Parry Sugars Refinery, India
- The State Trading Corporation of India Ltd
- ASAPP Information Group - India
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- OPG Power Generation Pvt Ltd - India
- Wood Mackenzie - Singapore
- South Luzon Thermal Energy Corporation
- Directorate Of Revenue Intelligence - India
- Kartika Selabumi Mining - Indonesia
- Indika Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kepco SPC Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Kumho Petrochemical, South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Commonwealth Bank - Australia
- Simpson Spence & Young - Indonesia
- Uttam Galva Steels Limited - India
- Maheswari Brothers Coal Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Larsen & Toubro Limited - India
- GMR Energy Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cigading International Bulk Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Ministry of Finance - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bulk Trading Sa - Switzerland
- CIMB Investment Bank - Malaysia
- Kideco Jaya Agung - Indonesia
- Global Coal Blending Company Limited - Australia
- International Coal Ventures Pvt Ltd - India
- Baramulti Group, Indonesia
- Global Green Power PLC Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- Jindal Steel & Power Ltd - India
- Romanian Commodities Exchange
- Economic Council, Georgia
- Barasentosa Lestari - Indonesia
- Meralco Power Generation, Philippines
- Metalloyd Limited - United Kingdom
- Jaiprakash Power Ventures ltd
- Bhatia International Limited - India
- Sical Logistics Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Rashtriya Ispat Nigam Limited - India
- Leighton Contractors Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- Mintek Dendrill Indonesia
- PNOC Exploration Corporation - Philippines
- Standard Chartered Bank - UAE
- Electricity Authority, New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Cement Manufacturers Association - India
- Australian Commodity Traders Exchange
- Timah Investasi Mineral - Indoneisa
- Georgia Ports Authority, United States
- Central Electricity Authority - India
- Gujarat Sidhee Cement - India
- Eastern Energy - Thailand
- Manunggal Multi Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Indonesian Coal Mining Association
- Samtan Co., Ltd - South Korea
- Straits Asia Resources Limited - Singapore
- SMC Global Power, Philippines
- Star Paper Mills Limited - India
- Essar Steel Hazira Ltd - India
- Carbofer General Trading SA - India
- SMG Consultants - Indonesia
- Bharathi Cement Corporation - India
- McConnell Dowell - Australia
- Singapore Mercantile Exchange
- Directorate General of MIneral and Coal - Indonesia
- Coastal Gujarat Power Limited - India
- Grasim Industreis Ltd - India
- GVK Power & Infra Limited - India
- Savvy Resources Ltd - HongKong
- Sakthi Sugars Limited - India
- Mercator Lines Limited - India
- Videocon Industries ltd - India
- SN Aboitiz Power Inc, Philippines
- Indian Oil Corporation Limited
- Port Waratah Coal Services - Australia
- Ambuja Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Bhoruka Overseas - Indonesia
- Trasteel International SA, Italy
- Indogreen Group - Indonesia
- Eastern Coal Council - USA
- Neyveli Lignite Corporation Ltd, - India
- Semirara Mining and Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Siam City Cement - Thailand
- Ministry of Transport, Egypt
- Coal and Oil Company - UAE
- Ceylon Electricity Board - Sri Lanka
- Vedanta Resources Plc - India
- Billiton Holdings Pty Ltd - Australia
- New Zealand Coal & Carbon
- Goldman Sachs - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Medco Energi Mining Internasional
- Deloitte Consulting - India
- Riau Bara Harum - Indonesia
- Marubeni Corporation - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parliament of New Zealand
- Aditya Birla Group - India
- Dalmia Cement Bharat India
- MS Steel International - UAE
- Holcim Trading Pte Ltd - Singapore
- Bangladesh Power Developement Board
- Planning Commission, India
- Sree Jayajothi Cements Limited - India
- Binh Thuan Hamico - Vietnam
- Aboitiz Power Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Antam Resourcindo - Indonesia
- Therma Luzon, Inc, Philippines
- Agrawal Coal Company - India
- GAC Shipping (India) Pvt Ltd
- India Bulls Power Limited - India
- Merrill Lynch Commodities Europe
- Siam City Cement PLC, Thailand
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