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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, 21 January 15
SHIFT IN INTERNATIONAL COAL TRADE TO THE PACIFIC BASIN WILL CONTINUE - IMF
COALspot.com: The shift in international coal trade to the Pacific Basin will continue, IMF said in its latest Medium-Term Coal Market Report.
...
Wednesday, 21 January 15
MARKET INSIGHT - VASSILIS LOGOTHETIS, INTERMODAL
The World Bank has lowered its forecast for global growth in 2015 to 3% down from its previous level of 3.4% amid rising concerns over the economic ...
Wednesday, 21 January 15
THERMAL COAL PRICE OUTLOOK DEPENDENT ON INDIAN IMPORT DEMAND - MATTHEW BOYLE, CRU
COALspot.com: Supply and demand side developments in India will be an important determinant of future market dynamics and prices for thermal coal a ...
Wednesday, 21 January 15
PORT OF NEWCASTLE COAL EXPORTS JUMP 16.19% ON MONTH TO 15.80 MIL MT IN DECEMBER' 14
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped $1.136 billi ...
Tuesday, 20 January 15
INDIA TO SURPASS THE UNITED STATES AND BECOME THE SECOND-LARGEST COAL CONSUMER IN THE WORLD BY 2019 - IMF
COALspot.com: In 2013, coal added more primary energy than any other fuel and was the fastest-growing fossil fuel, enhancing its position as the se ...
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- CIMB Investment Bank - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thiess Contractors Indonesia
- Vizag Seaport Private Limited - India
- GAC Shipping (India) Pvt Ltd
- Ind-Barath Power Infra Limited - India
- MS Steel International - UAE
- Mercator Lines Limited - India
- Leighton Contractors Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thai Mozambique Logistica
- Aditya Birla Group - India
- Rio Tinto Coal - Australia
- Videocon Industries ltd - India
- IEA Clean Coal Centre - UK
- Pendopo Energi Batubara - Indonesia
- Electricity Authority, New Zealand
- Makarim & Taira - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Bulk Trading Sa - Switzerland
- Ministry of Mines - Canada
- PTC India Limited - India
- Tata Chemicals Ltd - India
- Ambuja Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Coal and Oil Company - UAE
- Marubeni Corporation - India
- Meenaskhi Energy Private Limited - India
- Vedanta Resources Plc - India
- Mintek Dendrill Indonesia
- Directorate Of Revenue Intelligence - India
- London Commodity Brokers - England
- TeaM Sual Corporation - Philippines
- Tamil Nadu electricity Board
- Dalmia Cement Bharat India
- Romanian Commodities Exchange
- Xindia Steels Limited - India
- Kaltim Prima Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- Altura Mining Limited, Indonesia
- Madhucon Powers Ltd - India
- Power Finance Corporation Ltd., India
- Maheswari Brothers Coal Limited - India
- Wilmar Investment Holdings
- Deloitte Consulting - India
- Chamber of Mines of South Africa
- Australian Commodity Traders Exchange
- Global Coal Blending Company Limited - Australia
- Formosa Plastics Group - Taiwan
- Goldman Sachs - Singapore
- Independent Power Producers Association of India
- Krishnapatnam Port Company Ltd. - India
- Electricity Generating Authority of Thailand
- Karbindo Abesyapradhi - Indoneisa
- Commonwealth Bank - Australia
- Eastern Coal Council - USA
- Gujarat Sidhee Cement - India
- Samtan Co., Ltd - South Korea
- Standard Chartered Bank - UAE
- Edison Trading Spa - Italy
- GN Power Mariveles Coal Plant, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- LBH Netherlands Bv - Netherlands
- Kumho Petrochemical, South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Energy Link Ltd, New Zealand
- Sical Logistics Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Lanco Infratech Ltd - India
- Simpson Spence & Young - Indonesia
- Kepco SPC Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Africa Commodities Group - South Africa
- India Bulls Power Limited - India
- Planning Commission, India
- Manunggal Multi Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- Indogreen Group - Indonesia
- Minerals Council of Australia
- Economic Council, Georgia
- Indonesian Coal Mining Association
- GMR Energy Limited - India
- Indian Oil Corporation Limited
- Baramulti Group, Indonesia
- PowerSource Philippines DevCo
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Transport, Egypt
- Timah Investasi Mineral - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Port Waratah Coal Services - Australia
- Bharathi Cement Corporation - India
- Grasim Industreis Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Cement Manufacturers Association - India
- Riau Bara Harum - Indonesia
- Indo Tambangraya Megah - Indonesia
- Therma Luzon, Inc, Philippines
- White Energy Company Limited
- Siam City Cement PLC, Thailand
- Sinarmas Energy and Mining - Indonesia
- Kartika Selabumi Mining - Indonesia
- Anglo American - United Kingdom
- Australian Coal Association
- Trasteel International SA, Italy
- The State Trading Corporation of India Ltd
- Petron Corporation, Philippines
- Heidelberg Cement - Germany
- Mjunction Services Limited - India
- Interocean Group of Companies - India
- Coalindo Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bukit Makmur.PT - Indonesia
- Mercuria Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bayan Resources Tbk. - Indonesia
- New Zealand Coal & Carbon
- Offshore Bulk Terminal Pte Ltd, Singapore
- Holcim Trading Pte Ltd - Singapore
- Malabar Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Parry Sugars Refinery, India
- Directorate General of MIneral and Coal - Indonesia
- SMC Global Power, Philippines
- Essar Steel Hazira Ltd - India
- Indika Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- PetroVietnam Power Coal Import and Supply Company
- Sakthi Sugars Limited - India
- Globalindo Alam Lestari - Indonesia
- Antam Resourcindo - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Singapore Mercantile Exchange
- Eastern Energy - Thailand
- Barasentosa Lestari - Indonesia
- Kobexindo Tractors - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Karaikal Port Pvt Ltd - India
- McConnell Dowell - Australia
- Metalloyd Limited - United Kingdom
- Latin American Coal - Colombia
- Kapuas Tunggal Persada - Indonesia
- GVK Power & Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Bukit Asam (Persero) Tbk - Indonesia
- Central Java Power - Indonesia
- Chettinad Cement Corporation Ltd - India
- Sree Jayajothi Cements Limited - India
- Ministry of Finance - Indonesia
- Georgia Ports Authority, United States
- Oldendorff Carriers - Singapore
- Kideco Jaya Agung - Indonesia
- Iligan Light & Power Inc, Philippines
- Meralco Power Generation, Philippines
- Binh Thuan Hamico - Vietnam
- International Coal Ventures Pvt Ltd - India
- Energy Development Corp, Philippines
- Intertek Mineral Services - Indonesia
- ASAPP Information Group - India
- Kohat Cement Company Ltd. - Pakistan
- Posco Energy - South Korea
- CNBM International Corporation - China
- Star Paper Mills Limited - India
- San Jose City I Power Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- South Luzon Thermal Energy Corporation
- Wood Mackenzie - Singapore
- Salva Resources Pvt Ltd - India
- Renaissance Capital - South Africa
- Jaiprakash Power Ventures ltd
- Siam City Cement - Thailand
- AsiaOL BioFuels Corp., Philippines
- SMG Consultants - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Attock Cement Pakistan Limited
- Sindya Power Generating Company Private Ltd
- PNOC Exploration Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Aboitiz Power Corporation - Philippines
- VISA Power Limited - India
- Global Business Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Straits Asia Resources Limited - Singapore
- Parliament of New Zealand
- Savvy Resources Ltd - HongKong
- Agrawal Coal Company - India
- Medco Energi Mining Internasional
- The University of Queensland
- ICICI Bank Limited - India
- Global Green Power PLC Corporation, Philippines
- Larsen & Toubro Limited - India
- Orica Mining Services - Indonesia
- Banpu Public Company Limited - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining Corp, Philippines
- Bhushan Steel Limited - India
- Price Waterhouse Coopers - Russia
- IHS Mccloskey Coal Group - USA
- Uttam Galva Steels Limited - India
- Bhatia International Limited - India
- Billiton Holdings Pty Ltd - Australia
- Indian Energy Exchange, India
- Asmin Koalindo Tuhup - Indonesia
- The Treasury - Australian Government
- Bahari Cakrawala Sebuku - Indonesia
- Carbofer General Trading SA - India
- Coastal Gujarat Power Limited - India
- Sojitz Corporation - Japan
- Central Electricity Authority - India
- Orica Australia Pty. Ltd.
- Sarangani Energy Corporation, Philippines
- Borneo Indobara - Indonesia
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