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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, 20 January 15
INDONESIAN COAL OUTPUT SEEN RISING, DESPITE FALL IN ITS PRICE
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 declined month on month and week over week, but Indonesian Coal Output Seen Rising. T ...
Tuesday, 20 January 15
NEWCASTLE COAL SWAP FOR Q1' 2015 DELIVERY DECLINED 2.83% M-O-M
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery declined US$ 1.45 per MT (-2.83%) month over month and US$ 0.50 (-0.99%) we ...
Monday, 19 January 15
HBA FALL TO FRESH LOWS; COAL OVERSUPPLY WILL CONTINUE TO PUSH PRICE DOWN
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down Indonesian coal bench mark price this month to US$ 63.84. T ...
Monday, 19 January 15
CFR SOUTH CHINA COAL SWAPS REMAIN WEAK
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery declined US$ 3.37 (-5.63%) per MT month over month and US$ 0.74 (-1.29%) ...
Monday, 19 January 15
FOB RICHARDS BAY COAL SWAP FOR Q4 DELIVERY CLOSED 4% LOWER THAN Q1 DELIVERY PRICE
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q1' 2015 declined month over month and week over week.
The Q1 swap has f ...
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- Simpson Spence & Young - Indonesia
- Sarangani Energy Corporation, Philippines
- Rio Tinto Coal - Australia
- Sakthi Sugars Limited - India
- Makarim & Taira - Indonesia
- Trasteel International SA, Italy
- Orica Australia Pty. Ltd.
- Gujarat Sidhee Cement - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Energy - Thailand
- Gujarat Mineral Development Corp Ltd - India
- CNBM International Corporation - China
- Essar Steel Hazira Ltd - India
- Meenaskhi Energy Private Limited - India
- Coal and Oil Company - UAE
- Electricity Generating Authority of Thailand
- Vizag Seaport Private Limited - India
- Commonwealth Bank - Australia
- India Bulls Power Limited - India
- Independent Power Producers Association of India
- Asmin Koalindo Tuhup - Indonesia
- International Coal Ventures Pvt Ltd - India
- Aditya Birla Group - India
- Lanco Infratech Ltd - India
- Indogreen Group - Indonesia
- Indian Energy Exchange, India
- Krishnapatnam Port Company Ltd. - India
- Coastal Gujarat Power Limited - India
- Barasentosa Lestari - Indonesia
- Renaissance Capital - South Africa
- Kobexindo Tractors - Indoneisa
- New Zealand Coal & Carbon
- The Treasury - Australian Government
- Mjunction Services Limited - India
- Global Coal Blending Company Limited - Australia
- Tamil Nadu electricity Board
- Dalmia Cement Bharat India
- Billiton Holdings Pty Ltd - Australia
- Bharathi Cement Corporation - India
- PNOC Exploration Corporation - Philippines
- Latin American Coal - Colombia
- Mercator Lines Limited - India
- GVK Power & Infra Limited - India
- Carbofer General Trading SA - India
- Meralco Power Generation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Coal Council - USA
- Bukit Baiduri Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Marubeni Corporation - India
- Interocean Group of Companies - India
- London Commodity Brokers - England
- Kohat Cement Company Ltd. - Pakistan
- Port Waratah Coal Services - Australia
- IEA Clean Coal Centre - UK
- Vijayanagar Sugar Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Energy Development Corp, Philippines
- Indika Energy - Indonesia
- ICICI Bank Limited - India
- Riau Bara Harum - Indonesia
- Banpu Public Company Limited - Thailand
- IHS Mccloskey Coal Group - USA
- Ministry of Mines - Canada
- Planning Commission, India
- Australian Coal Association
- Mintek Dendrill Indonesia
- Romanian Commodities Exchange
- Bhushan Steel Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Vedanta Resources Plc - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- European Bulk Services B.V. - Netherlands
- Siam City Cement PLC, Thailand
- McConnell Dowell - Australia
- Sindya Power Generating Company Private Ltd
- Kalimantan Lumbung Energi - Indonesia
- Bhatia International Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sojitz Corporation - Japan
- Binh Thuan Hamico - Vietnam
- Jaiprakash Power Ventures ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Java Power - Indonesia
- Grasim Industreis Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kideco Jaya Agung - Indonesia
- PTC India Limited - India
- Posco Energy - South Korea
- Siam City Cement - Thailand
- Standard Chartered Bank - UAE
- Miang Besar Coal Terminal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Minerals Council of Australia
- Africa Commodities Group - South Africa
- Energy Link Ltd, New Zealand
- Thai Mozambique Logistica
- Parry Sugars Refinery, India
- Jorong Barutama Greston.PT - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Thiess Contractors Indonesia
- Electricity Authority, New Zealand
- Alfred C Toepfer International GmbH - Germany
- Coalindo Energy - Indonesia
- The State Trading Corporation of India Ltd
- Iligan Light & Power Inc, Philippines
- SMG Consultants - Indonesia
- Kepco SPC Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Edison Trading Spa - Italy
- Samtan Co., Ltd - South Korea
- Bangladesh Power Developement Board
- Cigading International Bulk Terminal - Indonesia
- Tata Chemicals Ltd - India
- Toyota Tsusho Corporation, Japan
- Chettinad Cement Corporation Ltd - India
- Xindia Steels Limited - India
- Maheswari Brothers Coal Limited - India
- Straits Asia Resources Limited - Singapore
- AsiaOL BioFuels Corp., Philippines
- Ceylon Electricity Board - Sri Lanka
- Baramulti Group, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Economic Council, Georgia
- Kapuas Tunggal Persada - Indonesia
- Wood Mackenzie - Singapore
- Malabar Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- Deloitte Consulting - India
- Oldendorff Carriers - Singapore
- Attock Cement Pakistan Limited
- South Luzon Thermal Energy Corporation
- Merrill Lynch Commodities Europe
- GN Power Mariveles Coal Plant, Philippines
- Videocon Industries ltd - India
- Bulk Trading Sa - Switzerland
- Karaikal Port Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Goldman Sachs - Singapore
- Australian Commodity Traders Exchange
- Semirara Mining and Power Corporation, Philippines
- Global Business Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Larsen & Toubro Limited - India
- Salva Resources Pvt Ltd - India
- Indian Oil Corporation Limited
- PowerSource Philippines DevCo
- GMR Energy Limited - India
- Parliament of New Zealand
- Jindal Steel & Power Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Directorate Of Revenue Intelligence - India
- Formosa Plastics Group - Taiwan
- Kaltim Prima Coal - Indonesia
- Cement Manufacturers Association - India
- Medco Energi Mining Internasional
- Sree Jayajothi Cements Limited - India
- Madhucon Powers Ltd - India
- Antam Resourcindo - Indonesia
- Chamber of Mines of South Africa
- Indonesian Coal Mining Association
- Altura Mining Limited, Indonesia
- Georgia Ports Authority, United States
- Indo Tambangraya Megah - Indonesia
- Bayan Resources Tbk. - Indonesia
- ASAPP Information Group - India
- Rashtriya Ispat Nigam Limited - India
- Ind-Barath Power Infra Limited - India
- Bukit Makmur.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Pendopo Energi Batubara - Indonesia
- Kartika Selabumi Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Agrawal Coal Company - India
- Directorate General of MIneral and Coal - Indonesia
- The University of Queensland
- Metalloyd Limited - United Kingdom
- Wilmar Investment Holdings
- Timah Investasi Mineral - Indoneisa
- Mercuria Energy - Indonesia
- Sical Logistics Limited - India
- Price Waterhouse Coopers - Russia
- Borneo Indobara - Indonesia
- Aboitiz Power Corporation - Philippines
- Kumho Petrochemical, South Korea
- Manunggal Multi Energi - Indonesia
- Central Electricity Authority - India
- Petron Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Holcim Trading Pte Ltd - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Ambuja Cements Ltd - India
- Anglo American - United Kingdom
- SMC Global Power, Philippines
- PetroVietnam Power Coal Import and Supply Company
- MS Steel International - UAE
- White Energy Company Limited
- Orica Mining Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- Star Paper Mills Limited - India
- LBH Netherlands Bv - Netherlands
- Savvy Resources Ltd - HongKong
- TeaM Sual Corporation - Philippines
- Singapore Mercantile Exchange
- VISA Power Limited - India
- CIMB Investment Bank - Malaysia
- Ministry of Transport, Egypt
- Ministry of Finance - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Heidelberg Cement - Germany
- San Jose City I Power Corp, Philippines
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