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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, 18 January 15
INDONESIA TO INDIA SUPRAMAX FREIGHT RATES ARE EXPECTED TO REMAIN WEAK NEXT WEEK
COALspot.com: The BDI was up 4.51 pct week on week on Friday 16, January 2015. The BDI closed at 741 points on this Friday after gaining arou ...
Friday, 16 January 15
U.S. WEEKLY COAL PRODUCTION UP 7.3% W-O-W
COALspot.com – United States the world's one of the largest coal producers, produced approximately 18.9 million short tons (mmst) of coal ...
Thursday, 15 January 15
PANAMAX : MARKET CONTINUE ON LOW PACE - FEARNLEYS
Handy
On a general basis we can say that rates are softening in both hemispheres. Although for some specific trades we can see premiums being ach ...
Thursday, 15 January 15
LOW CASH COSTS, GOOD LIQUIDITY HELP ASIAN OIL COMPANIES IN PRICE ROUT - FITCH
Fitch Ratings says that rated oil and gas production companies in Asia can comfortably operate under low oil prices for some time given their gener ...
Wednesday, 14 January 15
DRY BULK MARKET NOTED ANOTHER WEEKLY DECLINE - INTERMODAL
COALspot.com: The Dry bulk market noted another weekly decline on Friday, with the performance of the Capesize market still weighing down on the re ...
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- Agrawal Coal Company - India
- Planning Commission, India
- PetroVietnam Power Coal Import and Supply Company
- Chettinad Cement Corporation Ltd - India
- Carbofer General Trading SA - India
- Salva Resources Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Jaiprakash Power Ventures ltd
- Kaltim Prima Coal - Indonesia
- Meralco Power Generation, Philippines
- Wood Mackenzie - Singapore
- Eastern Coal Council - USA
- Krishnapatnam Port Company Ltd. - India
- Australian Coal Association
- Indika Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- VISA Power Limited - India
- Star Paper Mills Limited - India
- Sinarmas Energy and Mining - Indonesia
- SMC Global Power, Philippines
- IHS Mccloskey Coal Group - USA
- Singapore Mercantile Exchange
- Orica Australia Pty. Ltd.
- Petron Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- San Jose City I Power Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Semirara Mining Corp, Philippines
- Madhucon Powers Ltd - India
- Minerals Council of Australia
- Asmin Koalindo Tuhup - Indonesia
- Commonwealth Bank - Australia
- SN Aboitiz Power Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Cement Manufacturers Association - India
- Ministry of Mines - Canada
- Grasim Industreis Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Chamber of Mines of South Africa
- Coalindo Energy - Indonesia
- Lanco Infratech Ltd - India
- Georgia Ports Authority, United States
- Port Waratah Coal Services - Australia
- International Coal Ventures Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- PNOC Exploration Corporation - Philippines
- Electricity Authority, New Zealand
- Deloitte Consulting - India
- Anglo American - United Kingdom
- Global Business Power Corporation, Philippines
- Energy Development Corp, Philippines
- Renaissance Capital - South Africa
- India Bulls Power Limited - India
- Rio Tinto Coal - Australia
- Sindya Power Generating Company Private Ltd
- Indo Tambangraya Megah - Indonesia
- Bhushan Steel Limited - India
- Indogreen Group - Indonesia
- Mintek Dendrill Indonesia
- Bangladesh Power Developement Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pendopo Energi Batubara - Indonesia
- Iligan Light & Power Inc, Philippines
- PTC India Limited - India
- CNBM International Corporation - China
- Binh Thuan Hamico - Vietnam
- Australian Commodity Traders Exchange
- Formosa Plastics Group - Taiwan
- Pipit Mutiara Jaya. PT, Indonesia
- Makarim & Taira - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- MS Steel International - UAE
- Price Waterhouse Coopers - Russia
- South Luzon Thermal Energy Corporation
- GMR Energy Limited - India
- Maheswari Brothers Coal Limited - India
- Parliament of New Zealand
- The University of Queensland
- Bukit Makmur.PT - Indonesia
- Trasteel International SA, Italy
- Electricity Generating Authority of Thailand
- Ministry of Transport, Egypt
- Therma Luzon, Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- The State Trading Corporation of India Ltd
- Wilmar Investment Holdings
- CIMB Investment Bank - Malaysia
- Sical Logistics Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Heidelberg Cement - Germany
- Dalmia Cement Bharat India
- Bahari Cakrawala Sebuku - Indonesia
- Sarangani Energy Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- AsiaOL BioFuels Corp., Philippines
- Bulk Trading Sa - Switzerland
- Central Electricity Authority - India
- Siam City Cement - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Tamil Nadu electricity Board
- Indian Energy Exchange, India
- IEA Clean Coal Centre - UK
- Sree Jayajothi Cements Limited - India
- Xindia Steels Limited - India
- Goldman Sachs - Singapore
- Orica Mining Services - Indonesia
- McConnell Dowell - Australia
- Gujarat Sidhee Cement - India
- Global Coal Blending Company Limited - Australia
- Energy Link Ltd, New Zealand
- Medco Energi Mining Internasional
- Global Green Power PLC Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Borneo Indobara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Indian Oil Corporation Limited
- Straits Asia Resources Limited - Singapore
- Alfred C Toepfer International GmbH - Germany
- SMG Consultants - Indonesia
- Romanian Commodities Exchange
- Independent Power Producers Association of India
- Kumho Petrochemical, South Korea
- Standard Chartered Bank - UAE
- Bayan Resources Tbk. - Indonesia
- Globalindo Alam Lestari - Indonesia
- Oldendorff Carriers - Singapore
- GVK Power & Infra Limited - India
- European Bulk Services B.V. - Netherlands
- Manunggal Multi Energi - Indonesia
- Malabar Cements Ltd - India
- Posco Energy - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement PLC, Thailand
- Indonesian Coal Mining Association
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- ICICI Bank Limited - India
- Ambuja Cements Ltd - India
- Mercator Lines Limited - India
- Metalloyd Limited - United Kingdom
- Sojitz Corporation - Japan
- Meenaskhi Energy Private Limited - India
- Altura Mining Limited, Indonesia
- London Commodity Brokers - England
- Antam Resourcindo - Indonesia
- Mjunction Services Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- White Energy Company Limited
- Coastal Gujarat Power Limited - India
- ASAPP Information Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Attock Cement Pakistan Limited
- Vedanta Resources Plc - India
- Mercuria Energy - Indonesia
- Africa Commodities Group - South Africa
- LBH Netherlands Bv - Netherlands
- Merrill Lynch Commodities Europe
- Ministry of Finance - Indonesia
- Baramulti Group, Indonesia
- TeaM Sual Corporation - Philippines
- Simpson Spence & Young - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Eastern Energy - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Kepco SPC Power Corporation, Philippines
- Thiess Contractors Indonesia
- Economic Council, Georgia
- Timah Investasi Mineral - Indoneisa
- Samtan Co., Ltd - South Korea
- Holcim Trading Pte Ltd - Singapore
- Kapuas Tunggal Persada - Indonesia
- Power Finance Corporation Ltd., India
- Billiton Holdings Pty Ltd - Australia
- Interocean Group of Companies - India
- Essar Steel Hazira Ltd - India
- Edison Trading Spa - Italy
- Kideco Jaya Agung - Indonesia
- Savvy Resources Ltd - HongKong
- Jorong Barutama Greston.PT - Indonesia
- Vizag Seaport Private Limited - India
- The Treasury - Australian Government
- Jindal Steel & Power Ltd - India
- Barasentosa Lestari - Indonesia
- Videocon Industries ltd - India
- New Zealand Coal & Carbon
- Larsen & Toubro Limited - India
- Rashtriya Ispat Nigam Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhatia International Limited - India
- Bharathi Cement Corporation - India
- Coal and Oil Company - UAE
- Parry Sugars Refinery, India
- Aboitiz Power Corporation - Philippines
- Latin American Coal - Colombia
- Intertek Mineral Services - Indonesia
- Tata Chemicals Ltd - India
- PowerSource Philippines DevCo
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sakthi Sugars Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Thai Mozambique Logistica
- Aditya Birla Group - India
- Central Java Power - Indonesia
- Uttam Galva Steels Limited - India
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