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Tuesday, 17 March 15
NEARLY 17% OF US COAL PRODUCTION UNECONOMIC AT CURRENT MARKET PRICING - WOOD MACKENZIE
 COALspot.com: Close to 17% of forecast 2015 US coal production is at risk of idling or closure, totalling 162 million short tons (Mst), as these mine's total cash costs plus sustaining capital expenditures exceed current market pricing, according to Wood Mackenzie's latest coal market outlook.
Wood Mackenzie says that the majority of the coal at risk is produced in Central Appalachia where approximately 72% of the total output is unprofitable. Years of declining productivity, thinning seams, increasing strip ratios, more stringent government regulations, and a high paid workforce have taken their toll and made Central Appalachia the highest cost region within the US. Other US regions also have substantial amounts of coal at risk, ranging from 47% of production in Southern Appalachia to a low of eight percent in both the Western Bituminous and Powder River Basin. In aggregate, this equates to approximately 14% of US thermal coal production and 58% of metallurgical coal production being at risk.
Dale Hazelton, Senior Research Analyst at Wood Mackenzie explains, "Based on current economics there are a significant number of mines unable to cover their operating costs plus sustaining capital. Despite this, mine closures, while not rare, certainly aren't happening frequently. Part of the reason for this is the amount of thermal coal sold on the open market is very small compared to that sold under contract. Contracts can cover multiple years, and prices may have been agreed well before the current market's lows. A producer may also be able to beat the market prices as they have a valuable niche-quality coal, such as stoker coal, or the location of the mine is near an end-user providing a transportation advantage over competitors."
According to Wood Mackenzie, there are other reasons for not idling or closing a mine: "It is possible the company is actively shopping the assets and having them currently in operation is more attractive to buyers. A company may also need to generate certain levels of revenue or cashflow to avoid triggering debt covenants that result in accelerated debt payments or higher interest rates. Some companies may also be willing to temporarily lose a certain amount of money on some mines where the losses from operating are less than not yet high enough to require idling or closing the operation.
"This is particularly true for some of the assets recently purchased by new mining companies or private equity firms. In those cases, the companies understand that there will be some period of losses as management gets costs under control. The end-game here is to maintain operations and customer relationships until the eventual recovery," notes Hazelton.
However, Wood Mackenzie emphasizes that for prices to rise, fundamentally one of two things must happen: either the global demand for steel and power must increase or the supply of coal must decrease. Hazelton adds, "The growth prospects for steel demand remain tenuous at best as many countries’ economies remain fragile. The recent strength of the US dollar also encourages non-US producers to grow their production as a strengthening US dollar compared to their local currency effectively lowers their costs of production when denominated in US dollars."
Furthermore, natural gas prices in the US remain at very low levels, resulting in higher levels of coal-to-gas switching in power generation. Wood Mackenzie's outlook notes that additional cost cutting measures are starting to reach limits as producers globally have already cut costs significantly, serving to suppress coal prices further. Therefore, the only practical way for the market to get back into balance is for producers to cut production. "This needs to happen sooner rather than later, either voluntarily or involuntarily through bankruptcy, as the losses these mines are generating cannot be sustained," concludes Hazelton.
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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Thursday, 26 March 15
KYUSHU ELECTRIC POWER OF JAPAN HAS JOINED GLOBALCOAL ONLINE COAL TRADING PLATFORM
globalCOAL® announced today that Kyushu Electric Power, one of Japan’s largest utility companies, has joined its online coal trading plat ...
Wednesday, 25 March 15
MARKET INSIGHT: TANKER CHARTERING - KATERINA RESTIS
The 1st of January 2015, as broadly reported, denoted the beginning date of new and progressive emission regulations for vessels operating within t ...
Wednesday, 25 March 15
AUSTRALIA SET TO ONCE AGAIN BE THE WORLD'S LARGEST COAL EXPORTER - COAL, MINERALS COUNCIL OF AUSTRALIA
Greg Evans, Executive Director - Coal, Minerals Council of Australia
Media Release: The latest Resources and Energy Quarterly published by the ...
Wednesday, 25 March 15
AUSTRALIA UPSTREAM ENERGY FIRMS FACE RISING OIL PRICE EXPOSURE - FITCH
Fitch Ratings says the Australian oil and gas companies involved in exploration and production face higher exposure to oil price-linked revenues, w ...
Wednesday, 25 March 15
2014 : UK COAL IMPORTS DECLINED 17%; GERMANY COAL IMPORTS UP 6%
Hard Coal Market 2014: Despite The Energy Turnaround, Hard Coal Imports To Germany Rise By More Than 6%, Although Hard Coal-Fired Power Generation ...
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- Marubeni Corporation - India
- Simpson Spence & Young - Indonesia
- Bhatia International Limited - India
- Parry Sugars Refinery, India
- Metalloyd Limited - United Kingdom
- Malabar Cements Ltd - India
- ASAPP Information Group - India
- Cement Manufacturers Association - India
- Wood Mackenzie - Singapore
- Star Paper Mills Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Sakthi Sugars Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Standard Chartered Bank - UAE
- Anglo American - United Kingdom
- India Bulls Power Limited - India
- Grasim Industreis Ltd - India
- Madhucon Powers Ltd - India
- GVK Power & Infra Limited - India
- Oldendorff Carriers - Singapore
- The State Trading Corporation of India Ltd
- Minerals Council of Australia
- Bayan Resources Tbk. - Indonesia
- Romanian Commodities Exchange
- Wilmar Investment Holdings
- Dalmia Cement Bharat India
- Sical Logistics Limited - India
- Ceylon Electricity Board - Sri Lanka
- Kobexindo Tractors - Indoneisa
- Mercator Lines Limited - India
- Ministry of Transport, Egypt
- Riau Bara Harum - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Commonwealth Bank - Australia
- Indogreen Group - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Energy Link Ltd, New Zealand
- PTC India Limited - India
- Tata Chemicals Ltd - India
- Samtan Co., Ltd - South Korea
- Rio Tinto Coal - Australia
- Electricity Authority, New Zealand
- Bharathi Cement Corporation - India
- Lanco Infratech Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Parliament of New Zealand
- PowerSource Philippines DevCo
- Central Java Power - Indonesia
- GAC Shipping (India) Pvt Ltd
- South Luzon Thermal Energy Corporation
- Orica Australia Pty. Ltd.
- CNBM International Corporation - China
- Karbindo Abesyapradhi - Indoneisa
- Maheswari Brothers Coal Limited - India
- Energy Development Corp, Philippines
- Vizag Seaport Private Limited - India
- Carbofer General Trading SA - India
- Aboitiz Power Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Latin American Coal - Colombia
- Eastern Coal Council - USA
- Globalindo Alam Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- Altura Mining Limited, Indonesia
- IHS Mccloskey Coal Group - USA
- Coal and Oil Company - UAE
- Chettinad Cement Corporation Ltd - India
- Mjunction Services Limited - India
- Aditya Birla Group - India
- Ministry of Finance - Indonesia
- Indonesian Coal Mining Association
- Africa Commodities Group - South Africa
- Bhoruka Overseas - Indonesia
- Sree Jayajothi Cements Limited - India
- Jaiprakash Power Ventures ltd
- Formosa Plastics Group - Taiwan
- Thiess Contractors Indonesia
- AsiaOL BioFuels Corp., Philippines
- Sojitz Corporation - Japan
- Maharashtra Electricity Regulatory Commission - India
- Attock Cement Pakistan Limited
- Gujarat Electricity Regulatory Commission - India
- Economic Council, Georgia
- Global Coal Blending Company Limited - Australia
- Directorate Of Revenue Intelligence - India
- Kumho Petrochemical, South Korea
- Savvy Resources Ltd - HongKong
- Petrochimia International Co. Ltd.- Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Goldman Sachs - Singapore
- The Treasury - Australian Government
- IEA Clean Coal Centre - UK
- Siam City Cement PLC, Thailand
- Heidelberg Cement - Germany
- Bahari Cakrawala Sebuku - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bangladesh Power Developement Board
- Indian Energy Exchange, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SN Aboitiz Power Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Siam City Cement - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Deloitte Consulting - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Port Waratah Coal Services - Australia
- Global Green Power PLC Corporation, Philippines
- Meralco Power Generation, Philippines
- Power Finance Corporation Ltd., India
- MS Steel International - UAE
- Pendopo Energi Batubara - Indonesia
- Manunggal Multi Energi - Indonesia
- Barasentosa Lestari - Indonesia
- Merrill Lynch Commodities Europe
- Singapore Mercantile Exchange
- Mercuria Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Banpu Public Company Limited - Thailand
- Independent Power Producers Association of India
- Gujarat Sidhee Cement - India
- SMC Global Power, Philippines
- Planning Commission, India
- Chamber of Mines of South Africa
- Orica Mining Services - Indonesia
- Vedanta Resources Plc - India
- ICICI Bank Limited - India
- Billiton Holdings Pty Ltd - Australia
- TeaM Sual Corporation - Philippines
- PNOC Exploration Corporation - Philippines
- Australian Coal Association
- Electricity Generating Authority of Thailand
- Semirara Mining and Power Corporation, Philippines
- Indika Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Business Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Medco Energi Mining Internasional
- SMG Consultants - Indonesia
- Antam Resourcindo - Indonesia
- Thai Mozambique Logistica
- Kepco SPC Power Corporation, Philippines
- New Zealand Coal & Carbon
- VISA Power Limited - India
- Borneo Indobara - Indonesia
- The University of Queensland
- Edison Trading Spa - Italy
- Sinarmas Energy and Mining - Indonesia
- CIMB Investment Bank - Malaysia
- European Bulk Services B.V. - Netherlands
- Posco Energy - South Korea
- Videocon Industries ltd - India
- Meenaskhi Energy Private Limited - India
- Larsen & Toubro Limited - India
- Leighton Contractors Pty Ltd - Australia
- London Commodity Brokers - England
- White Energy Company Limited
- GMR Energy Limited - India
- Bukit Makmur.PT - Indonesia
- Price Waterhouse Coopers - Russia
- International Coal Ventures Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Central Electricity Authority - India
- Coalindo Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Karaikal Port Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Agrawal Coal Company - India
- TNB Fuel Sdn Bhd - Malaysia
- Therma Luzon, Inc, Philippines
- Georgia Ports Authority, United States
- Ind-Barath Power Infra Limited - India
- Uttam Galva Steels Limited - India
- Renaissance Capital - South Africa
- Xindia Steels Limited - India
- Ministry of Mines - Canada
- Kideco Jaya Agung - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- Petron Corporation, Philippines
- Baramulti Group, Indonesia
- San Jose City I Power Corp, Philippines
- Ambuja Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Kapuas Tunggal Persada - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bhushan Steel Limited - India
- McConnell Dowell - Australia
- Mintek Dendrill Indonesia
- Semirara Mining Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Salva Resources Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Eastern Energy - Thailand
- Tamil Nadu electricity Board
- Australian Commodity Traders Exchange
- Indian Oil Corporation Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Interocean Group of Companies - India
- Rashtriya Ispat Nigam Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Straits Asia Resources Limited - Singapore
- Indo Tambangraya Megah - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Toyota Tsusho Corporation, Japan
- Makarim & Taira - Indonesia
- Sindya Power Generating Company Private Ltd
- LBH Netherlands Bv - Netherlands
- Bulk Trading Sa - Switzerland
- Kartika Selabumi Mining - Indonesia
- Trasteel International SA, Italy
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