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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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Tuesday, 24 March 15
A WEAK WEEK FOR FOB INDONESIA COAL SWAP
COALspot.com: Indonesian coal swaps for delivery Q2' 2015 drop month on month and week over week.
The Q2 swap fell US$ 2.48 (5.12%) month ...
Tuesday, 24 March 15
RICHARDS BAY COAL SWAP FOR DELIVERY Q2 CLOSED $ 1.87 HIGHER COMPARED TO Q3 CLOSING PRICE
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q2' 2015 declined month over month and week on week.
The Q2 swap has dropped U ...
Tuesday, 24 March 15
ARGUS MEDITERRANEAN SOLID FUELS 2015 CONFERENCE | 2-3 JUNE, ISTANBUL
Press Release: Argus Media is proud to announce Argus Mediterranean Solid Fuels, which will be held in Istanbul,on 2-3February.
Argus produces ...
Monday, 23 March 15
IS OIL GETTING READY TO PLUNGE BELOW $40? - FORBES
KNOWLEDGE TO ELEVATE
In my last crude oil market update in late-February, I expressed my skepticism toward the oil price rebound. Since then, ...
Monday, 23 March 15
Q4' 2015 FOB NEWCASTLE COAL SWAPS DECLINED 6.79% M-O-M; 2.55% W-O-W
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery declined US$ 3.42 per MT (-6.33%) month over month and US$ 1.37 (-2.77%) we ...
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- Thai Mozambique Logistica
- TNB Fuel Sdn Bhd - Malaysia
- Bayan Resources Tbk. - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- Kobexindo Tractors - Indoneisa
- Carbofer General Trading SA - India
- Alfred C Toepfer International GmbH - Germany
- Sarangani Energy Corporation, Philippines
- Power Finance Corporation Ltd., India
- Global Business Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Sojitz Corporation - Japan
- Economic Council, Georgia
- GAC Shipping (India) Pvt Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- MS Steel International - UAE
- ICICI Bank Limited - India
- PTC India Limited - India
- Latin American Coal - Colombia
- Directorate General of MIneral and Coal - Indonesia
- Madhucon Powers Ltd - India
- Metalloyd Limited - United Kingdom
- Semirara Mining Corp, Philippines
- TeaM Sual Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Standard Chartered Bank - UAE
- Bharathi Cement Corporation - India
- Indika Energy - Indonesia
- CNBM International Corporation - China
- South Luzon Thermal Energy Corporation
- Parliament of New Zealand
- Billiton Holdings Pty Ltd - Australia
- Africa Commodities Group - South Africa
- McConnell Dowell - Australia
- Videocon Industries ltd - India
- Toyota Tsusho Corporation, Japan
- Bangladesh Power Developement Board
- Makarim & Taira - Indonesia
- Samtan Co., Ltd - South Korea
- Essar Steel Hazira Ltd - India
- VISA Power Limited - India
- Oldendorff Carriers - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petron Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Heidelberg Cement - Germany
- Altura Mining Limited, Indonesia
- Deloitte Consulting - India
- Bhushan Steel Limited - India
- Central Java Power - Indonesia
- Jaiprakash Power Ventures ltd
- Vedanta Resources Plc - India
- Sinarmas Energy and Mining - Indonesia
- Sree Jayajothi Cements Limited - India
- Thiess Contractors Indonesia
- Edison Trading Spa - Italy
- Baramulti Group, Indonesia
- Iligan Light & Power Inc, Philippines
- Indian Oil Corporation Limited
- Minerals Council of Australia
- Kumho Petrochemical, South Korea
- Siam City Cement - Thailand
- Kaltim Prima Coal - Indonesia
- European Bulk Services B.V. - Netherlands
- Ind-Barath Power Infra Limited - India
- The State Trading Corporation of India Ltd
- Cement Manufacturers Association - India
- Indogreen Group - Indonesia
- Coalindo Energy - Indonesia
- India Bulls Power Limited - India
- Price Waterhouse Coopers - Russia
- Orica Mining Services - Indonesia
- Holcim Trading Pte Ltd - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Malabar Cements Ltd - India
- Ministry of Finance - Indonesia
- Globalindo Alam Lestari - Indonesia
- Uttam Galva Steels Limited - India
- Simpson Spence & Young - Indonesia
- Timah Investasi Mineral - Indoneisa
- Grasim Industreis Ltd - India
- Planning Commission, India
- Aditya Birla Group - India
- Mjunction Services Limited - India
- White Energy Company Limited
- Jindal Steel & Power Ltd - India
- The Treasury - Australian Government
- Attock Cement Pakistan Limited
- New Zealand Coal & Carbon
- Singapore Mercantile Exchange
- IEA Clean Coal Centre - UK
- Renaissance Capital - South Africa
- The University of Queensland
- International Coal Ventures Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Bhatia International Limited - India
- SMG Consultants - Indonesia
- Star Paper Mills Limited - India
- IHS Mccloskey Coal Group - USA
- Riau Bara Harum - Indonesia
- Siam City Cement PLC, Thailand
- Eastern Coal Council - USA
- PNOC Exploration Corporation - Philippines
- Mercator Lines Limited - India
- Asmin Koalindo Tuhup - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Sical Logistics Limited - India
- Chamber of Mines of South Africa
- Marubeni Corporation - India
- Xindia Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- Pendopo Energi Batubara - Indonesia
- Larsen & Toubro Limited - India
- Banpu Public Company Limited - Thailand
- Kartika Selabumi Mining - Indonesia
- Trasteel International SA, Italy
- Salva Resources Pvt Ltd - India
- Tamil Nadu electricity Board
- Directorate Of Revenue Intelligence - India
- Sindya Power Generating Company Private Ltd
- Port Waratah Coal Services - Australia
- Medco Energi Mining Internasional
- Bukit Makmur.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Maheswari Brothers Coal Limited - India
- Vizag Seaport Private Limited - India
- Energy Link Ltd, New Zealand
- Aboitiz Power Corporation - Philippines
- Meralco Power Generation, Philippines
- Ministry of Transport, Egypt
- London Commodity Brokers - England
- Indian Energy Exchange, India
- Global Green Power PLC Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Pipit Mutiara Jaya. PT, Indonesia
- Mercuria Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sakthi Sugars Limited - India
- Antam Resourcindo - Indonesia
- Coal and Oil Company - UAE
- Interocean Group of Companies - India
- LBH Netherlands Bv - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Karaikal Port Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Global Coal Blending Company Limited - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indo Tambangraya Megah - Indonesia
- SN Aboitiz Power Inc, Philippines
- Independent Power Producers Association of India
- OPG Power Generation Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Goldman Sachs - Singapore
- Indonesian Coal Mining Association
- Leighton Contractors Pty Ltd - Australia
- Commonwealth Bank - Australia
- Rashtriya Ispat Nigam Limited - India
- Wilmar Investment Holdings
- Kohat Cement Company Ltd. - Pakistan
- Bhoruka Overseas - Indonesia
- Ambuja Cements Ltd - India
- Georgia Ports Authority, United States
- SMC Global Power, Philippines
- Central Electricity Authority - India
- Merrill Lynch Commodities Europe
- Parry Sugars Refinery, India
- Electricity Generating Authority of Thailand
- Gujarat Sidhee Cement - India
- Cigading International Bulk Terminal - Indonesia
- Tata Chemicals Ltd - India
- Anglo American - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Straits Asia Resources Limited - Singapore
- Jorong Barutama Greston.PT - Indonesia
- ASAPP Information Group - India
- Formosa Plastics Group - Taiwan
- Electricity Authority, New Zealand
- Manunggal Multi Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Energy Development Corp, Philippines
- GMR Energy Limited - India
- Coastal Gujarat Power Limited - India
- Wood Mackenzie - Singapore
- Borneo Indobara - Indonesia
- Therma Luzon, Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Agrawal Coal Company - India
- Bahari Cakrawala Sebuku - Indonesia
- PowerSource Philippines DevCo
- Intertek Mineral Services - Indonesia
- Romanian Commodities Exchange
- GN Power Mariveles Coal Plant, Philippines
- Posco Energy - South Korea
- Kalimantan Lumbung Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Barasentosa Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- Eastern Energy - Thailand
- Dalmia Cement Bharat India
- Kapuas Tunggal Persada - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- GVK Power & Infra Limited - India
- Australian Coal Association
- Rio Tinto Coal - Australia
- Kepco SPC Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Bukit Baiduri Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kideco Jaya Agung - Indonesia
- Bulk Trading Sa - Switzerland
- Mintek Dendrill Indonesia
- Ministry of Mines - Canada
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