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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, 19 March 15
HANDY: INDO COAL CARGOS DESTINED FOR INDIA BEING FIXED IN REGION OF $ 7-8K - FEARNLEYS
Handy
The Handy and Supra market has had a week with mixed signals. Although we see more activity in both hemispheres the rates are only up about ...
Thursday, 19 March 15
INDONESIAN COAL BENCHMARK SOAR 7.69% IN MARCH....!!!
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised up Indonesian coal benchmark prices to US$ 67.76 per MT in March ...
Wednesday, 18 March 15
AVERAGE RATE FOR CAPES MOVED TO BELOW $ 4K/DAY LAST WEEK - INTERMODAL
COALspot.com: The even heavier losses noted in the Capesize segment last week, denied the Dry Bulk market a third weekly positive, while the smalle ...
Wednesday, 18 March 15
PARKING THE CAPES - LINOS KOGEVINAS
It is no secret that recent times have been anything but kind towards shipping, and no sector has suffered more lately than the dry bulk one. While ...
Wednesday, 18 March 15
CHINA-OWNED SHIPS: A RAPID RISE TO BECOME ONE OF THE WORLD'S LARGEST FLEETS - RICHARD SCOTT
Ships operated by owners based in China have become increasingly prominent on the world’s sea routes. China-owned container ships, bulk carri ...
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- OPG Power Generation Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Malabar Cements Ltd - India
- Latin American Coal - Colombia
- PNOC Exploration Corporation - Philippines
- Global Business Power Corporation, Philippines
- Goldman Sachs - Singapore
- IHS Mccloskey Coal Group - USA
- Vedanta Resources Plc - India
- Jorong Barutama Greston.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- Orica Mining Services - Indonesia
- Independent Power Producers Association of India
- Parliament of New Zealand
- Bharathi Cement Corporation - India
- Posco Energy - South Korea
- Bhushan Steel Limited - India
- White Energy Company Limited
- Meralco Power Generation, Philippines
- Manunggal Multi Energi - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Intertek Mineral Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Larsen & Toubro Limited - India
- Singapore Mercantile Exchange
- Bhoruka Overseas - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Australia Pty. Ltd.
- Edison Trading Spa - Italy
- Asmin Koalindo Tuhup - Indonesia
- Price Waterhouse Coopers - Russia
- Simpson Spence & Young - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Coal Blending Company Limited - Australia
- Alfred C Toepfer International GmbH - Germany
- Mercuria Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Metalloyd Limited - United Kingdom
- Salva Resources Pvt Ltd - India
- Standard Chartered Bank - UAE
- Altura Mining Limited, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Georgia Ports Authority, United States
- Cement Manufacturers Association - India
- Barasentosa Lestari - Indonesia
- SMG Consultants - Indonesia
- Star Paper Mills Limited - India
- Tata Chemicals Ltd - India
- Mjunction Services Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Bulk Trading Sa - Switzerland
- Kartika Selabumi Mining - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sindya Power Generating Company Private Ltd
- Riau Bara Harum - Indonesia
- SN Aboitiz Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- GAC Shipping (India) Pvt Ltd
- Minerals Council of Australia
- Coal and Oil Company - UAE
- Australian Commodity Traders Exchange
- Jindal Steel & Power Ltd - India
- Renaissance Capital - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- GVK Power & Infra Limited - India
- Bukit Makmur.PT - Indonesia
- Thai Mozambique Logistica
- Indonesian Coal Mining Association
- Pendopo Energi Batubara - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Lanco Infratech Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Romanian Commodities Exchange
- Kohat Cement Company Ltd. - Pakistan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- TeaM Sual Corporation - Philippines
- Electricity Authority, New Zealand
- The University of Queensland
- Karaikal Port Pvt Ltd - India
- Attock Cement Pakistan Limited
- Madhucon Powers Ltd - India
- Gujarat Sidhee Cement - India
- ICICI Bank Limited - India
- Oldendorff Carriers - Singapore
- Therma Luzon, Inc, Philippines
- Wood Mackenzie - Singapore
- London Commodity Brokers - England
- Sinarmas Energy and Mining - Indonesia
- Africa Commodities Group - South Africa
- Ind-Barath Power Infra Limited - India
- Banpu Public Company Limited - Thailand
- Cigading International Bulk Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Samtan Co., Ltd - South Korea
- GMR Energy Limited - India
- Rio Tinto Coal - Australia
- Anglo American - United Kingdom
- Ministry of Finance - Indonesia
- ASAPP Information Group - India
- Rashtriya Ispat Nigam Limited - India
- Australian Coal Association
- Sarangani Energy Corporation, Philippines
- Indian Oil Corporation Limited
- Billiton Holdings Pty Ltd - Australia
- Economic Council, Georgia
- Straits Asia Resources Limited - Singapore
- SMC Global Power, Philippines
- Indika Energy - Indonesia
- Deloitte Consulting - India
- Bhatia International Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sakthi Sugars Limited - India
- Heidelberg Cement - Germany
- European Bulk Services B.V. - Netherlands
- Parry Sugars Refinery, India
- Semirara Mining Corp, Philippines
- Indian Energy Exchange, India
- Dalmia Cement Bharat India
- Coastal Gujarat Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Essar Steel Hazira Ltd - India
- VISA Power Limited - India
- Energy Link Ltd, New Zealand
- Videocon Industries ltd - India
- Sojitz Corporation - Japan
- Trasteel International SA, Italy
- Interocean Group of Companies - India
- Xindia Steels Limited - India
- Central Java Power - Indonesia
- Marubeni Corporation - India
- Formosa Plastics Group - Taiwan
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Kobexindo Tractors - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Savvy Resources Ltd - HongKong
- LBH Netherlands Bv - Netherlands
- Grasim Industreis Ltd - India
- Kideco Jaya Agung - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Merrill Lynch Commodities Europe
- Ministry of Mines - Canada
- Chettinad Cement Corporation Ltd - India
- MS Steel International - UAE
- Energy Development Corp, Philippines
- The Treasury - Australian Government
- Petrochimia International Co. Ltd.- Taiwan
- Mercator Lines Limited - India
- Globalindo Alam Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Eastern Energy - Thailand
- Bukit Baiduri Energy - Indonesia
- India Bulls Power Limited - India
- Meenaskhi Energy Private Limited - India
- Thiess Contractors Indonesia
- International Coal Ventures Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Iligan Light & Power Inc, Philippines
- Commonwealth Bank - Australia
- CNBM International Corporation - China
- Bayan Resources Tbk. - Indonesia
- Medco Energi Mining Internasional
- Antam Resourcindo - Indonesia
- New Zealand Coal & Carbon
- Power Finance Corporation Ltd., India
- CIMB Investment Bank - Malaysia
- Mintek Dendrill Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Coal Council - USA
- Vijayanagar Sugar Pvt Ltd - India
- Sical Logistics Limited - India
- San Jose City I Power Corp, Philippines
- Central Electricity Authority - India
- Binh Thuan Hamico - Vietnam
- Directorate Of Revenue Intelligence - India
- Coalindo Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- South Luzon Thermal Energy Corporation
- Port Waratah Coal Services - Australia
- Leighton Contractors Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- Baramulti Group, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Petron Corporation, Philippines
- Tamil Nadu electricity Board
- Holcim Trading Pte Ltd - Singapore
- Sree Jayajothi Cements Limited - India
- Toyota Tsusho Corporation, Japan
- Uttam Galva Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Maheswari Brothers Coal Limited - India
- Chamber of Mines of South Africa
- McConnell Dowell - Australia
- The State Trading Corporation of India Ltd
- Aditya Birla Group - India
- Planning Commission, India
- Borneo Indobara - Indonesia
- Ambuja Cements Ltd - India
- PowerSource Philippines DevCo
- IEA Clean Coal Centre - UK
- Gujarat Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- Wilmar Investment Holdings
- Makarim & Taira - Indonesia
- Siam City Cement - Thailand
- Indogreen Group - Indonesia
- Ministry of Transport, Egypt
- Indo Tambangraya Megah - Indonesia
- Carbofer General Trading SA - India
- PTC India Limited - India
- Vizag Seaport Private Limited - India
- Agrawal Coal Company - India
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