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Tuesday, 17 March 15
GAS TO CHALLENGE COAL IN THE ASIAN POWER GENERATION MIX - WOOD MACKENZIE
 KNOWLEDGE TO ELEVATE
Wood Mackenzie says that coal is facing increasing competition from gas in the power sector. Coal has dominated as the fuel of choice in Asia, even in the gas-centric power markets of SE Asia since 2010. In recent years, it has been assumed that coal will remain the most economical option for power generation. However, downward pressure on gas prices as well as individual market conditions in Asia are creating conditions in which it might compete with coal in the region.
Mr Graham Tyler, Research Director for Asia gas & power says, "While gas-coal competition is more commonplace in the US and Europe, in Asia, this is a new dynamic as coal and gas prices have not been at close enough levels for this to be a consideration. Spot LNG prices have fallen to around US$7 per million British thermal units (mmbtu) in recent months and we do not forecast any sustained price recovery above US$10/mmbtu with over a 100 million tonnes per annum (Mtpa) of new LNG expected to be operational by 2020. This looming supply glut will create an environment where coal versus gas competition in Asia is a real possibility." Asia's near-term gas demand growth is slowing, primarily due to a weaker economic growth and structural changes in the key market of China.
Turning to coal, Mr Prakash Sharma Research Director for Asia coal markets, says, "Benchmark thermal coal prices in the seaborne market are trading below the marginal cost of supply for many producers, and therefore are unlikely to fall significantly lower in the future. Coal prices are sitting at multi-year lows due to several factors including weakening demand and domestic protectionism in China: Delivered thermal coal prices have fallen from a peak of around US$110 per tonne (US$/t) in 2012 to below US$80/t in recent months already and historically, coal prices only fluctuated within a narrow band of US$2-4/mmbtu." Currently coal accounts for half of all power generation across Asia, while gas only accounts for 11%. However with coal prices not expected to fall more dramatically and gas prices expected to see renewed softening after this summer, Wood Mackenzie asserts that the price differential between gas and coal will be one to watch.
Mr Tyler says; "The price differential is key but there is not one single price across Asia at which gas will compete with coal. Instead, environmental initiatives and individual market influencers will determine the points at which the scales will tip in favour to gas. This is because Asia is not a singular gas market. Rather, it is a diverse range of markets with differing characteristics such as levels of economic development, fuel resources, market structures and government policies. The power markets are also discrete and have different dynamics even within some countries. Consequently, the factors that set the price at which gas will compete with coal differs between each market."
Wood Mackenzie's analysis points to China, South Korea and Malaysia as examples of this market diversity. Mr Tyler explains, "South Korea reflects a mature economy with an energy market dependent on imported fuels, and therefore has relatively high fuel costs. It has also introduced a carbon cap and trade scheme in January, which will favour gas due to its lower carbon content and thus; lower related carbon costs. Whereas in China, air quality is a key issue and gas-fired power generation is subsidized in some provinces. China is also introducing a national carbon trading scheme; and other markets are also implementing or looking at carbon initiatives. These factors all make gas the more attractive option."
Wood Mackenzie expects that pressure on the regulated price will allow an increase in gas-fired operation For example, Peninsular Malaysia is currently oversupplied with pipeline gas - a situation forecast to continue until 2020. Mr Tyler says "We have already seen delays to new-build coal plants currently under-construction in Malaysia. In a low commodity price world, where local gas production is over-supplied, if gas prices stay attractive we may see gas having a greater role. With weak gas prices and increasing environmental pressures, the cost of switching to gas-fired plants could become more economical. This shift in the competitive dynamic between coal and gas must now be front of mind for energy planners, utilities and fuel suppliers."
Wood Mackenzie says that Asia's strong long term economic growth will see power demand growth average 5% a year through to 2030, which will require over 2,000 gigawatts (GW) of additional power generation capacity to be built between now and then. With gas prices set to remain soft and increasing environmental pressures, it's likely gas will account for a higher proportion of this new power generation. As long as gas prices remain low, industry players need to continue to watch for individual market influencers to see where the most upside for gas may emerge
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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Friday, 10 April 15
US COAL PRODUCTION FELL 4.7% W-O-W : EIA
COALspot.com – United States the second largest coal producer in the world has produced approximately totaled an estimated 17.4 million short ...
Friday, 10 April 15
DRY BULK MARKET'S DOWNFALL ALSO OFFER INVESTMENT BARGAINS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Dry bulk market rates have fallen to historical lows over the past few weeks, with no clear path of recovery, at least in the near term. As such, m ...
Thursday, 09 April 15
CAPESIZE: RATES ARE STILL DISAPPOINTING - FEARNLEYS
Handy
The handy market had a stronger sentiment before the Easter holidays, but have as the bigger panamaxes seen a softening tendency this week. ...
Wednesday, 08 April 15
DRY BULK MARKET SEEMS UNABLE TO CATCH A BREAK - INTERMODAL
COALspot.com: The Dry Bulk market seems unable to catch a break these days.
According to Intermodal, following the market stabilization that p ...
Wednesday, 08 April 15
CHINA BURNS HALF OF THE WORLD'S COAL - CHRISTOPHER T. WHITTY
Intermodal Weekly Market Update
China is the world's largest consumer of coal, using more coal each year than the United States, the Europ ...
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- CIMB Investment Bank - Malaysia
- Cigading International Bulk Terminal - Indonesia
- SMG Consultants - Indonesia
- European Bulk Services B.V. - Netherlands
- Thiess Contractors Indonesia
- Meralco Power Generation, Philippines
- Makarim & Taira - Indonesia
- Eastern Energy - Thailand
- TeaM Sual Corporation - Philippines
- London Commodity Brokers - England
- Australian Commodity Traders Exchange
- Eastern Coal Council - USA
- GMR Energy Limited - India
- Sakthi Sugars Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- GN Power Mariveles Coal Plant, Philippines
- Wood Mackenzie - Singapore
- Sinarmas Energy and Mining - Indonesia
- Salva Resources Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Port Waratah Coal Services - Australia
- Price Waterhouse Coopers - Russia
- Gujarat Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- Tata Chemicals Ltd - India
- Bhoruka Overseas - Indonesia
- Wilmar Investment Holdings
- Mintek Dendrill Indonesia
- Alfred C Toepfer International GmbH - Germany
- Toyota Tsusho Corporation, Japan
- Simpson Spence & Young - Indonesia
- Gujarat Sidhee Cement - India
- PNOC Exploration Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Formosa Plastics Group - Taiwan
- ASAPP Information Group - India
- Energy Link Ltd, New Zealand
- Petron Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Romanian Commodities Exchange
- Indika Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Karaikal Port Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- The State Trading Corporation of India Ltd
- Indian Oil Corporation Limited
- Intertek Mineral Services - Indonesia
- Global Business Power Corporation, Philippines
- Minerals Council of Australia
- PTC India Limited - India
- Parry Sugars Refinery, India
- Australian Coal Association
- Siam City Cement - Thailand
- Rio Tinto Coal - Australia
- Miang Besar Coal Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Bhushan Steel Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- The Treasury - Australian Government
- Goldman Sachs - Singapore
- Pendopo Energi Batubara - Indonesia
- Sree Jayajothi Cements Limited - India
- Antam Resourcindo - Indonesia
- Indogreen Group - Indonesia
- Orica Mining Services - Indonesia
- Vizag Seaport Private Limited - India
- Power Finance Corporation Ltd., India
- Kartika Selabumi Mining - Indonesia
- Tamil Nadu electricity Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Mines - Canada
- Kepco SPC Power Corporation, Philippines
- Economic Council, Georgia
- Kapuas Tunggal Persada - Indonesia
- Global Green Power PLC Corporation, Philippines
- Indonesian Coal Mining Association
- Timah Investasi Mineral - Indoneisa
- IEA Clean Coal Centre - UK
- Deloitte Consulting - India
- Kideco Jaya Agung - Indonesia
- Savvy Resources Ltd - HongKong
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Planning Commission, India
- PowerSource Philippines DevCo
- Africa Commodities Group - South Africa
- Directorate Of Revenue Intelligence - India
- Mercuria Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Therma Luzon, Inc, Philippines
- Binh Thuan Hamico - Vietnam
- PetroVietnam Power Coal Import and Supply Company
- Central Electricity Authority - India
- Iligan Light & Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Central Java Power - Indonesia
- India Bulls Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Leighton Contractors Pty Ltd - Australia
- Singapore Mercantile Exchange
- Sarangani Energy Corporation, Philippines
- MS Steel International - UAE
- Kobexindo Tractors - Indoneisa
- McConnell Dowell - Australia
- Essar Steel Hazira Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- SMC Global Power, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Indian Energy Exchange, India
- Marubeni Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Bayan Resources Tbk. - Indonesia
- Sical Logistics Limited - India
- Sojitz Corporation - Japan
- Coalindo Energy - Indonesia
- Aditya Birla Group - India
- Bharathi Cement Corporation - India
- Billiton Holdings Pty Ltd - Australia
- Ambuja Cements Ltd - India
- Agrawal Coal Company - India
- Larsen & Toubro Limited - India
- Barasentosa Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- Electricity Generating Authority of Thailand
- Semirara Mining Corp, Philippines
- Borneo Indobara - Indonesia
- Uttam Galva Steels Limited - India
- Baramulti Group, Indonesia
- South Luzon Thermal Energy Corporation
- Aboitiz Power Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Commonwealth Bank - Australia
- Medco Energi Mining Internasional
- Globalindo Alam Lestari - Indonesia
- Ministry of Transport, Egypt
- Oldendorff Carriers - Singapore
- Siam City Cement PLC, Thailand
- Chettinad Cement Corporation Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Semirara Mining and Power Corporation, Philippines
- Independent Power Producers Association of India
- Indo Tambangraya Megah - Indonesia
- Energy Development Corp, Philippines
- Jindal Steel & Power Ltd - India
- Latin American Coal - Colombia
- Lanco Infratech Ltd - India
- Maheswari Brothers Coal Limited - India
- Rashtriya Ispat Nigam Limited - India
- Merrill Lynch Commodities Europe
- Posco Energy - South Korea
- Thai Mozambique Logistica
- Ministry of Finance - Indonesia
- Renaissance Capital - South Africa
- Georgia Ports Authority, United States
- Grasim Industreis Ltd - India
- Chamber of Mines of South Africa
- Bhatia International Limited - India
- OPG Power Generation Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Dalmia Cement Bharat India
- Karbindo Abesyapradhi - Indoneisa
- IHS Mccloskey Coal Group - USA
- Xindia Steels Limited - India
- Star Paper Mills Limited - India
- Interocean Group of Companies - India
- Banpu Public Company Limited - Thailand
- Madhucon Powers Ltd - India
- VISA Power Limited - India
- Parliament of New Zealand
- Electricity Authority, New Zealand
- Heidelberg Cement - Germany
- Directorate General of MIneral and Coal - Indonesia
- Manunggal Multi Energi - Indonesia
- Cement Manufacturers Association - India
- ICICI Bank Limited - India
- Malabar Cements Ltd - India
- New Zealand Coal & Carbon
- LBH Netherlands Bv - Netherlands
- Mercator Lines Limited - India
- Kumho Petrochemical, South Korea
- Gujarat Mineral Development Corp Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Standard Chartered Bank - UAE
- Global Coal Blending Company Limited - Australia
- Carbofer General Trading SA - India
- Jaiprakash Power Ventures ltd
- Maharashtra Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- White Energy Company Limited
- Altura Mining Limited, Indonesia
- Anglo American - United Kingdom
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coastal Gujarat Power Limited - India
- Orica Australia Pty. Ltd.
- Samtan Co., Ltd - South Korea
- Videocon Industries ltd - India
- Mjunction Services Limited - India
- The University of Queensland
- GVK Power & Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Trasteel International SA, Italy
- Bulk Trading Sa - Switzerland
- Vedanta Resources Plc - India
- Sindya Power Generating Company Private Ltd
- Bukit Baiduri Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- CNBM International Corporation - China
- Ind-Barath Power Infra Limited - India
- Attock Cement Pakistan Limited
- Bangladesh Power Developement Board
- Edison Trading Spa - Italy
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