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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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Thursday, 02 April 15
NEWBUILDING ORDERS FOR DRY BULK CARRIERS "DRY" UP
Newbuilding ordering activity remained subdued over the course of the past week, as ship owners are wary of adding further tonnage to an already pr ...
Wednesday, 01 April 15
SUPRAMAX & HANDY: RATES HELD STEADY TOWARDS THE WEEKEND
“Despite the fact that the Dry Bulk market closed off on the green last week, sentiment didn't improve by any means, not only because of ...
Wednesday, 01 April 15
WEEKLY SHIPPING MARKET UPDATE - INTERMODAL
There is no doubt that we are still witnessing a very challenging and at the same time very uncertain market, both with respect to dry chartering a ...
Wednesday, 01 April 15
Q4' 15 INDONESIA COAL SWAP CLOSED AT $45.15 W/E 27 MARCH 2015
COALspot.com: Indonesian coal swap for delivery Q2' 2015 drops month on month and week over week.
The Q2 swap declined US$ 1.54 (3.24%) mo ...
Tuesday, 31 March 15
RICHARDS BAY COAL SWAPS GAIN WEEK OVER WEEK
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q2' 2015 declined month over month but increased week on week.
The Q2 swap has ...
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- TNB Fuel Sdn Bhd - Malaysia
- Energy Development Corp, Philippines
- Electricity Authority, New Zealand
- LBH Netherlands Bv - Netherlands
- Anglo American - United Kingdom
- Thai Mozambique Logistica
- Vedanta Resources Plc - India
- Eastern Coal Council - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Sakthi Sugars Limited - India
- Larsen & Toubro Limited - India
- Makarim & Taira - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Economic Council, Georgia
- Riau Bara Harum - Indonesia
- Indika Energy - Indonesia
- Videocon Industries ltd - India
- Xindia Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Orica Australia Pty. Ltd.
- Price Waterhouse Coopers - Russia
- Indogreen Group - Indonesia
- CIMB Investment Bank - Malaysia
- Antam Resourcindo - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- SMG Consultants - Indonesia
- Carbofer General Trading SA - India
- GVK Power & Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Intertek Mineral Services - Indonesia
- Parliament of New Zealand
- Interocean Group of Companies - India
- Grasim Industreis Ltd - India
- Semirara Mining Corp, Philippines
- Banpu Public Company Limited - Thailand
- Miang Besar Coal Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Mines - Canada
- Barasentosa Lestari - Indonesia
- Malabar Cements Ltd - India
- Latin American Coal - Colombia
- South Luzon Thermal Energy Corporation
- Alfred C Toepfer International GmbH - Germany
- PowerSource Philippines DevCo
- Vijayanagar Sugar Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Sree Jayajothi Cements Limited - India
- Bhatia International Limited - India
- Kideco Jaya Agung - Indonesia
- Bulk Trading Sa - Switzerland
- Cement Manufacturers Association - India
- Semirara Mining and Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Gujarat Sidhee Cement - India
- Jorong Barutama Greston.PT - Indonesia
- Kumho Petrochemical, South Korea
- Oldendorff Carriers - Singapore
- Jaiprakash Power Ventures ltd
- Karaikal Port Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Thiess Contractors Indonesia
- ICICI Bank Limited - India
- Sical Logistics Limited - India
- Salva Resources Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Attock Cement Pakistan Limited
- Africa Commodities Group - South Africa
- Kobexindo Tractors - Indoneisa
- Altura Mining Limited, Indonesia
- IHS Mccloskey Coal Group - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- VISA Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Sojitz Corporation - Japan
- Iligan Light & Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Wood Mackenzie - Singapore
- London Commodity Brokers - England
- Standard Chartered Bank - UAE
- Coalindo Energy - Indonesia
- Singapore Mercantile Exchange
- Bayan Resources Tbk. - Indonesia
- Simpson Spence & Young - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Madhucon Powers Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Petron Corporation, Philippines
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- Ministry of Finance - Indonesia
- Ambuja Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Orica Mining Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- IEA Clean Coal Centre - UK
- Billiton Holdings Pty Ltd - Australia
- Central Electricity Authority - India
- TeaM Sual Corporation - Philippines
- Parry Sugars Refinery, India
- SMC Global Power, Philippines
- Mjunction Services Limited - India
- Binh Thuan Hamico - Vietnam
- Australian Commodity Traders Exchange
- Therma Luzon, Inc, Philippines
- Toyota Tsusho Corporation, Japan
- SN Aboitiz Power Inc, Philippines
- Chamber of Mines of South Africa
- ASAPP Information Group - India
- Ind-Barath Power Infra Limited - India
- Goldman Sachs - Singapore
- Mintek Dendrill Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Meenaskhi Energy Private Limited - India
- Energy Link Ltd, New Zealand
- Indian Energy Exchange, India
- San Jose City I Power Corp, Philippines
- GMR Energy Limited - India
- New Zealand Coal & Carbon
- Dalmia Cement Bharat India
- The State Trading Corporation of India Ltd
- Minerals Council of Australia
- Renaissance Capital - South Africa
- Independent Power Producers Association of India
- Cigading International Bulk Terminal - Indonesia
- PNOC Exploration Corporation - Philippines
- Eastern Energy - Thailand
- White Energy Company Limited
- Sindya Power Generating Company Private Ltd
- Trasteel International SA, Italy
- Merrill Lynch Commodities Europe
- MS Steel International - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pendopo Energi Batubara - Indonesia
- European Bulk Services B.V. - Netherlands
- Deloitte Consulting - India
- India Bulls Power Limited - India
- Metalloyd Limited - United Kingdom
- The University of Queensland
- PTC India Limited - India
- Bharathi Cement Corporation - India
- Bukit Baiduri Energy - Indonesia
- Tata Chemicals Ltd - India
- Uttam Galva Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Agrawal Coal Company - India
- Rio Tinto Coal - Australia
- Siam City Cement - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Power Finance Corporation Ltd., India
- International Coal Ventures Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Global Business Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Mercator Lines Limited - India
- Wilmar Investment Holdings
- Essar Steel Hazira Ltd - India
- Kepco SPC Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- McConnell Dowell - Australia
- Samtan Co., Ltd - South Korea
- Kartika Selabumi Mining - Indonesia
- Edison Trading Spa - Italy
- Baramulti Group, Indonesia
- Lanco Infratech Ltd - India
- Manunggal Multi Energi - Indonesia
- Timah Investasi Mineral - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jindal Steel & Power Ltd - India
- Ministry of Transport, Egypt
- Star Paper Mills Limited - India
- Borneo Indobara - Indonesia
- Bhushan Steel Limited - India
- Global Green Power PLC Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Indonesian Coal Mining Association
- Aboitiz Power Corporation - Philippines
- Commonwealth Bank - Australia
- GN Power Mariveles Coal Plant, Philippines
- Medco Energi Mining Internasional
- Georgia Ports Authority, United States
- Planning Commission, India
- Australian Coal Association
- Leighton Contractors Pty Ltd - Australia
- Sarangani Energy Corporation, Philippines
- Marubeni Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Gujarat Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- CNBM International Corporation - China
- Central Java Power - Indonesia
- Siam City Cement PLC, Thailand
- Kaltim Prima Coal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercuria Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- The Treasury - Australian Government
- Meralco Power Generation, Philippines
- Port Waratah Coal Services - Australia
- Coastal Gujarat Power Limited - India
- Electricity Generating Authority of Thailand
- Aditya Birla Group - India
- Indo Tambangraya Megah - Indonesia
- OPG Power Generation Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Bangladesh Power Developement Board
- Straits Asia Resources Limited - Singapore
- Tamil Nadu electricity Board
- AsiaOL BioFuels Corp., Philippines
- Posco Energy - South Korea
- Indian Oil Corporation Limited
- Coal and Oil Company - UAE
- Romanian Commodities Exchange
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