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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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Saturday, 28 March 15
THE DRY BULK FLEET AT BREAKING POINT - CLARKSONS
The severe oversupply in the bulkcarrier fleet has contributed to the current trough in the dry bulk market, putting considerable financial pressur ...
Friday, 27 March 15
INDONESIA: NEW REGULATION REQUIRES LETTER OF CREDIT FOR EXPORT OF PRODUCTS FROM NATURAL RESOURCES
The Minister of Trade issued Ministerial Regulation No. 04/M-DAG/PER/1/2015 (“Regulation No. 4/2015”) on 5 January 2015. Regulati ...
Friday, 27 March 15
WEEKLY U.S COAL OUTPUT FALLS 1.7% W-W; 7.9% Y-Y
COALspot.com – United States the world's one of the largest coal producers, produced approximately totaled an estimated 18.2 million ...
Thursday, 26 March 15
CHINA IRON ORE IMPORT FOR THE FIRST 2 MONTHS DECLINED BY 1.2 % Y-O-Y; PANAMAX AUSSIE/CHINA ROUNDS BEING FIXED IN THE $4 -5K RANGE - FEARNLEYS
Handy
There has been more activity in both hemispheres this week. Especially the USG market has picked up with more cargoes for prompter dates en ...
Thursday, 26 March 15
RATES FOR THE SMALLER SIZE SEGMENT CONTINUED TO IMPROVE LAST WEEK - INTERMODAL
To see green across the board is a rare occurrence in the Dry Bulk market nowadays and while the upside in which last week closed off is not of the ...
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- Mercuria Energy - Indonesia
- Mintek Dendrill Indonesia
- Xindia Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- GAC Shipping (India) Pvt Ltd
- Madhucon Powers Ltd - India
- Barasentosa Lestari - Indonesia
- Globalindo Alam Lestari - Indonesia
- Sojitz Corporation - Japan
- Dalmia Cement Bharat India
- Goldman Sachs - Singapore
- Global Green Power PLC Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Georgia Ports Authority, United States
- Meralco Power Generation, Philippines
- Ministry of Finance - Indonesia
- CNBM International Corporation - China
- Semirara Mining Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Deloitte Consulting - India
- Billiton Holdings Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- VISA Power Limited - India
- Heidelberg Cement - Germany
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Independent Power Producers Association of India
- Intertek Mineral Services - Indonesia
- Edison Trading Spa - Italy
- Energy Link Ltd, New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Grasim Industreis Ltd - India
- Kepco SPC Power Corporation, Philippines
- Makarim & Taira - Indonesia
- GMR Energy Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Lanco Infratech Ltd - India
- Maheswari Brothers Coal Limited - India
- South Luzon Thermal Energy Corporation
- Bukit Baiduri Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- PetroVietnam Power Coal Import and Supply Company
- India Bulls Power Limited - India
- PTC India Limited - India
- Eastern Coal Council - USA
- ASAPP Information Group - India
- Central Electricity Authority - India
- LBH Netherlands Bv - Netherlands
- Mercator Lines Limited - India
- Latin American Coal - Colombia
- Directorate Of Revenue Intelligence - India
- Borneo Indobara - Indonesia
- SMC Global Power, Philippines
- Malabar Cements Ltd - India
- CIMB Investment Bank - Malaysia
- Ministry of Transport, Egypt
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Sidhee Cement - India
- Gujarat Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rio Tinto Coal - Australia
- Petron Corporation, Philippines
- Sakthi Sugars Limited - India
- AsiaOL BioFuels Corp., Philippines
- Ceylon Electricity Board - Sri Lanka
- Power Finance Corporation Ltd., India
- Vizag Seaport Private Limited - India
- Carbofer General Trading SA - India
- Kartika Selabumi Mining - Indonesia
- Cement Manufacturers Association - India
- Global Coal Blending Company Limited - Australia
- Merrill Lynch Commodities Europe
- Formosa Plastics Group - Taiwan
- Sindya Power Generating Company Private Ltd
- Bangladesh Power Developement Board
- Kapuas Tunggal Persada - Indonesia
- Salva Resources Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- San Jose City I Power Corp, Philippines
- Price Waterhouse Coopers - Russia
- Videocon Industries ltd - India
- Romanian Commodities Exchange
- Siam City Cement - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Kobexindo Tractors - Indoneisa
- Bharathi Cement Corporation - India
- Marubeni Corporation - India
- European Bulk Services B.V. - Netherlands
- Renaissance Capital - South Africa
- Holcim Trading Pte Ltd - Singapore
- Ind-Barath Power Infra Limited - India
- Australian Coal Association
- Bukit Asam (Persero) Tbk - Indonesia
- Simpson Spence & Young - Indonesia
- Essar Steel Hazira Ltd - India
- Aboitiz Power Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- London Commodity Brokers - England
- Bhoruka Overseas - Indonesia
- SMG Consultants - Indonesia
- Bayan Resources Tbk. - Indonesia
- Planning Commission, India
- Thai Mozambique Logistica
- Indika Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Parry Sugars Refinery, India
- Aditya Birla Group - India
- Central Java Power - Indonesia
- Chettinad Cement Corporation Ltd - India
- Savvy Resources Ltd - HongKong
- MS Steel International - UAE
- Orica Australia Pty. Ltd.
- Gujarat Mineral Development Corp Ltd - India
- PowerSource Philippines DevCo
- Eastern Energy - Thailand
- Cigading International Bulk Terminal - Indonesia
- Bhushan Steel Limited - India
- Attock Cement Pakistan Limited
- Singapore Mercantile Exchange
- Bulk Trading Sa - Switzerland
- Wood Mackenzie - Singapore
- Uttam Galva Steels Limited - India
- Port Waratah Coal Services - Australia
- Posco Energy - South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Samtan Co., Ltd - South Korea
- Wilmar Investment Holdings
- Energy Development Corp, Philippines
- IEA Clean Coal Centre - UK
- Jindal Steel & Power Ltd - India
- Vedanta Resources Plc - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Oil Corporation Limited
- White Energy Company Limited
- Indogreen Group - Indonesia
- Africa Commodities Group - South Africa
- Minerals Council of Australia
- Asmin Koalindo Tuhup - Indonesia
- Star Paper Mills Limited - India
- Tamil Nadu electricity Board
- Coal and Oil Company - UAE
- Kumho Petrochemical, South Korea
- Miang Besar Coal Terminal - Indonesia
- Ambuja Cements Ltd - India
- Ministry of Mines - Canada
- Krishnapatnam Port Company Ltd. - India
- Indian Energy Exchange, India
- New Zealand Coal & Carbon
- Kaltim Prima Coal - Indonesia
- Medco Energi Mining Internasional
- Indonesian Coal Mining Association
- Riau Bara Harum - Indonesia
- Parliament of New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Electricity Generating Authority of Thailand
- McConnell Dowell - Australia
- Global Business Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Oldendorff Carriers - Singapore
- Karbindo Abesyapradhi - Indoneisa
- TeaM Sual Corporation - Philippines
- The Treasury - Australian Government
- Agrawal Coal Company - India
- OPG Power Generation Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sree Jayajothi Cements Limited - India
- Alfred C Toepfer International GmbH - Germany
- Sinarmas Energy and Mining - Indonesia
- Larsen & Toubro Limited - India
- Semirara Mining and Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Siam City Cement PLC, Thailand
- Toyota Tsusho Corporation, Japan
- Karaikal Port Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Rashtriya Ispat Nigam Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Tata Chemicals Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Iligan Light & Power Inc, Philippines
- The State Trading Corporation of India Ltd
- Leighton Contractors Pty Ltd - Australia
- Trasteel International SA, Italy
- Indo Tambangraya Megah - Indonesia
- Australian Commodity Traders Exchange
- Meenaskhi Energy Private Limited - India
- Electricity Authority, New Zealand
- ICICI Bank Limited - India
- Orica Mining Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Interocean Group of Companies - India
- Commonwealth Bank - Australia
- Baramulti Group, Indonesia
- Bukit Makmur.PT - Indonesia
- Chamber of Mines of South Africa
- Manunggal Multi Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Coalindo Energy - Indonesia
- Thiess Contractors Indonesia
- Altura Mining Limited, Indonesia
- Economic Council, Georgia
- Anglo American - United Kingdom
- GVK Power & Infra Limited - India
- Sical Logistics Limited - India
- Coastal Gujarat Power Limited - India
- Bhatia International Limited - India
- Metalloyd Limited - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Binh Thuan Hamico - Vietnam
- Antam Resourcindo - Indonesia
- The University of Queensland
- Mjunction Services Limited - India
- IHS Mccloskey Coal Group - USA
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