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Wednesday, 12 October 16
INDIAN STEELMAKERS' DELEVERAGING AT RISK ON COKING COAL PRICE JUMP - FITCH
 The sharp increase in coking coal prices since August 2016 could squeeze Indian steelmakers' profitability and threaten their deleveraging, Fitch Ratings says.
The risk will increase if high coking coal prices persist and domestic steel demand growth remains weak. Leverage for producers such as Tata Steel Limited (BB/Rating Watch Evolving) and JSW Steel Ltd (BB/Negative) jumped in the financial year ending March 2016 (FY16), mainly due to poor profitability, and sustained pressure on margins would hamper the deleveraging process.
Prices for hard coking coal for export by Australia as of 30 September 2016 were 125% (USD100/tonne) higher than the average in the quarter ended June 2016 (1QFY17), according to data from The Steel Index. Prices rallied following China's decision to limit coal mines' operating days to 276 a year, from 330 before, to restructure the industry and improve its profitability. Others issues such as flooding in China's Shanxi province, which reduced supply, and a number of unplanned mine outages in Australia also supported the price rise.
The increase in raw material costs for Indian steel producers could shrink margins, if the cost rise is not passed on to consumers. For example, we estimate that a USD50/tonne increase in Tata Steel's coking coal cost in 1QFY17 would have reduced consolidated EBITDA by around 35%, if all else stayed the same. Similarly, JSW Steel's 1QFY17 consolidated EBITDA would have fallen by around 25%. The impact of higher coal costs would be offset if we assume price realisations for the two companies were 5%-10% higher.
However, the ability of steelmakers in India to raise prices to counter any sustained cost increase is likely to be constrained if weak domestic demand growth persists amid increased capacity. Domestic consumption in April-September 2016 rose by just 2.5% yoy, compared with 5.9% in FY16. Meanwhile, producers, including Tata Steel and JSW Steel, aim to increase sales volume after recent capacity expansions.
The full impact of the recent jump in coking coal prices on steelmakers will be felt from the later part of 3QFY17, as volumes are mostly traded on a contractual basis and priced using monthly or quarterly averages, and companies generally keep two to three months' worth of inventories. JSW Steel relies solely on imported coking coal and is therefore exposed to the cost rises. Tata Steel's Indian operations are less susceptible to the rise in coking coal prices as its own production caters to roughly 45% of its requirements, but its overseas units are at higher risk as they rely on imports.
While short-term supply disruptions are being resolved, it is yet unclear how China's policy on coal will evolve. Steel makers in China have recently requested the government to allow higher coal output to alleviate cost pressures. However, coking coal prices could remain high in the absence of a relaxation in operating guidelines for mines. Fitch raised its mid-cycle price assumption for hard coking coal by around 10% to USD110/tonne for the long term in August 2016.
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Wednesday, 12 October 16
MARKET INSIGHT - LINOS KOGEVINAS
Another Monday has gone by, bringing with it further turbulence for oil. A series of meetings between high-production nations Russia & Saudi Ar ...
Wednesday, 12 October 16
UK SEABORNE COAL IMPORT PLUNGES 64% AS A WORRYING TREND LURKS - BIMCO
The main exporters of thermal coal for coal- fired power plants to the United Kingdom (UK) have experienced a heavy decline in seaborne cargo volum ...
Monday, 10 October 16
INDONESIAN COAL PRICE REFERENCE HITS HIGHEST LEVELS SINCE SEPTEMBER 2014
COALspot.com: The Indonesia coal benchmark price hits to its highest level since September 2014. The government declared benchmark prices for Indon ...
Monday, 10 October 16
THE FREIGHT MARKET FIRMS UP ON STRONG CAPE PERFORMANCE
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rose again and ending in a positive note this past week. ...
Friday, 07 October 16
INDONESIA'S DEMAND FOR COAL REMAINS STRONG: BP
Indonesia's domestic demand for coal shows no sign of slowing down as the country is banking on its coal abundance to meet the country' ...
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- Cement Manufacturers Association - India
- Tamil Nadu electricity Board
- Sical Logistics Limited - India
- Bhatia International Limited - India
- New Zealand Coal & Carbon
- Ministry of Transport, Egypt
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- Kumho Petrochemical, South Korea
- San Jose City I Power Corp, Philippines
- Orica Australia Pty. Ltd.
- Holcim Trading Pte Ltd - Singapore
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- Georgia Ports Authority, United States
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- SMC Global Power, Philippines
- Independent Power Producers Association of India
- Globalindo Alam Lestari - Indonesia
- Medco Energi Mining Internasional
- Gujarat Sidhee Cement - India
- PNOC Exploration Corporation - Philippines
- Electricity Authority, New Zealand
- The Treasury - Australian Government
- Kapuas Tunggal Persada - Indonesia
- Mercuria Energy - Indonesia
- IEA Clean Coal Centre - UK
- Kalimantan Lumbung Energi - Indonesia
- Sojitz Corporation - Japan
- Central Java Power - Indonesia
- Altura Mining Limited, Indonesia
- Port Waratah Coal Services - Australia
- Madhucon Powers Ltd - India
- Central Electricity Authority - India
- Sree Jayajothi Cements Limited - India
- White Energy Company Limited
- Alfred C Toepfer International GmbH - Germany
- Vedanta Resources Plc - India
- GN Power Mariveles Coal Plant, Philippines
- Intertek Mineral Services - Indonesia
- Merrill Lynch Commodities Europe
- Rashtriya Ispat Nigam Limited - India
- Parry Sugars Refinery, India
- Energy Development Corp, Philippines
- Bangladesh Power Developement Board
- Malabar Cements Ltd - India
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- Samtan Co., Ltd - South Korea
- Simpson Spence & Young - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Bayan Resources Tbk. - Indonesia
- Bhushan Steel Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Baramulti Group, Indonesia
- Riau Bara Harum - Indonesia
- South Luzon Thermal Energy Corporation
- Grasim Industreis Ltd - India
- Goldman Sachs - Singapore
- Renaissance Capital - South Africa
- Indo Tambangraya Megah - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Larsen & Toubro Limited - India
- Salva Resources Pvt Ltd - India
- Xindia Steels Limited - India
- Siam City Cement PLC, Thailand
- Posco Energy - South Korea
- The State Trading Corporation of India Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coalindo Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Thiess Contractors Indonesia
- Eastern Coal Council - USA
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- Meralco Power Generation, Philippines
- Indian Oil Corporation Limited
- Ministry of Finance - Indonesia
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- Directorate General of MIneral and Coal - Indonesia
- Petron Corporation, Philippines
- Anglo American - United Kingdom
- Minerals Council of Australia
- Chettinad Cement Corporation Ltd - India
- Straits Asia Resources Limited - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Iligan Light & Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Oldendorff Carriers - Singapore
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- GAC Shipping (India) Pvt Ltd
- Bhoruka Overseas - Indonesia
- Semirara Mining Corp, Philippines
- Ministry of Mines - Canada
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indika Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Kepco SPC Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The University of Queensland
- Therma Luzon, Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Tata Chemicals Ltd - India
- Carbofer General Trading SA - India
- Mercator Lines Limited - India
- Coal and Oil Company - UAE
- MS Steel International - UAE
- Barasentosa Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- Bharathi Cement Corporation - India
- Sinarmas Energy and Mining - Indonesia
- European Bulk Services B.V. - Netherlands
- India Bulls Power Limited - India
- Aditya Birla Group - India
- LBH Netherlands Bv - Netherlands
- CIMB Investment Bank - Malaysia
- Indogreen Group - Indonesia
- London Commodity Brokers - England
- Dalmia Cement Bharat India
- Rio Tinto Coal - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Borneo Indobara - Indonesia
- Makarim & Taira - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Standard Chartered Bank - UAE
- Australian Coal Association
- ASAPP Information Group - India
- Chamber of Mines of South Africa
- Manunggal Multi Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- IHS Mccloskey Coal Group - USA
- Heidelberg Cement - Germany
- Interocean Group of Companies - India
- Lanco Infratech Ltd - India
- Australian Commodity Traders Exchange
- Global Business Power Corporation, Philippines
- Indian Energy Exchange, India
- Africa Commodities Group - South Africa
- Mintek Dendrill Indonesia
- Sarangani Energy Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Sakthi Sugars Limited - India
- Commonwealth Bank - Australia
- Marubeni Corporation - India
- Planning Commission, India
- Miang Besar Coal Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- VISA Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Orica Mining Services - Indonesia
- PowerSource Philippines DevCo
- Timah Investasi Mineral - Indoneisa
- TeaM Sual Corporation - Philippines
- ICICI Bank Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Energy - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Makmur.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- Toyota Tsusho Corporation, Japan
- Singapore Mercantile Exchange
- GMR Energy Limited - India
- Ceylon Electricity Board - Sri Lanka
- PTC India Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Global Coal Blending Company Limited - Australia
- Kobexindo Tractors - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- Attock Cement Pakistan Limited
- Parliament of New Zealand
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- Asmin Koalindo Tuhup - Indonesia
- SN Aboitiz Power Inc, Philippines
- Agrawal Coal Company - India
- Energy Link Ltd, New Zealand
- Electricity Generating Authority of Thailand
- Edison Trading Spa - Italy
- OPG Power Generation Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Wood Mackenzie - Singapore
- Metalloyd Limited - United Kingdom
- Bahari Cakrawala Sebuku - Indonesia
- Power Finance Corporation Ltd., India
- Siam City Cement - Thailand
- Maheswari Brothers Coal Limited - India
- Aboitiz Power Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Uttam Galva Steels Limited - India
- Kaltim Prima Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Trasteel International SA, Italy
- Sindya Power Generating Company Private Ltd
- Vizag Seaport Private Limited - India
- CNBM International Corporation - China
- GVK Power & Infra Limited - India
- McConnell Dowell - Australia
- Karaikal Port Pvt Ltd - India
- Economic Council, Georgia
- Formosa Plastics Group - Taiwan
- Thai Mozambique Logistica
- Jindal Steel & Power Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- Wilmar Investment Holdings
- Indonesian Coal Mining Association
- Romanian Commodities Exchange
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