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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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- PowerSource Philippines DevCo
- Jaiprakash Power Ventures ltd
- Star Paper Mills Limited - India
- Larsen & Toubro Limited - India
- Chettinad Cement Corporation Ltd - India
- Videocon Industries ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Goldman Sachs - Singapore
- Ministry of Mines - Canada
- PTC India Limited - India
- Manunggal Multi Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
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- Global Green Power PLC Corporation, Philippines
- ICICI Bank Limited - India
- Heidelberg Cement - Germany
- Singapore Mercantile Exchange
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- Mjunction Services Limited - India
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- Electricity Authority, New Zealand
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- SMC Global Power, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Grasim Industreis Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Minerals Council of Australia
- Banpu Public Company Limited - Thailand
- Indo Tambangraya Megah - Indonesia
- Parry Sugars Refinery, India
- Kideco Jaya Agung - Indonesia
- TeaM Sual Corporation - Philippines
- MS Steel International - UAE
- San Jose City I Power Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Ministry of Finance - Indonesia
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- Deloitte Consulting - India
- Orica Mining Services - Indonesia
- Petron Corporation, Philippines
- Meenaskhi Energy Private Limited - India
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- Independent Power Producers Association of India
- Commonwealth Bank - Australia
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- Central Java Power - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Coalindo Energy - Indonesia
- Wilmar Investment Holdings
- Electricity Generating Authority of Thailand
- Bhushan Steel Limited - India
- Straits Asia Resources Limited - Singapore
- IHS Mccloskey Coal Group - USA
- GMR Energy Limited - India
- ASAPP Information Group - India
- Edison Trading Spa - Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Agrawal Coal Company - India
- The University of Queensland
- Renaissance Capital - South Africa
- Maharashtra Electricity Regulatory Commission - India
- Posco Energy - South Korea
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- Coal and Oil Company - UAE
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- Bayan Resources Tbk. - Indonesia
- Bukit Makmur.PT - Indonesia
- Tata Chemicals Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Australian Commodity Traders Exchange
- Georgia Ports Authority, United States
- Indonesian Coal Mining Association
- Savvy Resources Ltd - HongKong
- Power Finance Corporation Ltd., India
- International Coal Ventures Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Bhoruka Overseas - Indonesia
- Merrill Lynch Commodities Europe
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- Karbindo Abesyapradhi - Indoneisa
- Energy Development Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Wood Mackenzie - Singapore
- Ministry of Transport, Egypt
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining and Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Antam Resourcindo - Indonesia
- Latin American Coal - Colombia
- Petrochimia International Co. Ltd.- Taiwan
- Attock Cement Pakistan Limited
- Globalindo Alam Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- Kobexindo Tractors - Indoneisa
- Meralco Power Generation, Philippines
- Africa Commodities Group - South Africa
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- Sree Jayajothi Cements Limited - India
- Thiess Contractors Indonesia
- Bangladesh Power Developement Board
- Marubeni Corporation - India
- Pipit Mutiara Jaya. PT, Indonesia
- VISA Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Price Waterhouse Coopers - Russia
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- Sakthi Sugars Limited - India
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- SMG Consultants - Indonesia
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- Economic Council, Georgia
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- Dalmia Cement Bharat India
- Global Coal Blending Company Limited - Australia
- Chamber of Mines of South Africa
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- Orica Australia Pty. Ltd.
- Krishnapatnam Port Company Ltd. - India
- Bulk Trading Sa - Switzerland
- Global Business Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Sindya Power Generating Company Private Ltd
- Mercuria Energy - Indonesia
- Planning Commission, India
- Thai Mozambique Logistica
- Siam City Cement - Thailand
- Romanian Commodities Exchange
- Asmin Koalindo Tuhup - Indonesia
- Salva Resources Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Kumho Petrochemical, South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- New Zealand Coal & Carbon
- Kaltim Prima Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Kepco SPC Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Uttam Galva Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement PLC, Thailand
- Gujarat Sidhee Cement - India
- The Treasury - Australian Government
- Sical Logistics Limited - India
- Bharathi Cement Corporation - India
- Indian Oil Corporation Limited
- Simpson Spence & Young - Indonesia
- Metalloyd Limited - United Kingdom
- Malabar Cements Ltd - India
- Eastern Energy - Thailand
- Rio Tinto Coal - Australia
- Anglo American - United Kingdom
- Central Electricity Authority - India
- Iligan Light & Power Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Trasteel International SA, Italy
- Mintek Dendrill Indonesia
- OPG Power Generation Pvt Ltd - India
- Vedanta Resources Plc - India
- Parliament of New Zealand
- Energy Link Ltd, New Zealand
- Baramulti Group, Indonesia
- Samtan Co., Ltd - South Korea
- Eastern Coal Council - USA
- Tamil Nadu electricity Board
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- Kohat Cement Company Ltd. - Pakistan
- Rashtriya Ispat Nigam Limited - India
- CIMB Investment Bank - Malaysia
- AsiaOL BioFuels Corp., Philippines
- Ceylon Electricity Board - Sri Lanka
- SN Aboitiz Power Inc, Philippines
- Semirara Mining Corp, Philippines
- Indian Energy Exchange, India
- Standard Chartered Bank - UAE
- Xindia Steels Limited - India
- Port Waratah Coal Services - Australia
- GN Power Mariveles Coal Plant, Philippines
- Mercator Lines Limited - India
- London Commodity Brokers - England
- India Bulls Power Limited - India
- IEA Clean Coal Centre - UK
- Bukit Baiduri Energy - Indonesia
- Bhatia International Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maheswari Brothers Coal Limited - India
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- Sarangani Energy Corporation, Philippines
- Borneo Indobara - Indonesia
- Lanco Infratech Ltd - India
- McConnell Dowell - Australia
- Pendopo Energi Batubara - Indonesia
- Indika Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Ambuja Cements Ltd - India
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