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