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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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Monday, 03 October 16
THERMAL COAL PRICE SHOOTS UP AND MADE THEIR VERTICAL MOVE IN 5 YEARS; PRICE RALLY CONTINUES
COALspot.com: A rally in thermal coal prices over the past few months, after years of decline, is still continuing and it is expected to rally at l ...
Monday, 03 October 16
DRY-BULK SHIPPING FREIGHTS SLIDE IN SOFTENING SPOT MARKET
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities decline slightly and ending in a negative note this past ...
Friday, 30 September 16
U.S. WEEKLY COAL OUTPUT FELL 2.3% - EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 15.7 million short ton ...
Friday, 30 September 16
OPEC CUT SUPPORTS SLOW OIL RECOVERY, NOT STRONG REBOUND - FITCH
OPEC's oil production target announced this week signals the potential for greater co-ordination among its members, but the target itself is la ...
Thursday, 29 September 16
FREIGHT RATES MIGHT CONTINUE TO SLIDE NEXT WEEK DUE TO HOLIDAYS IN CHINA
Supramax
Flat start to week followed by a slight gain in rates for Supramaxes, says Fearnleys in its latest weekly report.
According to Fear ...
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- Sical Logistics Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Coal Blending Company Limited - Australia
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Mines - Canada
- Australian Commodity Traders Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Mineral Development Corp Ltd - India
- Parliament of New Zealand
- Alfred C Toepfer International GmbH - Germany
- Sree Jayajothi Cements Limited - India
- Ministry of Finance - Indonesia
- Heidelberg Cement - Germany
- Anglo American - United Kingdom
- Indo Tambangraya Megah - Indonesia
- Straits Asia Resources Limited - Singapore
- Grasim Industreis Ltd - India
- Globalindo Alam Lestari - Indonesia
- Uttam Galva Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Coastal Gujarat Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Thiess Contractors Indonesia
- Ambuja Cements Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kumho Petrochemical, South Korea
- PowerSource Philippines DevCo
- Iligan Light & Power Inc, Philippines
- Tata Chemicals Ltd - India
- Electricity Generating Authority of Thailand
- Manunggal Multi Energi - Indonesia
- Commonwealth Bank - Australia
- Malabar Cements Ltd - India
- Goldman Sachs - Singapore
- Bhushan Steel Limited - India
- Lanco Infratech Ltd - India
- Carbofer General Trading SA - India
- Semirara Mining and Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Chamber of Mines of South Africa
- Miang Besar Coal Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Minerals Council of Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maheswari Brothers Coal Limited - India
- Siam City Cement - Thailand
- Pendopo Energi Batubara - Indonesia
- Coal and Oil Company - UAE
- Rashtriya Ispat Nigam Limited - India
- Africa Commodities Group - South Africa
- Kideco Jaya Agung - Indonesia
- Essar Steel Hazira Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Bukit Makmur.PT - Indonesia
- Rio Tinto Coal - Australia
- Formosa Plastics Group - Taiwan
- Edison Trading Spa - Italy
- Mjunction Services Limited - India
- Mintek Dendrill Indonesia
- Binh Thuan Hamico - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Bulk Trading Sa - Switzerland
- Interocean Group of Companies - India
- Star Paper Mills Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Riau Bara Harum - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- OPG Power Generation Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Posco Energy - South Korea
- McConnell Dowell - Australia
- Mercator Lines Limited - India
- Vizag Seaport Private Limited - India
- Timah Investasi Mineral - Indoneisa
- Meralco Power Generation, Philippines
- Energy Development Corp, Philippines
- Karaikal Port Pvt Ltd - India
- India Bulls Power Limited - India
- Borneo Indobara - Indonesia
- Indian Oil Corporation Limited
- European Bulk Services B.V. - Netherlands
- ASAPP Information Group - India
- Bharathi Cement Corporation - India
- Independent Power Producers Association of India
- Meenaskhi Energy Private Limited - India
- Romanian Commodities Exchange
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- Madhucon Powers Ltd - India
- PTC India Limited - India
- Simpson Spence & Young - Indonesia
- Renaissance Capital - South Africa
- Larsen & Toubro Limited - India
- Krishnapatnam Port Company Ltd. - India
- Bangladesh Power Developement Board
- Leighton Contractors Pty Ltd - Australia
- Economic Council, Georgia
- Ind-Barath Power Infra Limited - India
- Thai Mozambique Logistica
- GMR Energy Limited - India
- AsiaOL BioFuels Corp., Philippines
- Antam Resourcindo - Indonesia
- Georgia Ports Authority, United States
- White Energy Company Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jindal Steel & Power Ltd - India
- Global Green Power PLC Corporation, Philippines
- Videocon Industries ltd - India
- Marubeni Corporation - India
- Billiton Holdings Pty Ltd - Australia
- Mercuria Energy - Indonesia
- Wood Mackenzie - Singapore
- The Treasury - Australian Government
- Cigading International Bulk Terminal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Sojitz Corporation - Japan
- London Commodity Brokers - England
- Samtan Co., Ltd - South Korea
- Eastern Coal Council - USA
- LBH Netherlands Bv - Netherlands
- Merrill Lynch Commodities Europe
- Petrochimia International Co. Ltd.- Taiwan
- VISA Power Limited - India
- TeaM Sual Corporation - Philippines
- Eastern Energy - Thailand
- Barasentosa Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- Orica Australia Pty. Ltd.
- Therma Luzon, Inc, Philippines
- South Luzon Thermal Energy Corporation
- Intertek Mineral Services - Indonesia
- Petron Corporation, Philippines
- Central Java Power - Indonesia
- SN Aboitiz Power Inc, Philippines
- SMC Global Power, Philippines
- CNBM International Corporation - China
- Sarangani Energy Corporation, Philippines
- Tamil Nadu electricity Board
- Kapuas Tunggal Persada - Indonesia
- Indogreen Group - Indonesia
- New Zealand Coal & Carbon
- Parry Sugars Refinery, India
- Electricity Authority, New Zealand
- Deloitte Consulting - India
- Central Electricity Authority - India
- Asmin Koalindo Tuhup - Indonesia
- Kepco SPC Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Kalimantan Lumbung Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- GAC Shipping (India) Pvt Ltd
- Maharashtra Electricity Regulatory Commission - India
- MS Steel International - UAE
- Energy Link Ltd, New Zealand
- Ceylon Electricity Board - Sri Lanka
- CIMB Investment Bank - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Medco Energi Mining Internasional
- ICICI Bank Limited - India
- Singapore Mercantile Exchange
- Bukit Baiduri Energy - Indonesia
- Dalmia Cement Bharat India
- Indian Energy Exchange, India
- Xindia Steels Limited - India
- Agrawal Coal Company - India
- GVK Power & Infra Limited - India
- The State Trading Corporation of India Ltd
- Standard Chartered Bank - UAE
- Jaiprakash Power Ventures ltd
- Savvy Resources Ltd - HongKong
- Trasteel International SA, Italy
- Australian Coal Association
- PNOC Exploration Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- Aditya Birla Group - India
- Toyota Tsusho Corporation, Japan
- Coalindo Energy - Indonesia
- Sakthi Sugars Limited - India
- The University of Queensland
- Salva Resources Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Planning Commission, India
- Cement Manufacturers Association - India
- Karbindo Abesyapradhi - Indoneisa
- Wilmar Investment Holdings
- International Coal Ventures Pvt Ltd - India
- Baramulti Group, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Transport, Egypt
- Port Waratah Coal Services - Australia
- Indonesian Coal Mining Association
- San Jose City I Power Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kaltim Prima Coal - Indonesia
- SMG Consultants - Indonesia
- IHS Mccloskey Coal Group - USA
- Neyveli Lignite Corporation Ltd, - India
- IEA Clean Coal Centre - UK
- Gujarat Electricity Regulatory Commission - India
- Aboitiz Power Corporation - Philippines
- Makarim & Taira - Indonesia
- Chettinad Cement Corporation Ltd - India
- Altura Mining Limited, Indonesia
- Vedanta Resources Plc - India
- Indika Energy - Indonesia
- Bhatia International Limited - India
- Latin American Coal - Colombia
- Gujarat Sidhee Cement - India
- Orica Mining Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Attock Cement Pakistan Limited
- Price Waterhouse Coopers - Russia
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