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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, 19 September 16
AFTER YEARS OF COMA, COAL BECOMES THE MOST ATTRACTIVE COMMODITY RIGHT NOW
COALspot.com: China boosted coal imports in recent months. The Chinese government’s drive to cut over capacity pushed up the demand for therm ...
Monday, 19 September 16
THE CAPE INDEX WAS UP 7.28% WEEK OVER WEEK
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities declined and ending in a slightly negative note this past ...
Friday, 16 September 16
GLOBAL SHIPBUILDING: THE CHALLENGE TO REMAIN 'ACTIVE' - CHRISTOPHER PEARCE, CLARKSONS
The number of ‘active’ shipyards globally has more than halved since the start of 2009, falling to around 400 shipyards at the start of ...
Friday, 16 September 16
U.S. WEEKLY COAL OUTPUT DECLINED 6.2% TO 15.1 MMST, SAYS EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 15.1 million short ton ...
Thursday, 15 September 16
INDONESIA MAY FACE A COAL CRISIS BY 2035!
COALspot.com: Indonesia is the world’s fourth-largest coal producer and the world’s largest thermal coal exporter may face a coal crisi ...
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- Anglo American - United Kingdom
- Lanco Infratech Ltd - India
- The Treasury - Australian Government
- Orica Australia Pty. Ltd.
- Baramulti Group, Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Malabar Cements Ltd - India
- Coastal Gujarat Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- European Bulk Services B.V. - Netherlands
- Parry Sugars Refinery, India
- GMR Energy Limited - India
- Meralco Power Generation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Planning Commission, India
- Siam City Cement PLC, Thailand
- Kepco SPC Power Corporation, Philippines
- Singapore Mercantile Exchange
- CNBM International Corporation - China
- MS Steel International - UAE
- Orica Mining Services - Indonesia
- Mjunction Services Limited - India
- Sree Jayajothi Cements Limited - India
- Indian Energy Exchange, India
- Australian Coal Association
- Mintek Dendrill Indonesia
- Economic Council, Georgia
- Grasim Industreis Ltd - India
- Merrill Lynch Commodities Europe
- India Bulls Power Limited - India
- Bulk Trading Sa - Switzerland
- Independent Power Producers Association of India
- Sojitz Corporation - Japan
- Heidelberg Cement - Germany
- Chettinad Cement Corporation Ltd - India
- IEA Clean Coal Centre - UK
- ASAPP Information Group - India
- Savvy Resources Ltd - HongKong
- Essar Steel Hazira Ltd - India
- Bhoruka Overseas - Indonesia
- Semirara Mining Corp, Philippines
- Borneo Indobara - Indonesia
- TeaM Sual Corporation - Philippines
- New Zealand Coal & Carbon
- London Commodity Brokers - England
- Africa Commodities Group - South Africa
- SMC Global Power, Philippines
- Therma Luzon, Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Madhucon Powers Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Sakthi Sugars Limited - India
- Barasentosa Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Eastern Coal Council - USA
- Iligan Light & Power Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Trasteel International SA, Italy
- Rashtriya Ispat Nigam Limited - India
- Videocon Industries ltd - India
- Samtan Co., Ltd - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Rio Tinto Coal - Australia
- Salva Resources Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Bharathi Cement Corporation - India
- Indian Oil Corporation Limited
- Price Waterhouse Coopers - Russia
- Krishnapatnam Port Company Ltd. - India
- Dalmia Cement Bharat India
- Gujarat Mineral Development Corp Ltd - India
- Ind-Barath Power Infra Limited - India
- SMG Consultants - Indonesia
- Makarim & Taira - Indonesia
- International Coal Ventures Pvt Ltd - India
- Thiess Contractors Indonesia
- Xindia Steels Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Georgia Ports Authority, United States
- Bukit Makmur.PT - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Chamber of Mines of South Africa
- Marubeni Corporation - India
- Straits Asia Resources Limited - Singapore
- Karaikal Port Pvt Ltd - India
- Energy Development Corp, Philippines
- Goldman Sachs - Singapore
- Bhatia International Limited - India
- Binh Thuan Hamico - Vietnam
- Holcim Trading Pte Ltd - Singapore
- Global Coal Blending Company Limited - Australia
- Gujarat Sidhee Cement - India
- Manunggal Multi Energi - Indonesia
- Posco Energy - South Korea
- Global Green Power PLC Corporation, Philippines
- PowerSource Philippines DevCo
- Ambuja Cements Ltd - India
- Central Electricity Authority - India
- Australian Commodity Traders Exchange
- Jindal Steel & Power Ltd - India
- Global Business Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Aditya Birla Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bayan Resources Tbk. - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Central Java Power - Indonesia
- Formosa Plastics Group - Taiwan
- Coal and Oil Company - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- CIMB Investment Bank - Malaysia
- Parliament of New Zealand
- Intertek Mineral Services - Indonesia
- Sindya Power Generating Company Private Ltd
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement - Thailand
- Timah Investasi Mineral - Indoneisa
- Simpson Spence & Young - Indonesia
- IHS Mccloskey Coal Group - USA
- The University of Queensland
- Commonwealth Bank - Australia
- Medco Energi Mining Internasional
- Pendopo Energi Batubara - Indonesia
- GVK Power & Infra Limited - India
- Tata Chemicals Ltd - India
- Edison Trading Spa - Italy
- Bahari Cakrawala Sebuku - Indonesia
- Kaltim Prima Coal - Indonesia
- Banpu Public Company Limited - Thailand
- San Jose City I Power Corp, Philippines
- Ministry of Mines - Canada
- Agrawal Coal Company - India
- White Energy Company Limited
- Mercuria Energy - Indonesia
- Indonesian Coal Mining Association
- Ceylon Electricity Board - Sri Lanka
- Karbindo Abesyapradhi - Indoneisa
- Indogreen Group - Indonesia
- Indo Tambangraya Megah - Indonesia
- Riau Bara Harum - Indonesia
- Standard Chartered Bank - UAE
- Renaissance Capital - South Africa
- Metalloyd Limited - United Kingdom
- Interocean Group of Companies - India
- Mercator Lines Limited - India
- LBH Netherlands Bv - Netherlands
- Tamil Nadu electricity Board
- Eastern Energy - Thailand
- Bhushan Steel Limited - India
- Jaiprakash Power Ventures ltd
- Port Waratah Coal Services - Australia
- Gujarat Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- Electricity Generating Authority of Thailand
- PNOC Exploration Corporation - Philippines
- Larsen & Toubro Limited - India
- PTC India Limited - India
- Kobexindo Tractors - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- OPG Power Generation Pvt Ltd - India
- Indika Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Energy Link Ltd, New Zealand
- Deloitte Consulting - India
- South Luzon Thermal Energy Corporation
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- VISA Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- AsiaOL BioFuels Corp., Philippines
- The State Trading Corporation of India Ltd
- Cigading International Bulk Terminal - Indonesia
- Minerals Council of Australia
- Uttam Galva Steels Limited - India
- Globalindo Alam Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Wilmar Investment Holdings
- Bangladesh Power Developement Board
- Billiton Holdings Pty Ltd - Australia
- Petron Corporation, Philippines
- Antam Resourcindo - Indonesia
- Ministry of Transport, Egypt
- Kapuas Tunggal Persada - Indonesia
- Sical Logistics Limited - India
- Thai Mozambique Logistica
- Vijayanagar Sugar Pvt Ltd - India
- Altura Mining Limited, Indonesia
- SN Aboitiz Power Inc, Philippines
- McConnell Dowell - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Star Paper Mills Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Carbofer General Trading SA - India
- ICICI Bank Limited - India
- Latin American Coal - Colombia
- Cement Manufacturers Association - India
- Power Finance Corporation Ltd., India
- Oldendorff Carriers - Singapore
- Kohat Cement Company Ltd. - Pakistan
- GN Power Mariveles Coal Plant, Philippines
- Kartika Selabumi Mining - Indonesia
- Attock Cement Pakistan Limited
- Vedanta Resources Plc - India
- Kumho Petrochemical, South Korea
- Electricity Authority, New Zealand
- Directorate Of Revenue Intelligence - India
- Vizag Seaport Private Limited - India
- Bukit Baiduri Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Coalindo Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Ministry of Finance - Indonesia
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