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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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Thursday, 15 September 16
CAPESIZE: LAST WEEK ENDED ON A VERY STRONG NOTE MAINLY DRIVEN BY A ACTIVE BRAZIL MARKET - FEARNLYS
Supramax
With holidays in the eastern hemisphere beginning this week, the sentiment and activity level has been decreasing.
In the Pacific, ...
Wednesday, 14 September 16
THE DRY BULK MARKET REACHED LEVELS LAST SEEN BACK IN 2015 - INTERMODAL
In an earlier column we commented that we are undergoing “shipping’s new (ab)normal” with constrained financing, shift in demand ...
Wednesday, 14 September 16
THE PORT OF NEWCASTLE SHIPPED 12.48 MMT OF COAL IN AUGUST; AVERAGE SELLING PRICE WAS $AU 83.33
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port has shipped $AU $1,040.4 ...
Tuesday, 13 September 16
CAPESIZE: BIG STRENGTH SEEN IN THE MARKET THIS WEEK - ALLIED
Capesize - Big strength seen in the market this week, with an upbeat in sentiment amongst owners helping pull up rates fairly quickly and many hold ...
Monday, 12 September 16
THE CAPE MARKET HAS GAINS ON WEEK; THE CAPE INDEX SETTLING AT 1566 POINTS ON FRIDAY
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rose and ending in a positive note this past week. The BD ...
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- Agrawal Coal Company - India
- Petron Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- GVK Power & Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Jindal Steel & Power Ltd - India
- Altura Mining Limited, Indonesia
- Singapore Mercantile Exchange
- Ministry of Mines - Canada
- MS Steel International - UAE
- Tamil Nadu electricity Board
- Timah Investasi Mineral - Indoneisa
- Ministry of Finance - Indonesia
- Africa Commodities Group - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Directorate General of MIneral and Coal - Indonesia
- Tata Chemicals Ltd - India
- Chettinad Cement Corporation Ltd - India
- Central Java Power - Indonesia
- Independent Power Producers Association of India
- Aditya Birla Group - India
- Asmin Koalindo Tuhup - Indonesia
- London Commodity Brokers - England
- Pipit Mutiara Jaya. PT, Indonesia
- Global Coal Blending Company Limited - Australia
- AsiaOL BioFuels Corp., Philippines
- Malabar Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Electricity Authority, New Zealand
- Kartika Selabumi Mining - Indonesia
- PowerSource Philippines DevCo
- Larsen & Toubro Limited - India
- Ministry of Transport, Egypt
- ASAPP Information Group - India
- Uttam Galva Steels Limited - India
- Wilmar Investment Holdings
- Kalimantan Lumbung Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Economic Council, Georgia
- Thiess Contractors Indonesia
- Global Business Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Parliament of New Zealand
- Indian Oil Corporation Limited
- IEA Clean Coal Centre - UK
- Sakthi Sugars Limited - India
- Vizag Seaport Private Limited - India
- Coastal Gujarat Power Limited - India
- Parry Sugars Refinery, India
- Trasteel International SA, Italy
- GAC Shipping (India) Pvt Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Electricity Generating Authority of Thailand
- European Bulk Services B.V. - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- Wood Mackenzie - Singapore
- International Coal Ventures Pvt Ltd - India
- SMC Global Power, Philippines
- Riau Bara Harum - Indonesia
- Planning Commission, India
- Heidelberg Cement - Germany
- Antam Resourcindo - Indonesia
- Billiton Holdings Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- Energy Development Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Latin American Coal - Colombia
- Sindya Power Generating Company Private Ltd
- Xindia Steels Limited - India
- Carbofer General Trading SA - India
- Intertek Mineral Services - Indonesia
- Globalindo Alam Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- GMR Energy Limited - India
- Sinarmas Energy and Mining - Indonesia
- Attock Cement Pakistan Limited
- Global Green Power PLC Corporation, Philippines
- Indika Energy - Indonesia
- Dalmia Cement Bharat India
- Rashtriya Ispat Nigam Limited - India
- Kapuas Tunggal Persada - Indonesia
- Indogreen Group - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Directorate Of Revenue Intelligence - India
- Cement Manufacturers Association - India
- SMG Consultants - Indonesia
- Eastern Energy - Thailand
- Banpu Public Company Limited - Thailand
- Madhucon Powers Ltd - India
- India Bulls Power Limited - India
- Standard Chartered Bank - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Simpson Spence & Young - Indonesia
- Formosa Plastics Group - Taiwan
- Thai Mozambique Logistica
- Meralco Power Generation, Philippines
- Therma Luzon, Inc, Philippines
- Videocon Industries ltd - India
- South Luzon Thermal Energy Corporation
- TeaM Sual Corporation - Philippines
- Mercator Lines Limited - India
- Sree Jayajothi Cements Limited - India
- Georgia Ports Authority, United States
- Price Waterhouse Coopers - Russia
- Minerals Council of Australia
- Sarangani Energy Corporation, Philippines
- New Zealand Coal & Carbon
- Australian Coal Association
- Romanian Commodities Exchange
- San Jose City I Power Corp, Philippines
- Coal and Oil Company - UAE
- VISA Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Meenaskhi Energy Private Limited - India
- Port Waratah Coal Services - Australia
- Straits Asia Resources Limited - Singapore
- Kumho Petrochemical, South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mjunction Services Limited - India
- Chamber of Mines of South Africa
- Bhushan Steel Limited - India
- Barasentosa Lestari - Indonesia
- Vedanta Resources Plc - India
- Essar Steel Hazira Ltd - India
- Australian Commodity Traders Exchange
- Oldendorff Carriers - Singapore
- IHS Mccloskey Coal Group - USA
- The Treasury - Australian Government
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Gujarat Sidhee Cement - India
- PetroVietnam Power Coal Import and Supply Company
- Karaikal Port Pvt Ltd - India
- Deloitte Consulting - India
- White Energy Company Limited
- Marubeni Corporation - India
- TNB Fuel Sdn Bhd - Malaysia
- Merrill Lynch Commodities Europe
- Bayan Resources Tbk. - Indonesia
- Indonesian Coal Mining Association
- Makarim & Taira - Indonesia
- Anglo American - United Kingdom
- Metalloyd Limited - United Kingdom
- Indo Tambangraya Megah - Indonesia
- Pendopo Energi Batubara - Indonesia
- Borneo Indobara - Indonesia
- Salva Resources Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Kobexindo Tractors - Indoneisa
- Iligan Light & Power Inc, Philippines
- Rio Tinto Coal - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Kideco Jaya Agung - Indonesia
- Bukit Makmur.PT - Indonesia
- Coalindo Energy - Indonesia
- Sojitz Corporation - Japan
- Siam City Cement - Thailand
- PNOC Exploration Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maheswari Brothers Coal Limited - India
- Commonwealth Bank - Australia
- Edison Trading Spa - Italy
- Eastern Coal Council - USA
- CIMB Investment Bank - Malaysia
- Bukit Baiduri Energy - Indonesia
- PTC India Limited - India
- Kaltim Prima Coal - Indonesia
- Bangladesh Power Developement Board
- ICICI Bank Limited - India
- Power Finance Corporation Ltd., India
- Jaiprakash Power Ventures ltd
- Cigading International Bulk Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Mercuria Energy - Indonesia
- Baramulti Group, Indonesia
- Mintek Dendrill Indonesia
- Energy Link Ltd, New Zealand
- Medco Energi Mining Internasional
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- Ind-Barath Power Infra Limited - India
- Siam City Cement PLC, Thailand
- Orica Mining Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Ambuja Cements Ltd - India
- Bhoruka Overseas - Indonesia
- The University of Queensland
- McConnell Dowell - Australia
- Jorong Barutama Greston.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Indian Energy Exchange, India
- Bukit Asam (Persero) Tbk - Indonesia
- Central Electricity Authority - India
- LBH Netherlands Bv - Netherlands
- Goldman Sachs - Singapore
- Sical Logistics Limited - India
- Renaissance Capital - South Africa
- Alfred C Toepfer International GmbH - Germany
- Bhatia International Limited - India
- Bharathi Cement Corporation - India
- Lanco Infratech Ltd - India
- Interocean Group of Companies - India
- Holcim Trading Pte Ltd - Singapore
- SN Aboitiz Power Inc, Philippines
- Star Paper Mills Limited - India
- Aboitiz Power Corporation - Philippines
- CNBM International Corporation - China
- Savvy Resources Ltd - HongKong
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining and Power Corporation, Philippines
- Posco Energy - South Korea
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