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Friday, 28 September 18
FITCH RATINGS: METALLURGICAL COAL MINERS MAY CURB COSTS AS PRICES SLIP
Strong cost inflation in the global metallurgical coal sector suggests that miners may focus on cost controls as prices decline from their current high levels over the next 18 months, say Fitch Ratings and CRU. However, mining companies rated by Fitch are well-positioned for any potential squeeze on margins, as their costs are relatively low by global standards and, in most cases, their diversified business operations limit exposure to the sector.
CRU estimates that global costs in the metallurgical coal sector increased by 18% in 2017 and continued to rise in 2018. Severe weather has played a role in Australia, causing supply-chain disruption that led to demurrage penalties and increased storage costs for unshipped coal. However, costs have also been pushed up globally by higher oil prices and attempts by mining companies to maximise production to take advantage of high prices.
Coking coal prices are currently sufficiently high that cost inflation has not undermined profitability. CRU estimates that the seaborne industry generated an average cash margin of 40% in 2016-2017, and profitability has remained very strong this year.
The metallurgical coal market is unlikely to become oversupplied in the near term, and Fitch does not expect prices to fall deep into the cost curve, as they did during 2014-2016. However, prices have already eased off from their peak of USD260/tonne in 4Q16, and are likely to decline further as supply constraints continue to ease. Fitch’s current assumptions are that hard coking coal prices will average USD185/tonne this year and USD140/tonne thereafter. These declines could put pressure on some less competitive mining companies to reduce costs to protect margins.
Among Fitch-rated companies, Teck Resources (BB+/Positive) has the largest exposure to the metallurgical coal sector, which accounted for 60% of its segment EBITDA in the 12 months to 30 June 2018. The company is among those that have increased use of contractors and rented more mining equipment to raise short-term output, which has pushed up marginal costs. Nevertheless, Teck is still in the lower half of the global cost curve (FOB port) and its costs remain lower in US dollar terms than in 2014. Teck has also taken advantage of strong margins and cash flow to reduce leverage. The main credit issue facing the company is the prospect of continued project spending and its funding resulting in weaker cash flows and higher financial leverage.
BHP Billiton (A/Stable) and Anglo American (BBB-/Stable) also have significant metallurgical coal assets, mostly located in Australia, where coal mines are generally relatively low cost by global standards. BHP and Anglo also have diversified operations, with metallurgical coal accounting for only around 16% of BHP Billiton’s revenue and 17% of Anglo’s in the financial year ending June 2017. There could be increased focus on improving efficiency in the Australian coal sector, as already signalled by some companies, but CRU and the Australian government expect production to continue to grow strongly over the next four years.
Meanwhile, mining service companies and earthmoving equipment manufacturers should continue to benefit from rising demand and a better pricing environment as miners continue with new projects and increase production. Emeco (B/Stable), which has the largest exposure to metallurgical coal among Fitch-rated companies, reported improved EBITDA margin as the commodity sector recovered. It also improved its leverage position. Further leverage improvements are likely in 2019-2021 due to equity-funded acquisitions and a tight rental equipment market in Australia.
Source: Fitch Ratings
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Friday, 02 November 18
COAL FETCHES 102% PREMIUM IN E-AUCTION, SURPASSING THE EARLIER HIGHEST OF 95% - FINANCIAL EXPRESS
Coal prices have received a premium of 102% in spot e-auction during September 2018, surpassing the earlier highest of 95% premium during the spot ...
Friday, 02 November 18
CHINA: COAL CONSUMPTION POSTS STRONG GROWTH ON BACK OF POWER GENERATION DEMAND - CHINA DAILY
China’s energy consumption experienced continuous rebound during the first three quarters in 2018, National Energy Administration announced o ...
Thursday, 01 November 18
IMO 2020 - EXPLORING THE OPTION OF SOX SCRUBBERS - SIDDHARTH MAHAJAN, GARD
KNOWLEDGE TO ELEVATE
There are four possible methods of compliance:
1.use VLSFO (very low Sulphur oil) or blends;
2,use dis ...
Wednesday, 31 October 18
INDIA: COAL IMPORTS SURGE ON DOMESTIC SHORT SUPPLY - HINDU
Shortage of thermal coal supply in India has pushed imports up to 85 million tonnes (mt) in the first half of the current fiscal compared to 75 mt ...
Wednesday, 31 October 18
SHIPPING MARKET INSIGHT - APOSTOLOS ROMPOPOULOS
Since the IMO’s 2020 global cap on sulphur in marine fuels is coming into force, ship-owners have to decide whether they will operate using e ...
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- LBH Netherlands Bv - Netherlands
- Directorate General of MIneral and Coal - Indonesia
- Bukit Makmur.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- SMG Consultants - Indonesia
- Barasentosa Lestari - Indonesia
- India Bulls Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Global Green Power PLC Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Tata Chemicals Ltd - India
- Posco Energy - South Korea
- Makarim & Taira - Indonesia
- PowerSource Philippines DevCo
- Siam City Cement PLC, Thailand
- Indian Oil Corporation Limited
- Minerals Council of Australia
- Orica Australia Pty. Ltd.
- Siam City Cement - Thailand
- Attock Cement Pakistan Limited
- Australian Coal Association
- Manunggal Multi Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Xindia Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Mercator Lines Limited - India
- Sical Logistics Limited - India
- The State Trading Corporation of India Ltd
- Ambuja Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Krishnapatnam Port Company Ltd. - India
- GVK Power & Infra Limited - India
- Sakthi Sugars Limited - India
- Lanco Infratech Ltd - India
- Eastern Coal Council - USA
- Meralco Power Generation, Philippines
- Energy Development Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Coalindo Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- San Jose City I Power Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- Merrill Lynch Commodities Europe
- Wood Mackenzie - Singapore
- Straits Asia Resources Limited - Singapore
- Neyveli Lignite Corporation Ltd, - India
- VISA Power Limited - India
- Therma Luzon, Inc, Philippines
- Cement Manufacturers Association - India
- Altura Mining Limited, Indonesia
- Ceylon Electricity Board - Sri Lanka
- PNOC Exploration Corporation - Philippines
- Romanian Commodities Exchange
- Gujarat Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kapuas Tunggal Persada - Indonesia
- Renaissance Capital - South Africa
- Ministry of Transport, Egypt
- Indian Energy Exchange, India
- Aditya Birla Group - India
- Planning Commission, India
- Chamber of Mines of South Africa
- Price Waterhouse Coopers - Russia
- Holcim Trading Pte Ltd - Singapore
- Bhushan Steel Limited - India
- Mercuria Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Coal and Oil Company - UAE
- Vedanta Resources Plc - India
- Bangladesh Power Developement Board
- Thai Mozambique Logistica
- Pipit Mutiara Jaya. PT, Indonesia
- Parliament of New Zealand
- GMR Energy Limited - India
- South Luzon Thermal Energy Corporation
- GAC Shipping (India) Pvt Ltd
- European Bulk Services B.V. - Netherlands
- Antam Resourcindo - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Jindal Steel & Power Ltd - India
- Economic Council, Georgia
- Goldman Sachs - Singapore
- Directorate Of Revenue Intelligence - India
- CNBM International Corporation - China
- Bharathi Cement Corporation - India
- Iligan Light & Power Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Mjunction Services Limited - India
- Borneo Indobara - Indonesia
- Petron Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Eastern Energy - Thailand
- Global Coal Blending Company Limited - Australia
- Wilmar Investment Holdings
- Simpson Spence & Young - Indonesia
- Semirara Mining and Power Corporation, Philippines
- White Energy Company Limited
- Oldendorff Carriers - Singapore
- SMC Global Power, Philippines
- Bhoruka Overseas - Indonesia
- Rio Tinto Coal - Australia
- Bukit Baiduri Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Central Java Power - Indonesia
- Independent Power Producers Association of India
- Trasteel International SA, Italy
- Dalmia Cement Bharat India
- Commonwealth Bank - Australia
- Gujarat Sidhee Cement - India
- Salva Resources Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Parry Sugars Refinery, India
- ASAPP Information Group - India
- Georgia Ports Authority, United States
- Latin American Coal - Colombia
- The Treasury - Australian Government
- Standard Chartered Bank - UAE
- London Commodity Brokers - England
- Formosa Plastics Group - Taiwan
- Billiton Holdings Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- Indogreen Group - Indonesia
- Heidelberg Cement - Germany
- Grasim Industreis Ltd - India
- Uttam Galva Steels Limited - India
- Electricity Generating Authority of Thailand
- TeaM Sual Corporation - Philippines
- The University of Queensland
- Indonesian Coal Mining Association
- Toyota Tsusho Corporation, Japan
- Metalloyd Limited - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
- Anglo American - United Kingdom
- CIMB Investment Bank - Malaysia
- Intertek Mineral Services - Indonesia
- Agrawal Coal Company - India
- New Zealand Coal & Carbon
- International Coal Ventures Pvt Ltd - India
- Kumho Petrochemical, South Korea
- McConnell Dowell - Australia
- Baramulti Group, Indonesia
- Indika Energy - Indonesia
- Riau Bara Harum - Indonesia
- Vizag Seaport Private Limited - India
- Aboitiz Power Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Coastal Gujarat Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Commodity Traders Exchange
- Larsen & Toubro Limited - India
- Sinarmas Energy and Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Energy Link Ltd, New Zealand
- Africa Commodities Group - South Africa
- Sindya Power Generating Company Private Ltd
- Ministry of Mines - Canada
- Deloitte Consulting - India
- Sojitz Corporation - Japan
- Interocean Group of Companies - India
- Ministry of Finance - Indonesia
- Bhatia International Limited - India
- Global Business Power Corporation, Philippines
- PTC India Limited - India
- Mintek Dendrill Indonesia
- IHS Mccloskey Coal Group - USA
- ICICI Bank Limited - India
- IEA Clean Coal Centre - UK
- Medco Energi Mining Internasional
- MS Steel International - UAE
- Star Paper Mills Limited - India
- Maheswari Brothers Coal Limited - India
- Power Finance Corporation Ltd., India
- Singapore Mercantile Exchange
- Meenaskhi Energy Private Limited - India
- Jaiprakash Power Ventures ltd
- Edison Trading Spa - Italy
- Vijayanagar Sugar Pvt Ltd - India
- Marubeni Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining Corp, Philippines
- Videocon Industries ltd - India
- Kideco Jaya Agung - Indonesia
- Electricity Authority, New Zealand
- Thiess Contractors Indonesia
- Sree Jayajothi Cements Limited - India
- Ind-Barath Power Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- SN Aboitiz Power Inc, Philippines
- Central Electricity Authority - India
- Madhucon Powers Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Bulk Trading Sa - Switzerland
- Samtan Co., Ltd - South Korea
- Leighton Contractors Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- Pendopo Energi Batubara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Indo Tambangraya Megah - Indonesia
- Tamil Nadu electricity Board
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Carbofer General Trading SA - India
- Kartika Selabumi Mining - Indonesia
- Malabar Cements Ltd - India
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