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