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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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Saturday, 20 October 18
PANAMAX: THE PACIFIC SAW A LARGE VOLUME OF FIXING, WITH INDONESIA AGAIN THE DRIVING FORCE - THE BALTIC BRIEFING
Capesize
A positive end to last week after a shaky start, with a Coaltrans taking participants out of the market early on and with rates slippi ...
Thursday, 18 October 18
SUPRAMAX: INDO/WC INDIA SUPRAS ARE FIXING AROUND MID $14000S P/D BASIS SPORE DELIVERY
Capesize
The volatile Cape market continues this week, especially in the Pacific says Fearnleys in its latest weekly report.
...
Thursday, 18 October 18
COAL SHORTAGE HITS POWER SECTOR AGAIN; HOW INDIA CAN GET ITS PRODUCTION RIGHT - ANIL SWARUP
By convincing states of the value proposition of increased production, the record production of Fy15 & Fy16 can be emulated.
The ...
Thursday, 18 October 18
CHINA POWER REFORM NEUTRAL ON GRIDS, PRESSURES IPP MARGINS - FITCH RATINGS
China's power sector reform has a broadly neutral impact on transmission grids although it will pressure the power producers' margins, says ...
Wednesday, 17 October 18
ESCROW SERVICE FOR BALTIC MEMBERS NOW LIVE
The Baltic Exchange’s Escrow Service for its members to hold deposits for ship sale transactions goes live today (15 October). The service is ...
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Showing 1586 to 1590 news of total 6871 |
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- Electricity Generating Authority of Thailand
- Aditya Birla Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Mines - Canada
- Siam City Cement - Thailand
- Intertek Mineral Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Central Java Power - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Thiess Contractors Indonesia
- ASAPP Information Group - India
- Semirara Mining and Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Business Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Cement Manufacturers Association - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Georgia Ports Authority, United States
- Energy Development Corp, Philippines
- Petron Corporation, Philippines
- Semirara Mining Corp, Philippines
- Latin American Coal - Colombia
- Indo Tambangraya Megah - Indonesia
- Formosa Plastics Group - Taiwan
- Simpson Spence & Young - Indonesia
- Jindal Steel & Power Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Economic Council, Georgia
- Global Green Power PLC Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Indian Energy Exchange, India
- Australian Coal Association
- Sakthi Sugars Limited - India
- European Bulk Services B.V. - Netherlands
- Port Waratah Coal Services - Australia
- Marubeni Corporation - India
- Merrill Lynch Commodities Europe
- The University of Queensland
- Chettinad Cement Corporation Ltd - India
- Africa Commodities Group - South Africa
- Posco Energy - South Korea
- Iligan Light & Power Inc, Philippines
- Ministry of Finance - Indonesia
- South Luzon Thermal Energy Corporation
- Medco Energi Mining Internasional
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wilmar Investment Holdings
- Star Paper Mills Limited - India
- IEA Clean Coal Centre - UK
- Sical Logistics Limited - India
- Wood Mackenzie - Singapore
- Electricity Authority, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Deloitte Consulting - India
- Madhucon Powers Ltd - India
- Indian Oil Corporation Limited
- Bulk Trading Sa - Switzerland
- Kohat Cement Company Ltd. - Pakistan
- Parliament of New Zealand
- Central Electricity Authority - India
- Mjunction Services Limited - India
- London Commodity Brokers - England
- Karaikal Port Pvt Ltd - India
- Bhatia International Limited - India
- Baramulti Group, Indonesia
- Straits Asia Resources Limited - Singapore
- Kumho Petrochemical, South Korea
- Eastern Coal Council - USA
- Chamber of Mines of South Africa
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- Metalloyd Limited - United Kingdom
- Bharathi Cement Corporation - India
- Bangladesh Power Developement Board
- Tata Chemicals Ltd - India
- ICICI Bank Limited - India
- The Treasury - Australian Government
- Indogreen Group - Indonesia
- Lanco Infratech Ltd - India
- Essar Steel Hazira Ltd - India
- Orica Australia Pty. Ltd.
- Sarangani Energy Corporation, Philippines
- Antam Resourcindo - Indonesia
- Therma Luzon, Inc, Philippines
- CNBM International Corporation - China
- Power Finance Corporation Ltd., India
- Maheswari Brothers Coal Limited - India
- Directorate Of Revenue Intelligence - India
- Dalmia Cement Bharat India
- Borneo Indobara - Indonesia
- Timah Investasi Mineral - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- McConnell Dowell - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kaltim Prima Coal - Indonesia
- Coal and Oil Company - UAE
- Videocon Industries ltd - India
- India Bulls Power Limited - India
- Ind-Barath Power Infra Limited - India
- Tamil Nadu electricity Board
- International Coal Ventures Pvt Ltd - India
- Parry Sugars Refinery, India
- Mercator Lines Limited - India
- Trasteel International SA, Italy
- Binh Thuan Hamico - Vietnam
- Samtan Co., Ltd - South Korea
- Minerals Council of Australia
- Thai Mozambique Logistica
- Meralco Power Generation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- OPG Power Generation Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- White Energy Company Limited
- Rashtriya Ispat Nigam Limited - India
- Renaissance Capital - South Africa
- Grasim Industreis Ltd - India
- Goldman Sachs - Singapore
- TeaM Sual Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
- Bhoruka Overseas - Indonesia
- Energy Link Ltd, New Zealand
- Meenaskhi Energy Private Limited - India
- Romanian Commodities Exchange
- Ambuja Cements Ltd - India
- Gujarat Sidhee Cement - India
- GAC Shipping (India) Pvt Ltd
- Singapore Mercantile Exchange
- AsiaOL BioFuels Corp., Philippines
- Sojitz Corporation - Japan
- Xindia Steels Limited - India
- Edison Trading Spa - Italy
- Standard Chartered Bank - UAE
- Miang Besar Coal Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Cigading International Bulk Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Planning Commission, India
- Salva Resources Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- CIMB Investment Bank - Malaysia
- Altura Mining Limited, Indonesia
- Toyota Tsusho Corporation, Japan
- Oldendorff Carriers - Singapore
- PowerSource Philippines DevCo
- Holcim Trading Pte Ltd - Singapore
- Mercuria Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Interocean Group of Companies - India
- Aboitiz Power Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Krishnapatnam Port Company Ltd. - India
- MS Steel International - UAE
- Bukit Makmur.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bhushan Steel Limited - India
- Globalindo Alam Lestari - Indonesia
- Malabar Cements Ltd - India
- SMC Global Power, Philippines
- Attock Cement Pakistan Limited
- SMG Consultants - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- VISA Power Limited - India
- Rio Tinto Coal - Australia
- Kartika Selabumi Mining - Indonesia
- New Zealand Coal & Carbon
- Vedanta Resources Plc - India
- Coastal Gujarat Power Limited - India
- Agrawal Coal Company - India
- Sindya Power Generating Company Private Ltd
- Sinarmas Energy and Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Directorate General of MIneral and Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Heidelberg Cement - Germany
- PNOC Exploration Corporation - Philippines
- Uttam Galva Steels Limited - India
- Barasentosa Lestari - Indonesia
- Riau Bara Harum - Indonesia
- SN Aboitiz Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- PTC India Limited - India
- Carbofer General Trading SA - India
- Siam City Cement PLC, Thailand
- Eastern Energy - Thailand
- Australian Commodity Traders Exchange
- LBH Netherlands Bv - Netherlands
- Kapuas Tunggal Persada - Indonesia
- Jaiprakash Power Ventures ltd
- GN Power Mariveles Coal Plant, Philippines
- The State Trading Corporation of India Ltd
- IHS Mccloskey Coal Group - USA
- Commonwealth Bank - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Asam (Persero) Tbk - Indonesia
- Independent Power Producers Association of India
- Indonesian Coal Mining Association
- Ministry of Transport, Egypt
- Indika Energy - Indonesia
- GVK Power & Infra Limited - India
- Mintek Dendrill Indonesia
- Makarim & Taira - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Anglo American - United Kingdom
- GMR Energy Limited - India
- Larsen & Toubro Limited - India
- Orica Mining Services - Indonesia
- San Jose City I Power Corp, Philippines
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