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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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Wednesday, 03 October 18
SHIPPING MARKET INSIGHT - KATERINA RESTIS
The bunker fuel supply and availability landscape is close to its transformation with the enforcement of the IMO’s global 0.5% fuel Sulphur c ...
Tuesday, 02 October 18
PANAMAX: A FURTHER RISE ACROSS ALL MAIN ROUTES THIS WEEK - ALLIED
Capesize
Finally an upward recovery was in sight in the spot market the past few days, after the prolonged negative pressure noted the weeks pr ...
Tuesday, 02 October 18
THE PRICE OF OIL CONTINUES ITS CLIMB AMIDST A SERIES OF CONCERNS REGARDING SUPPLY CONSTRAINTS - GEORGE LAZARIDIS
It has been a busy week for oil traders as the price of oil continues its climb amidst a series of concerns regarding supply constraints.
...
Tuesday, 02 October 18
INDONESIA GETS READY TO MEET INCREASED COAL DEMAND FROM CHINA, FREIGHT TO RESPOND - MIKAL BOE
Indonesian coal suppliers have increased their domestic coal production target by 4.5 percent from a previous 485 million tonnes to a massive 507 m ...
Monday, 01 October 18
SUPRAMAX: A 56,000 DWT FIXED DELIVERY FOR A SURABAYA TRIP WITH REDELIVERY TO WEST COAST INDIA AT $13,500 - THE BALTIC BRIEFING
Capesize
A stop-start market for the big ships with many expectations and few fulfilled. Holidays curtailed trading early in the week, but the ...
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Showing 1601 to 1605 news of total 6871 |
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- Africa Commodities Group - South Africa
- Australian Commodity Traders Exchange
- Central Java Power - Indonesia
- Electricity Authority, New Zealand
- Metalloyd Limited - United Kingdom
- Thai Mozambique Logistica
- Central Electricity Authority - India
- Wilmar Investment Holdings
- Samtan Co., Ltd - South Korea
- International Coal Ventures Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Georgia Ports Authority, United States
- Bhoruka Overseas - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Antam Resourcindo - Indonesia
- Salva Resources Pvt Ltd - India
- ICICI Bank Limited - India
- Eastern Coal Council - USA
- Parry Sugars Refinery, India
- Agrawal Coal Company - India
- Kideco Jaya Agung - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Toyota Tsusho Corporation, Japan
- Orica Mining Services - Indonesia
- Parliament of New Zealand
- Wood Mackenzie - Singapore
- Coalindo Energy - Indonesia
- Goldman Sachs - Singapore
- Latin American Coal - Colombia
- Malabar Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- Globalindo Alam Lestari - Indonesia
- Kumho Petrochemical, South Korea
- Star Paper Mills Limited - India
- London Commodity Brokers - England
- GMR Energy Limited - India
- Pendopo Energi Batubara - Indonesia
- Therma Luzon, Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Indian Energy Exchange, India
- Jindal Steel & Power Ltd - India
- Marubeni Corporation - India
- Dalmia Cement Bharat India
- TNB Fuel Sdn Bhd - Malaysia
- PNOC Exploration Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Madhucon Powers Ltd - India
- Meenaskhi Energy Private Limited - India
- Bukit Baiduri Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Global Green Power PLC Corporation, Philippines
- Carbofer General Trading SA - India
- Price Waterhouse Coopers - Russia
- Manunggal Multi Energi - Indonesia
- Xindia Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Billiton Holdings Pty Ltd - Australia
- GVK Power & Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bahari Cakrawala Sebuku - Indonesia
- Orica Australia Pty. Ltd.
- Bhatia International Limited - India
- Energy Development Corp, Philippines
- PTC India Limited - India
- SMG Consultants - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining and Power Corporation, Philippines
- Minerals Council of Australia
- Straits Asia Resources Limited - Singapore
- Banpu Public Company Limited - Thailand
- Essar Steel Hazira Ltd - India
- Romanian Commodities Exchange
- Merrill Lynch Commodities Europe
- Economic Council, Georgia
- Indonesian Coal Mining Association
- Singapore Mercantile Exchange
- Ambuja Cements Ltd - India
- Mercator Lines Limited - India
- Australian Coal Association
- Intertek Mineral Services - Indonesia
- IHS Mccloskey Coal Group - USA
- Tata Chemicals Ltd - India
- Bhushan Steel Limited - India
- GAC Shipping (India) Pvt Ltd
- Bayan Resources Tbk. - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Independent Power Producers Association of India
- Jorong Barutama Greston.PT - Indonesia
- Deloitte Consulting - India
- Siam City Cement - Thailand
- Ministry of Mines - Canada
- Karaikal Port Pvt Ltd - India
- Ministry of Transport, Egypt
- Gujarat Sidhee Cement - India
- McConnell Dowell - Australia
- Neyveli Lignite Corporation Ltd, - India
- The Treasury - Australian Government
- Bank of Tokyo Mitsubishi UFJ Ltd
- Larsen & Toubro Limited - India
- Bharathi Cement Corporation - India
- SN Aboitiz Power Inc, Philippines
- Anglo American - United Kingdom
- Meralco Power Generation, Philippines
- Commonwealth Bank - Australia
- Iligan Light & Power Inc, Philippines
- Mintek Dendrill Indonesia
- Simpson Spence & Young - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- The University of Queensland
- Binh Thuan Hamico - Vietnam
- Savvy Resources Ltd - HongKong
- Planning Commission, India
- Cigading International Bulk Terminal - Indonesia
- Tamil Nadu electricity Board
- Global Coal Blending Company Limited - Australia
- Bukit Makmur.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- Ministry of Finance - Indonesia
- Ind-Barath Power Infra Limited - India
- Vedanta Resources Plc - India
- Indian Oil Corporation Limited
- European Bulk Services B.V. - Netherlands
- Chamber of Mines of South Africa
- Jaiprakash Power Ventures ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indogreen Group - Indonesia
- Semirara Mining Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Siam City Cement PLC, Thailand
- Chettinad Cement Corporation Ltd - India
- Kepco SPC Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Grasim Industreis Ltd - India
- MS Steel International - UAE
- Indo Tambangraya Megah - Indonesia
- Heidelberg Cement - Germany
- Kalimantan Lumbung Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Uttam Galva Steels Limited - India
- Altura Mining Limited, Indonesia
- Interocean Group of Companies - India
- GN Power Mariveles Coal Plant, Philippines
- White Energy Company Limited
- CNBM International Corporation - China
- Offshore Bulk Terminal Pte Ltd, Singapore
- LBH Netherlands Bv - Netherlands
- Thiess Contractors Indonesia
- Oldendorff Carriers - Singapore
- Bangladesh Power Developement Board
- Kapuas Tunggal Persada - Indonesia
- Edison Trading Spa - Italy
- VISA Power Limited - India
- Kaltim Prima Coal - Indonesia
- Sical Logistics Limited - India
- Global Business Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Bulk Trading Sa - Switzerland
- Energy Link Ltd, New Zealand
- Electricity Generating Authority of Thailand
- Standard Chartered Bank - UAE
- New Zealand Coal & Carbon
- SMC Global Power, Philippines
- India Bulls Power Limited - India
- Mjunction Services Limited - India
- Holcim Trading Pte Ltd - Singapore
- Cement Manufacturers Association - India
- Renaissance Capital - South Africa
- Trasteel International SA, Italy
- Petron Corporation, Philippines
- Indika Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- Borneo Indobara - Indonesia
- Baramulti Group, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Riau Bara Harum - Indonesia
- Timah Investasi Mineral - Indoneisa
- Power Finance Corporation Ltd., India
- Barasentosa Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- OPG Power Generation Pvt Ltd - India
- Mercuria Energy - Indonesia
- Posco Energy - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rio Tinto Coal - Australia
- Makarim & Taira - Indonesia
- Coal and Oil Company - UAE
- Videocon Industries ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- CIMB Investment Bank - Malaysia
- Sree Jayajothi Cements Limited - India
- The State Trading Corporation of India Ltd
- Attock Cement Pakistan Limited
- Krishnapatnam Port Company Ltd. - India
- Sojitz Corporation - Japan
- Ceylon Electricity Board - Sri Lanka
- Sakthi Sugars Limited - India
- TeaM Sual Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Port Waratah Coal Services - Australia
- Coastal Gujarat Power Limited - India
- ASAPP Information Group - India
- PowerSource Philippines DevCo
- Aditya Birla Group - India
- Medco Energi Mining Internasional
- Formosa Plastics Group - Taiwan
- IEA Clean Coal Centre - UK
- Eastern Energy - Thailand
- Vizag Seaport Private Limited - India
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