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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, 22 September 18
SHIPOWNERS URGENTLY NEED A FUEL-MANAGEMENT PLAN - METTE KRONHOLM FRAENDE, BIMCO
With the majority of ship operators expected to choose low-sulphur fuel over scrubbers to comply with the new IMO sulphur cap regulation, all eyes ...
Saturday, 22 September 18
GERMANY'S MOVE TO SCRAP COAL WILL COST TAXPAYERS - BRIAN PARKIN | WILLIAM WILKES
Chancellor Angela Merkel’s plan to close Germany’s remaining coal-fired power stations will drive up subsidies for regions that mine th ...
Saturday, 22 September 18
FITCH RATINGS: WORLD GROWTH FORECAST CUT ON US-CHINA TRADE BATTLE
Protectionist US trade policies have now reached the point where they are materially affecting what remains a strong global growth outlook, with th ...
Tuesday, 18 September 18
COOLING OUTLOOK FOR COAL - KATE JONES
At a time of increasing focus on the renewables market as the world seeks to clean up its act to prevent climate change, what is the outlook like f ...
Monday, 17 September 18
GLENCORE RETURNS TO JAPAN COAL TALKS SCUPPERED BY HIGH PRICES - BLOOMBERG
Mining giant Glencore Plc and Japanese utilities have resumed thermal coal supply negotiations, restarting talks that fell apart earlier this year ...
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Showing 1611 to 1615 news of total 6871 |
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- Parry Sugars Refinery, India
- Petrochimia International Co. Ltd.- Taiwan
- Malabar Cements Ltd - India
- Electricity Authority, New Zealand
- Timah Investasi Mineral - Indoneisa
- Singapore Mercantile Exchange
- Jorong Barutama Greston.PT - Indonesia
- Mercuria Energy - Indonesia
- Riau Bara Harum - Indonesia
- Formosa Plastics Group - Taiwan
- Meenaskhi Energy Private Limited - India
- Binh Thuan Hamico - Vietnam
- IHS Mccloskey Coal Group - USA
- Romanian Commodities Exchange
- Indian Oil Corporation Limited
- Banpu Public Company Limited - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Asmin Koalindo Tuhup - Indonesia
- Savvy Resources Ltd - HongKong
- SMG Consultants - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Coalindo Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Independent Power Producers Association of India
- Sindya Power Generating Company Private Ltd
- CIMB Investment Bank - Malaysia
- PetroVietnam Power Coal Import and Supply Company
- New Zealand Coal & Carbon
- Wood Mackenzie - Singapore
- Pendopo Energi Batubara - Indonesia
- Ambuja Cements Ltd - India
- Grasim Industreis Ltd - India
- Bulk Trading Sa - Switzerland
- Central Electricity Authority - India
- Merrill Lynch Commodities Europe
- Vedanta Resources Plc - India
- Meralco Power Generation, Philippines
- Globalindo Alam Lestari - Indonesia
- Electricity Generating Authority of Thailand
- Gujarat Mineral Development Corp Ltd - India
- Attock Cement Pakistan Limited
- GN Power Mariveles Coal Plant, Philippines
- Billiton Holdings Pty Ltd - Australia
- Trasteel International SA, Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- Star Paper Mills Limited - India
- Sakthi Sugars Limited - India
- Commonwealth Bank - Australia
- Siam City Cement - Thailand
- Ceylon Electricity Board - Sri Lanka
- LBH Netherlands Bv - Netherlands
- Rio Tinto Coal - Australia
- Alfred C Toepfer International GmbH - Germany
- Aditya Birla Group - India
- Eastern Energy - Thailand
- Kapuas Tunggal Persada - Indonesia
- Interocean Group of Companies - India
- Cigading International Bulk Terminal - Indonesia
- Dalmia Cement Bharat India
- GMR Energy Limited - India
- Kobexindo Tractors - Indoneisa
- Essar Steel Hazira Ltd - India
- Sree Jayajothi Cements Limited - India
- Eastern Coal Council - USA
- San Jose City I Power Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Coal Blending Company Limited - Australia
- Oldendorff Carriers - Singapore
- Global Business Power Corporation, Philippines
- Anglo American - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Barasentosa Lestari - Indonesia
- Lanco Infratech Ltd - India
- Central Java Power - Indonesia
- Ministry of Mines - Canada
- Vijayanagar Sugar Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Deloitte Consulting - India
- Mjunction Services Limited - India
- Wilmar Investment Holdings
- Altura Mining Limited, Indonesia
- CNBM International Corporation - China
- Sarangani Energy Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Latin American Coal - Colombia
- Bhoruka Overseas - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mintek Dendrill Indonesia
- Economic Council, Georgia
- Chettinad Cement Corporation Ltd - India
- Minerals Council of Australia
- Therma Luzon, Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- The University of Queensland
- Edison Trading Spa - Italy
- Kumho Petrochemical, South Korea
- Metalloyd Limited - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- Larsen & Toubro Limited - India
- Georgia Ports Authority, United States
- Kartika Selabumi Mining - Indonesia
- Sinarmas Energy and Mining - Indonesia
- PTC India Limited - India
- Intertek Mineral Services - Indonesia
- Jindal Steel & Power Ltd - India
- Coastal Gujarat Power Limited - India
- Ministry of Finance - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Gujarat Sidhee Cement - India
- Jaiprakash Power Ventures ltd
- Chamber of Mines of South Africa
- Indika Energy - Indonesia
- Makarim & Taira - Indonesia
- OPG Power Generation Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Goldman Sachs - Singapore
- Heidelberg Cement - Germany
- Xindia Steels Limited - India
- Power Finance Corporation Ltd., India
- Indo Tambangraya Megah - Indonesia
- ASAPP Information Group - India
- Rashtriya Ispat Nigam Limited - India
- Bhushan Steel Limited - India
- Toyota Tsusho Corporation, Japan
- Petron Corporation, Philippines
- India Bulls Power Limited - India
- Indogreen Group - Indonesia
- Samtan Co., Ltd - South Korea
- Ministry of Transport, Egypt
- VISA Power Limited - India
- McConnell Dowell - Australia
- Baramulti Group, Indonesia
- Bharathi Cement Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Energy Link Ltd, New Zealand
- MS Steel International - UAE
- Vizag Seaport Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- Posco Energy - South Korea
- Uttam Galva Steels Limited - India
- Planning Commission, India
- Orica Australia Pty. Ltd.
- Manunggal Multi Energi - Indonesia
- Orica Mining Services - Indonesia
- Karaikal Port Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Energy Development Corp, Philippines
- Thai Mozambique Logistica
- Kepco SPC Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Antam Resourcindo - Indonesia
- Ind-Barath Power Infra Limited - India
- Africa Commodities Group - South Africa
- London Commodity Brokers - England
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bangladesh Power Developement Board
- Parliament of New Zealand
- Aboitiz Power Corporation - Philippines
- Indian Energy Exchange, India
- PowerSource Philippines DevCo
- Iligan Light & Power Inc, Philippines
- GVK Power & Infra Limited - India
- IEA Clean Coal Centre - UK
- Bayan Resources Tbk. - Indonesia
- ICICI Bank Limited - India
- Indonesian Coal Mining Association
- Borneo Indobara - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Madhucon Powers Ltd - India
- South Luzon Thermal Energy Corporation
- Salva Resources Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Videocon Industries ltd - India
- Sojitz Corporation - Japan
- Marubeni Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- Price Waterhouse Coopers - Russia
- Tamil Nadu electricity Board
- Agrawal Coal Company - India
- Bhatia International Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Australian Coal Association
- International Coal Ventures Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- GAC Shipping (India) Pvt Ltd
- Kaltim Prima Coal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Leighton Contractors Pty Ltd - Australia
- SMC Global Power, Philippines
- Miang Besar Coal Terminal - Indonesia
- Australian Commodity Traders Exchange
- Maheswari Brothers Coal Limited - India
- Renaissance Capital - South Africa
- Medco Energi Mining Internasional
- Cement Manufacturers Association - India
- European Bulk Services B.V. - Netherlands
- Coal and Oil Company - UAE
- TeaM Sual Corporation - Philippines
- Standard Chartered Bank - UAE
- The Treasury - Australian Government
- Mercator Lines Limited - India
- Semirara Mining and Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Port Waratah Coal Services - Australia
- The State Trading Corporation of India Ltd
- Tata Chemicals Ltd - India
- Thiess Contractors Indonesia
- Carbofer General Trading SA - India
- Bukit Baiduri Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- White Energy Company Limited
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