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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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Monday, 17 September 18
SMALL PERCENTAGE OF THE WORLD FLEET WILL FIT SCRUBBERS - FORECASTS : METTE KRONHOLM FRAENDE
In recent months, there have been numerous reports of a strong pick-up in demand for scrubbers. On 1 January 2020, however, the number of ships fit ...
Saturday, 15 September 18
POWERING SUSTAINABLE DEVELOPMENT WITH LOW EMISSION COAL TECHNOLOGIES - WCA
In its 5th Strategic Energy Plan this year (2018), the Japanese Cabinet recognised coal as an important energy resource, necessary for the country& ...
Friday, 14 September 18
10 YEARS ON FROM LEHMAN, HOW IS SHIPPING'S "HANGOVER"? - CLARKSONS RESEARCH
On 15th September 2008, the collapse of Lehman Brothers crystallised the financial crisis and the onset the worst economic downturn for a century. ...
Thursday, 13 September 18
OPEC SEES SLOWER 2019 OIL DEMAND GROWTH, WARNS ON ECONOMY
Crude Oil Price Movements
In August, the OPEC Reference Basket declined by $1.01 m-o-m, settling at $72.26/b. Crude oil futures were also down ...
Thursday, 13 September 18
SUPRAMAX: INDO-INDIA COAL RUN WAS FIXED CLOSE TO $16000 ON ULTRA - FEARNLEYS
Capesize
Rates took a further drop in the beginning of the week, to later find a floor around mid-week reaching mid USD 7 level for c5 and just ...
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Showing 1616 to 1620 news of total 6871 |
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- Aditya Birla Group - India
- Bayan Resources Tbk. - Indonesia
- Kartika Selabumi Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Orica Mining Services - Indonesia
- Heidelberg Cement - Germany
- Directorate General of MIneral and Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Central Java Power - Indonesia
- Malabar Cements Ltd - India
- Tata Chemicals Ltd - India
- Timah Investasi Mineral - Indoneisa
- Merrill Lynch Commodities Europe
- Commonwealth Bank - Australia
- Intertek Mineral Services - Indonesia
- Barasentosa Lestari - Indonesia
- Sical Logistics Limited - India
- Siam City Cement PLC, Thailand
- Power Finance Corporation Ltd., India
- Larsen & Toubro Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Metalloyd Limited - United Kingdom
- Oldendorff Carriers - Singapore
- Kideco Jaya Agung - Indonesia
- Bulk Trading Sa - Switzerland
- Wood Mackenzie - Singapore
- Orica Australia Pty. Ltd.
- Port Waratah Coal Services - Australia
- Ministry of Mines - Canada
- Bharathi Cement Corporation - India
- Globalindo Alam Lestari - Indonesia
- Cement Manufacturers Association - India
- Singapore Mercantile Exchange
- Aboitiz Power Corporation - Philippines
- Vedanta Resources Plc - India
- SMG Consultants - Indonesia
- Central Electricity Authority - India
- Samtan Co., Ltd - South Korea
- Parry Sugars Refinery, India
- Chamber of Mines of South Africa
- Indian Oil Corporation Limited
- Latin American Coal - Colombia
- Mintek Dendrill Indonesia
- Holcim Trading Pte Ltd - Singapore
- Wilmar Investment Holdings
- Kepco SPC Power Corporation, Philippines
- Thai Mozambique Logistica
- India Bulls Power Limited - India
- Therma Luzon, Inc, Philippines
- Rio Tinto Coal - Australia
- Electricity Authority, New Zealand
- Dalmia Cement Bharat India
- Sindya Power Generating Company Private Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Finance - Indonesia
- Tamil Nadu electricity Board
- Thiess Contractors Indonesia
- Global Business Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Miang Besar Coal Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Indian Energy Exchange, India
- Krishnapatnam Port Company Ltd. - India
- South Luzon Thermal Energy Corporation
- Maharashtra Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- Indogreen Group - Indonesia
- Standard Chartered Bank - UAE
- Sakthi Sugars Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Riau Bara Harum - Indonesia
- Meenaskhi Energy Private Limited - India
- Manunggal Multi Energi - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Trasteel International SA, Italy
- Bhatia International Limited - India
- Grasim Industreis Ltd - India
- Bhoruka Overseas - Indonesia
- Mercator Lines Limited - India
- Vizag Seaport Private Limited - India
- Karaikal Port Pvt Ltd - India
- SMC Global Power, Philippines
- Interocean Group of Companies - India
- International Coal Ventures Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Alfred C Toepfer International GmbH - Germany
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GMR Energy Limited - India
- GAC Shipping (India) Pvt Ltd
- AsiaOL BioFuels Corp., Philippines
- Romanian Commodities Exchange
- IEA Clean Coal Centre - UK
- The State Trading Corporation of India Ltd
- Formosa Plastics Group - Taiwan
- CNBM International Corporation - China
- Indonesian Coal Mining Association
- Georgia Ports Authority, United States
- Borneo Indobara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Kohat Cement Company Ltd. - Pakistan
- Kobexindo Tractors - Indoneisa
- Sarangani Energy Corporation, Philippines
- Australian Coal Association
- Planning Commission, India
- Agrawal Coal Company - India
- Siam City Cement - Thailand
- PTC India Limited - India
- ICICI Bank Limited - India
- Salva Resources Pvt Ltd - India
- Edison Trading Spa - Italy
- Ministry of Transport, Egypt
- PowerSource Philippines DevCo
- Lanco Infratech Ltd - India
- Makarim & Taira - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Chettinad Cement Corporation Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Leighton Contractors Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Coalindo Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Energy Link Ltd, New Zealand
- Sree Jayajothi Cements Limited - India
- Posco Energy - South Korea
- Attock Cement Pakistan Limited
- Coal and Oil Company - UAE
- Indika Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Eastern Coal Council - USA
- Pendopo Energi Batubara - Indonesia
- Bangladesh Power Developement Board
- London Commodity Brokers - England
- ASAPP Information Group - India
- Jaiprakash Power Ventures ltd
- Xindia Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Independent Power Producers Association of India
- Mercuria Energy - Indonesia
- Videocon Industries ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Sidhee Cement - India
- TeaM Sual Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- CIMB Investment Bank - Malaysia
- VISA Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Simpson Spence & Young - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Mjunction Services Limited - India
- Eastern Energy - Thailand
- Binh Thuan Hamico - Vietnam
- Deloitte Consulting - India
- Baramulti Group, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- Petron Corporation, Philippines
- The Treasury - Australian Government
- San Jose City I Power Corp, Philippines
- Altura Mining Limited, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Kumho Petrochemical, South Korea
- Kaltim Prima Coal - Indonesia
- Madhucon Powers Ltd - India
- Coastal Gujarat Power Limited - India
- Banpu Public Company Limited - Thailand
- Star Paper Mills Limited - India
- MS Steel International - UAE
- Uttam Galva Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Medco Energi Mining Internasional
- Straits Asia Resources Limited - Singapore
- Bhushan Steel Limited - India
- Jorong Barutama Greston.PT - Indonesia
- New Zealand Coal & Carbon
- Economic Council, Georgia
- McConnell Dowell - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Price Waterhouse Coopers - Russia
- SN Aboitiz Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Iligan Light & Power Inc, Philippines
- Marubeni Corporation - India
- Renaissance Capital - South Africa
- The University of Queensland
- Bukit Makmur.PT - Indonesia
- Goldman Sachs - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- GN Power Mariveles Coal Plant, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- White Energy Company Limited
- European Bulk Services B.V. - Netherlands
- Minerals Council of Australia
- Anglo American - United Kingdom
- Africa Commodities Group - South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Maheswari Brothers Coal Limited - India
- Semirara Mining Corp, Philippines
- Meralco Power Generation, Philippines
- Carbofer General Trading SA - India
- Australian Commodity Traders Exchange
- Global Green Power PLC Corporation, Philippines
- GVK Power & Infra Limited - India
- Antam Resourcindo - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Parliament of New Zealand
- Sinarmas Energy and Mining - Indonesia
- Ambuja Cements Ltd - India
- Sojitz Corporation - Japan
- Energy Development Corp, Philippines
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