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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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Tuesday, 28 August 18
SUPRAMAX: A COAL TRIP VIA INDONESIA PAID $13,500 ON A 56,000DWT TO WC INDIA - BALTIC BRIEFING
Capesize
The Singapore holiday mid-week disrupted trading and unsettled the market, with owners losing some resilience. The market took on a la ...
Tuesday, 28 August 18
SHIPPING MARKET UPDATE - GEORGE LAZARIDIS
As we edge close to the start of the Autumn Season, a period within the year that is usually characterized as the pivot point from the final quarte ...
Friday, 24 August 18
KOREAN RESTRICTIONS ON COAL SULPHUR IMPACTING HUNTER EXPORTS - THE HERALD
WARNINGS that Korean restrictions on sulphur levels in coal could hurt the Hunter industry appear to have been accurate, according to a report in t ...
Thursday, 23 August 18
RUSSIA'S MECHEL PRODUCED 9.69 MMT OF RUN-OF-MINE COAL IN 1H'2018
Mechel PAO, one of the leading Russian mining and metals companies, announces 1H2018 operational results.
Mechel PAO’s Chief E ...
Thursday, 23 August 18
SUPRAMAX: SOME FRESH COAL CARGOES APPEARED IN SE ASIA, GIVING A BIT PRESSURE ON RATES FOR END AUGUST SHIPMENTS - FEARNLEYS
Capesize
Slightly softer but generally very healthy for the big ships, with limited supply of early tonnage and positive Brazilian ore export v ...
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Showing 1636 to 1640 news of total 6871 |
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- Mercator Lines Limited - India
- Australian Commodity Traders Exchange
- Sinarmas Energy and Mining - Indonesia
- Bukit Makmur.PT - Indonesia
- European Bulk Services B.V. - Netherlands
- Iligan Light & Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Indian Energy Exchange, India
- TeaM Sual Corporation - Philippines
- Larsen & Toubro Limited - India
- Goldman Sachs - Singapore
- The University of Queensland
- Formosa Plastics Group - Taiwan
- Ceylon Electricity Board - Sri Lanka
- Sree Jayajothi Cements Limited - India
- Sical Logistics Limited - India
- Kohat Cement Company Ltd. - Pakistan
- PetroVietnam Power Coal Import and Supply Company
- Chamber of Mines of South Africa
- Electricity Generating Authority of Thailand
- Binh Thuan Hamico - Vietnam
- Straits Asia Resources Limited - Singapore
- Attock Cement Pakistan Limited
- The Treasury - Australian Government
- Videocon Industries ltd - India
- Star Paper Mills Limited - India
- Bhoruka Overseas - Indonesia
- Siam City Cement PLC, Thailand
- Planning Commission, India
- LBH Netherlands Bv - Netherlands
- Mintek Dendrill Indonesia
- Essar Steel Hazira Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Standard Chartered Bank - UAE
- Billiton Holdings Pty Ltd - Australia
- Energy Development Corp, Philippines
- Altura Mining Limited, Indonesia
- The State Trading Corporation of India Ltd
- Chettinad Cement Corporation Ltd - India
- Intertek Mineral Services - Indonesia
- Independent Power Producers Association of India
- Alfred C Toepfer International GmbH - Germany
- Minerals Council of Australia
- Samtan Co., Ltd - South Korea
- Medco Energi Mining Internasional
- Borneo Indobara - Indonesia
- Ambuja Cements Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Metalloyd Limited - United Kingdom
- Indonesian Coal Mining Association
- Bayan Resources Tbk. - Indonesia
- GVK Power & Infra Limited - India
- Petron Corporation, Philippines
- Sojitz Corporation - Japan
- Neyveli Lignite Corporation Ltd, - India
- Mercuria Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- TNB Fuel Sdn Bhd - Malaysia
- OPG Power Generation Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Bulk Trading Sa - Switzerland
- Kideco Jaya Agung - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Salva Resources Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Madhucon Powers Ltd - India
- Oldendorff Carriers - Singapore
- Toyota Tsusho Corporation, Japan
- Barasentosa Lestari - Indonesia
- Uttam Galva Steels Limited - India
- International Coal Ventures Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- Therma Luzon, Inc, Philippines
- Xindia Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- Carbofer General Trading SA - India
- Power Finance Corporation Ltd., India
- CNBM International Corporation - China
- Bukit Baiduri Energy - Indonesia
- VISA Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Lanco Infratech Ltd - India
- Tata Chemicals Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Indian Oil Corporation Limited
- Central Java Power - Indonesia
- Maheswari Brothers Coal Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Thai Mozambique Logistica
- Jaiprakash Power Ventures ltd
- Bhatia International Limited - India
- Kumho Petrochemical, South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Edison Trading Spa - Italy
- Vedanta Resources Plc - India
- Pendopo Energi Batubara - Indonesia
- Wilmar Investment Holdings
- Merrill Lynch Commodities Europe
- Savvy Resources Ltd - HongKong
- Bhushan Steel Limited - India
- Africa Commodities Group - South Africa
- Kaltim Prima Coal - Indonesia
- Orica Australia Pty. Ltd.
- Global Green Power PLC Corporation, Philippines
- Ministry of Mines - Canada
- Banpu Public Company Limited - Thailand
- ASAPP Information Group - India
- Kalimantan Lumbung Energi - Indonesia
- Baramulti Group, Indonesia
- Parliament of New Zealand
- Parry Sugars Refinery, India
- Coastal Gujarat Power Limited - India
- Energy Link Ltd, New Zealand
- Wood Mackenzie - Singapore
- GMR Energy Limited - India
- Ind-Barath Power Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Finance - Indonesia
- Siam City Cement - Thailand
- Eastern Coal Council - USA
- Gujarat Mineral Development Corp Ltd - India
- Sakthi Sugars Limited - India
- Interocean Group of Companies - India
- Vizag Seaport Private Limited - India
- Ministry of Transport, Egypt
- Dalmia Cement Bharat India
- Commonwealth Bank - Australia
- Makarim & Taira - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Aboitiz Power Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Eastern Energy - Thailand
- Leighton Contractors Pty Ltd - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mjunction Services Limited - India
- Indika Energy - Indonesia
- Riau Bara Harum - Indonesia
- White Energy Company Limited
- GN Power Mariveles Coal Plant, Philippines
- Semirara Mining and Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Bharathi Cement Corporation - India
- New Zealand Coal & Carbon
- Romanian Commodities Exchange
- London Commodity Brokers - England
- Central Electricity Authority - India
- Sarangani Energy Corporation, Philippines
- Global Business Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Indogreen Group - Indonesia
- Jindal Steel & Power Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- MS Steel International - UAE
- IEA Clean Coal Centre - UK
- Antam Resourcindo - Indonesia
- SMG Consultants - Indonesia
- Rio Tinto Coal - Australia
- Trasteel International SA, Italy
- Directorate Of Revenue Intelligence - India
- Coalindo Energy - Indonesia
- Coal and Oil Company - UAE
- Meenaskhi Energy Private Limited - India
- Electricity Authority, New Zealand
- Karaikal Port Pvt Ltd - India
- ICICI Bank Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Malabar Cements Ltd - India
- Port Waratah Coal Services - Australia
- Simpson Spence & Young - Indonesia
- Singapore Mercantile Exchange
- Cigading International Bulk Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aditya Birla Group - India
- Latin American Coal - Colombia
- Marubeni Corporation - India
- Renaissance Capital - South Africa
- Krishnapatnam Port Company Ltd. - India
- Georgia Ports Authority, United States
- Kapuas Tunggal Persada - Indonesia
- India Bulls Power Limited - India
- Kobexindo Tractors - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining Corp, Philippines
- Australian Coal Association
- Globalindo Alam Lestari - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Meralco Power Generation, Philippines
- Thiess Contractors Indonesia
- Heidelberg Cement - Germany
- PTC India Limited - India
- SMC Global Power, Philippines
- Cement Manufacturers Association - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Economic Council, Georgia
- McConnell Dowell - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Agrawal Coal Company - India
- PowerSource Philippines DevCo
- Orica Mining Services - Indonesia
- Deloitte Consulting - India
- South Luzon Thermal Energy Corporation
- Grasim Industreis Ltd - India
- Anglo American - United Kingdom
- San Jose City I Power Corp, Philippines
- Bangladesh Power Developement Board
- SN Aboitiz Power Inc, Philippines
- Tamil Nadu electricity Board
- Gujarat Sidhee Cement - India
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