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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, 22 August 18
KOMIPO INVITES BIDS FOR 480K TONS OF BITUMINOUS COAL FOR BORYEONG POWER PLANT & SHIN BORYEONG POWER PLANTS
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued a tender for 480,000 mt of min. 5700 NAR coal of Australian origi ...
Wednesday, 22 August 18
SHIPPING MARKET INSIGHT - GEORGE PANAGOPOULOS
During the most quite week of the summer period we witnessed a trade war between United States and Turkey. A battle, which started with the arrest ...
Monday, 20 August 18
SUPRAMAX: OVERALL IT WAS A POSITIVE WEEK FOR THE BSI INDEX WITH GAINS MADE - THE BALTIC BRIEFING
Capesize
A week of largely unfulfilled expectations with holidays again curbing activity. Rates remained essentially healthy, but despite bad wea ...
Friday, 17 August 18
DO ARBITRATION AGREEMENTS IN BILLS OF LADING BIND THEIR HOLDERS? - WFW
KNOWLEDGE TO ELEVATE
Bills of lading are a crucial part of the security package traditionally sought by trade finance providers.
...
Friday, 17 August 18
MALAYSIA'S MANJUNG 4 - WORLD COAL ASSOCIATION
According to the IEA’s Energy Access Outlook 2017 report, nearly all of those who gained access to electricity worldwide in the last 16 years ...
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- Jaiprakash Power Ventures ltd
- Globalindo Alam Lestari - Indonesia
- Indian Energy Exchange, India
- AsiaOL BioFuels Corp., Philippines
- Bhatia International Limited - India
- Krishnapatnam Port Company Ltd. - India
- Thai Mozambique Logistica
- Indogreen Group - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Miang Besar Coal Terminal - Indonesia
- Larsen & Toubro Limited - India
- Holcim Trading Pte Ltd - Singapore
- Ministry of Finance - Indonesia
- Edison Trading Spa - Italy
- Chettinad Cement Corporation Ltd - India
- Antam Resourcindo - Indonesia
- Indian Oil Corporation Limited
- Bhushan Steel Limited - India
- Bulk Trading Sa - Switzerland
- Directorate General of MIneral and Coal - Indonesia
- Chamber of Mines of South Africa
- Africa Commodities Group - South Africa
- Siam City Cement PLC, Thailand
- Anglo American - United Kingdom
- SN Aboitiz Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- PetroVietnam Power Coal Import and Supply Company
- Price Waterhouse Coopers - Russia
- Manunggal Multi Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Global Business Power Corporation, Philippines
- Wilmar Investment Holdings
- SMC Global Power, Philippines
- McConnell Dowell - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- Singapore Mercantile Exchange
- Kobexindo Tractors - Indoneisa
- Vizag Seaport Private Limited - India
- Sojitz Corporation - Japan
- ASAPP Information Group - India
- Formosa Plastics Group - Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Altura Mining Limited, Indonesia
- Aditya Birla Group - India
- Bangladesh Power Developement Board
- Sree Jayajothi Cements Limited - India
- Salva Resources Pvt Ltd - India
- Interocean Group of Companies - India
- Jindal Steel & Power Ltd - India
- Oldendorff Carriers - Singapore
- MS Steel International - UAE
- Global Green Power PLC Corporation, Philippines
- Standard Chartered Bank - UAE
- Energy Development Corp, Philippines
- Binh Thuan Hamico - Vietnam
- CIMB Investment Bank - Malaysia
- The State Trading Corporation of India Ltd
- Coastal Gujarat Power Limited - India
- PowerSource Philippines DevCo
- Minerals Council of Australia
- Planning Commission, India
- Ind-Barath Power Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Uttam Galva Steels Limited - India
- Xindia Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Mintek Dendrill Indonesia
- Madhucon Powers Ltd - India
- Central Java Power - Indonesia
- Maheswari Brothers Coal Limited - India
- OPG Power Generation Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- ICICI Bank Limited - India
- Ambuja Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- Thiess Contractors Indonesia
- Billiton Holdings Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- Coalindo Energy - Indonesia
- GVK Power & Infra Limited - India
- Indika Energy - Indonesia
- Power Finance Corporation Ltd., India
- Posco Energy - South Korea
- Vedanta Resources Plc - India
- Kohat Cement Company Ltd. - Pakistan
- India Bulls Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Trasteel International SA, Italy
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Bhoruka Overseas - Indonesia
- IEA Clean Coal Centre - UK
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- CNBM International Corporation - China
- Coal and Oil Company - UAE
- Gujarat Mineral Development Corp Ltd - India
- New Zealand Coal & Carbon
- PTC India Limited - India
- Romanian Commodities Exchange
- Leighton Contractors Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Parry Sugars Refinery, India
- Dalmia Cement Bharat India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Parliament of New Zealand
- Gujarat Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Metalloyd Limited - United Kingdom
- Independent Power Producers Association of India
- Aboitiz Power Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Orica Mining Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Indonesian Coal Mining Association
- Tamil Nadu electricity Board
- Pendopo Energi Batubara - Indonesia
- Grasim Industreis Ltd - India
- Malabar Cements Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Essar Steel Hazira Ltd - India
- Gujarat Sidhee Cement - India
- VISA Power Limited - India
- Sical Logistics Limited - India
- Australian Coal Association
- Bayan Resources Tbk. - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Riau Bara Harum - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Ministry of Mines - Canada
- Baramulti Group, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karaikal Port Pvt Ltd - India
- Heidelberg Cement - Germany
- Electricity Generating Authority of Thailand
- Mjunction Services Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Samtan Co., Ltd - South Korea
- Mercator Lines Limited - India
- White Energy Company Limited
- Borneo Indobara - Indonesia
- London Commodity Brokers - England
- International Coal Ventures Pvt Ltd - India
- Electricity Authority, New Zealand
- Port Waratah Coal Services - Australia
- Directorate Of Revenue Intelligence - India
- Petron Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Central Electricity Authority - India
- Kepco SPC Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Agrawal Coal Company - India
- Lanco Infratech Ltd - India
- Simpson Spence & Young - Indonesia
- Renaissance Capital - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- The Treasury - Australian Government
- Energy Link Ltd, New Zealand
- Meralco Power Generation, Philippines
- IHS Mccloskey Coal Group - USA
- Bukit Makmur.PT - Indonesia
- Siam City Cement - Thailand
- Semirara Mining Corp, Philippines
- Mercuria Energy - Indonesia
- The University of Queensland
- Indo Tambangraya Megah - Indonesia
- Latin American Coal - Colombia
- Economic Council, Georgia
- Goldman Sachs - Singapore
- PNOC Exploration Corporation - Philippines
- Tata Chemicals Ltd - India
- Sarangani Energy Corporation, Philippines
- Cement Manufacturers Association - India
- Kalimantan Lumbung Energi - Indonesia
- Sakthi Sugars Limited - India
- San Jose City I Power Corp, Philippines
- Commonwealth Bank - Australia
- Jorong Barutama Greston.PT - Indonesia
- Merrill Lynch Commodities Europe
- SMG Consultants - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bharathi Cement Corporation - India
- South Luzon Thermal Energy Corporation
- Rio Tinto Coal - Australia
- Marubeni Corporation - India
- Medco Energi Mining Internasional
- GMR Energy Limited - India
- Kumho Petrochemical, South Korea
- LBH Netherlands Bv - Netherlands
- Deloitte Consulting - India
- Rashtriya Ispat Nigam Limited - India
- Iligan Light & Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Georgia Ports Authority, United States
- Straits Asia Resources Limited - Singapore
- Orica Australia Pty. Ltd.
- Ministry of Transport, Egypt
- Videocon Industries ltd - India
- Eastern Coal Council - USA
- Carbofer General Trading SA - India
- European Bulk Services B.V. - Netherlands
- Star Paper Mills Limited - India
- Australian Commodity Traders Exchange
- Timah Investasi Mineral - Indoneisa
- Savvy Resources Ltd - HongKong
- Therma Luzon, Inc, Philippines
- Wood Mackenzie - Singapore
- Eastern Energy - Thailand
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