We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
Tuesday, 20 October 09
COAL PRICES TO SURGE IN 2010 DESPITE AMPLE SUPPLY
 Commodity Online reported that, Coal prices are indeed destined to go higher as they follow the rise of ‘coal currencies’ such as Australian Dollar (AUD), South African Rand (ZAR) and Columbian Peso (COP). Strong emerging market demand is also pushing up prices although it may be limited by abundant stocks on coal producing countries.
The BofA Merrill Lynch Global Report on energy pointed out that many “oil currencies” including UAE Dirhams (AED) and Saudi Arabian Riyal (SAR) are pegged to the US dollar, but coal exporters tend to keep a free float therefore currencies linked to coal have outperformed both their emerging market and G-10 peers. The report notes that near upside gains in steam coal will be limited to US dollar weakness.
Mirroring forex, prompt API-2 thermal coal prices have jumped 9% in the past month reaching $73/mt—slightly ahead of crude oil and petroleum products—while calendar prices for 2010 have recovered to a six-week high of over $84/mt. With coal inventories swelling to record highs around the globe, any near-term upside pressure on front-month coal prices above $80/mt is likely to be limited to further USD weakness. Although BofA Merrill Lynch Global report said that steam coal forwards to flatten significantly over the next six months as the recovery takes hold, excess supply will still dampen any upside pressure on near-dated spreads in the short-run.
The outlook for thermal coal markets should improve significantly and high inventories will be burned down next year as coal is set to regain market share relative to natural gas. Chinese and Indian demand for coal is already growing strongly. With a demand recovery coming in the rest of Asia, South Africa and the Atlantic Basin, the market is likely to tighten pretty quickly in 2010.
Trade sitting at the comfort of home. Start with a mere 50$
As a result, API-4 South African coal prices have appreciated strongly in USD but not so much in local currencies. This situation arises because some of the world’s largest coal exporters like South Africa, Australia, and Colombia keep a free float. The logic supporting the recent move in coal prices is compelling. On the one hand, coal happens to be exported out of countries with a free-floating currency regime. On the other side, coal is the fuel of choice in an EM-led domestic recovery, as China, India, and many other emerging economies will require bucket-loads of cheap energy to maintain a fast pace of growth. Having said that, coal prices have lagged the rapid weakening of the trade-weighteddollar, suggesting coal prices could trend higher only to catch up with the recent currency moves, BofA Merrill Lynch Report said.
A wall of inventories will cap steam coal near-term
With coal inventories swelling to new record highs around the globe, any nearterm upside pressure in front-month coal prices above $80/mt will require further dollar weakness. Europe, a key consuming area for thermal coal, currently holds record stockpiles of Colombian and Russian material at its main ports in Amsterdam, Antwerp, and Rotterdam. European utilities are also awash with coal. In the US, the situation is even more pronounced, with inventories held at utilities standing at 70 days of consumption, 13 days higher than last year. In fact, coal inventories are pretty healthy everywhere, including parts of the Asia Pacific. India, and China are an exception as stocks seem to be drawing there at the moment.
Rising coal production will also limit upside on prices
Another factor limiting the near-term upside on coal is the healthy growth in supply. Russia seems to have turned its corner following an earlier slump in coal exports. During the first eight months of this year, Russian exports to Europe increased 19% relative to last year driven by rail and port de-bottlenecking. The export performance out of Australia has improved significantly in the past weeks and currently stands at the highest in over four months. Port congestion is down to just 20 ships, from 42 a few weeks ago, and should continue to improve gradually throughout next year as Newcastle adds a third terminal in Q1. Production in Colombia is also looking a lot healthier.
However, the thermal coal market will rebalance in 2010...
None of these bearish factors will last and we expect a rebound in global coal prices next year. The global thermal coal market will firmly rebalance primarily from the demand-side, BofA Merrill Lynch report stated. It expects the demand in Pacific region to outstrip that of West. demand in the Pacific outstrips demand in the West. Chinese and Indian demand for coal is already growing pretty strongly and once we add a demand recovery in the rest of Asia Pacific, South Africa, and the Atlantic Basin, the current excess supply in the market will be soaked up pretty quickly. A combination of power generation growth, industrial demand recovery, generation capacity growth, and fuel switching will firmly support global coal demand next year at around 3% growth, from -0.3% this year, according to BofA Merrill Lynch Global Report.
...as demand for coal is recovering, led by China and India
Looking at the main demand drivers in turn, demand in China and India is already growing pretty rapidly, driven by the upsurge in electricity generation and strategic stock-building of the past months. In the first eight months of this year, China imported 74 million mt of coal, up from 29 million mt in the prior year, a truly mind-boggling increase. As exports more than halved in the same period, China firmly switched from being a net exporter last year (4.8 million mt) to being a net importer (59 million mt YTD) (Chart 12). China has been moving away from Australia and Indonesia, at the margin, and started to source coal from farther away places like Russia, South Africa, Canada and Colombia— helped by low freight rates.
With prices below $100/t, China will remain a net importer
Paradoxically, the higher Chinese imports have occurred at a time that domestic production has surged to a new record. As regulators have kept domestic coal prices high relative to seaborne prices, Chinese utilities have moved to imported coal. Regional distribution bottlenecks, particularly in the railway system, have also continued to prevent the domestically produced coal to travel from the inner regions to the coastal demand centers, hence supporting coal prices in the East.
Coal demand in Asia Pacific is improving very rapidly...
In India, an acute shortage of domestic coal and a string of supply constraints have driven coal imports sharply higher. This material has come mainly from. Only 5 years ago, India hardly imported any coal but it now soaks up 70 million tons per annum. Bucking the global trend, Indian coal stocks are critically low due to a combination of monsoon rains, domestic mine strikes and stagnant production growth.
Meanwhile, coalfired generation growth is back to record highs but is now reportedly being constrained by the lack of coal (Chart 15). At this rate, coal supply shortages in India are likely to be prevalent for a long time. The government set stringent targets for electricity generation capacity and the share of coal-fired plants in the generation mix is set to rise to 57% by 2010, from 53% currently. With domestic demand for coal likely to grow unabated, Indian companies are now in the
process of buying up coal assets in South Africa, Indonesia, and Australia.
...and will eventually pull global thermal coal prices higher
While China and India currently stand out, demand will also come back strongly in other Asian countries, such as Korea, Taiwan, and Thailand. Japan is probably the only country that will not exert strong international buying pressure because domestic nuclear power generation capacity is coming back. Steadier demand growth is not only confined to Asia though. Power generation in South Africa, where 70% of capacity is coal-fired, is now almost back at pre-crisis levels. Relative to last year, power output is down by a meager 1.2%. Once coal demand returns to trend growth of 5%, it will quickly outpace production growth, which has remained fairly constant in the past years. Moreover, Eskom is constructing a number of coal-fired power stations, probably helping to drive coal demand higher.
Gas to coal fuel-switching will boost US, Europe demand
Capacity growth could also be a significant driver in the United States where a number of new coal-fired plants are coming to the market. Out of 19 GW potentially added next year, 7.5 GW alone will be coal-fired. No doubt, the recession has significantly reduced the demand for power and expanded reserve margins. However, coal is likely to gain back significant market share next year as the recovery sets in. Although gas-fired plants have displaced coal-fired generation
recently, this situation is not expected to last. Importantly, coal-to-gas switching occurred on the back of exceptionally low gas prices. BofA Merrill Lynch Global Report said that the spread of USnatural gas to coal will widen again next year, supporting coal demand.
In Europe, a toxic combination of falling power and industrial demand together with cheap natural gas prices has also contributed to loosen up the demand for the fossil fuel. Power supplies are likely to be reasonably comfortable this winter due to high natural gas inventories. Still, we expect this situation to reverse rapidly in the first half of next year. The lagged impact from rising oil prices will feed through to indexed European natural gas. Unless CO2 prices rise sharply—
which is unlikely given the current oversupply of permits—coal demand, which has also suffered from fuel switching, will pick up fairly significantly.
Economic recovery may push coal to over $100/t in 2010
In sum, the outlook for the thermal coal markets could improve significantly going forward.. Increased demand coupled with stronger “coal currencies”, could push European API-2 coal prices above $100/mt by the middle of next year, the report added.
Dry freight will buck the trend, remaining range-bound
Coal demand is set to eventually pick up driving up coal prices next year but freight rates will be low. A massive order book of new dry bulk ships will continue to push new ships online at a very rapid rate. Although demand for dry bulk goods, importantly iron ore, is improving everywhere as steel capacity utilization is rising, shipping bottlenecks will not reappear for another 2-3 years at the earliest, the BofA Merrill Lynch Global Report added.
Source: Commodity Online
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Tuesday, 20 October 09
RECAPITAL SET TO BUY INDONESIA'S BERAU COAL - SOURCES
* COULD PAY AT LEAST $1.3 BLN FOR BERAU - SOURCES
* RECAPITAL CONFIRMS IT HAS BID FOR BERAU
* BAKRIE GROUP LIKELY TO BACK BID – SOURCES
...
Tuesday, 20 October 09
INDIA MAY CUT STAKE IN NTPC BY DECEMBER, POWER SECRETARY SAYS
Bloomberg reported that, India’s government may sell a 5 percent stake in NTPC Ltd., the country’s biggest power producer, as early as D ...
Monday, 19 October 09
COAL PRICE UP AGAIN - RICHARDS BAY TERMINAL
Export prices rose 45 cents, or 0.7%, to an average of 64.05 a metric ton in the week ended Oct. 16, according to McCloskey Group.
The week was & ...
Monday, 19 October 09
COAL MINISTRY SEEKS EXPLANATION FROM AP GENCO
The Hindu Business reported that, the Coal Ministry has asked the Power Generation Corporation of Andhra Pradesh (AP Genco) to explain why there was ...
Monday, 19 October 09
CEMENT UNLIKELY TO COST MORE DESPITE COAL PRICE HIKE
Business-Standard reported that, Cement manufacturers will not immediately hike prices of the construction material, despite a surge in their input ...
|
|
|
Showing 6326 to 6330 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- ASAPP Information Group - India
- GVK Power & Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- Posco Energy - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wood Mackenzie - Singapore
- Edison Trading Spa - Italy
- Indika Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Marubeni Corporation - India
- India Bulls Power Limited - India
- Global Business Power Corporation, Philippines
- Latin American Coal - Colombia
- Wilmar Investment Holdings
- Aditya Birla Group - India
- Kobexindo Tractors - Indoneisa
- Central Electricity Authority - India
- Borneo Indobara - Indonesia
- Trasteel International SA, Italy
- Mjunction Services Limited - India
- Jaiprakash Power Ventures ltd
- Global Coal Blending Company Limited - Australia
- Kohat Cement Company Ltd. - Pakistan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Port Waratah Coal Services - Australia
- Price Waterhouse Coopers - Russia
- Cigading International Bulk Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- PNOC Exploration Corporation - Philippines
- Electricity Authority, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- South Luzon Thermal Energy Corporation
- VISA Power Limited - India
- The Treasury - Australian Government
- Mercuria Energy - Indonesia
- Indonesian Coal Mining Association
- Heidelberg Cement - Germany
- Minerals Council of Australia
- LBH Netherlands Bv - Netherlands
- Sinarmas Energy and Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Singapore Mercantile Exchange
- Bharathi Cement Corporation - India
- Antam Resourcindo - Indonesia
- Interocean Group of Companies - India
- Parliament of New Zealand
- IEA Clean Coal Centre - UK
- Indo Tambangraya Megah - Indonesia
- SMG Consultants - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bayan Resources Tbk. - Indonesia
- GAC Shipping (India) Pvt Ltd
- PTC India Limited - India
- Bukit Makmur.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- International Coal Ventures Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Agrawal Coal Company - India
- Global Green Power PLC Corporation, Philippines
- Malabar Cements Ltd - India
- Binh Thuan Hamico - Vietnam
- Directorate Of Revenue Intelligence - India
- Semirara Mining Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Kumho Petrochemical, South Korea
- Sarangani Energy Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Mercator Lines Limited - India
- Timah Investasi Mineral - Indoneisa
- Metalloyd Limited - United Kingdom
- Ministry of Mines - Canada
- Intertek Mineral Services - Indonesia
- Independent Power Producers Association of India
- Kideco Jaya Agung - Indonesia
- Energy Development Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Formosa Plastics Group - Taiwan
- Bukit Baiduri Energy - Indonesia
- Larsen & Toubro Limited - India
- Sree Jayajothi Cements Limited - India
- Indian Energy Exchange, India
- Ind-Barath Power Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Romanian Commodities Exchange
- Kartika Selabumi Mining - Indonesia
- Bulk Trading Sa - Switzerland
- AsiaOL BioFuels Corp., Philippines
- Tata Chemicals Ltd - India
- Ministry of Finance - Indonesia
- Banpu Public Company Limited - Thailand
- Siam City Cement PLC, Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- McConnell Dowell - Australia
- Simpson Spence & Young - Indonesia
- Commonwealth Bank - Australia
- Asmin Koalindo Tuhup - Indonesia
- Petron Corporation, Philippines
- Therma Luzon, Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Pendopo Energi Batubara - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Vedanta Resources Plc - India
- Chamber of Mines of South Africa
- Planning Commission, India
- Oldendorff Carriers - Singapore
- Deloitte Consulting - India
- Bhatia International Limited - India
- White Energy Company Limited
- Africa Commodities Group - South Africa
- Siam City Cement - Thailand
- Australian Coal Association
- Toyota Tsusho Corporation, Japan
- New Zealand Coal & Carbon
- Makarim & Taira - Indonesia
- The State Trading Corporation of India Ltd
- Maharashtra Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- Bangladesh Power Developement Board
- Goldman Sachs - Singapore
- Uttam Galva Steels Limited - India
- Australian Commodity Traders Exchange
- Bhushan Steel Limited - India
- Sindya Power Generating Company Private Ltd
- Power Finance Corporation Ltd., India
- European Bulk Services B.V. - Netherlands
- Cement Manufacturers Association - India
- Straits Asia Resources Limited - Singapore
- Rashtriya Ispat Nigam Limited - India
- Economic Council, Georgia
- Xindia Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Anglo American - United Kingdom
- Altura Mining Limited, Indonesia
- Savvy Resources Ltd - HongKong
- Samtan Co., Ltd - South Korea
- CIMB Investment Bank - Malaysia
- Karaikal Port Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Orica Mining Services - Indonesia
- Star Paper Mills Limited - India
- Jorong Barutama Greston.PT - Indonesia
- London Commodity Brokers - England
- Baramulti Group, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- GMR Energy Limited - India
- Gujarat Sidhee Cement - India
- Kepco SPC Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Rio Tinto Coal - Australia
- Madhucon Powers Ltd - India
- Dalmia Cement Bharat India
- Barasentosa Lestari - Indonesia
- Videocon Industries ltd - India
- The University of Queensland
- Meralco Power Generation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- SMC Global Power, Philippines
- Maheswari Brothers Coal Limited - India
- Thai Mozambique Logistica
- SN Aboitiz Power Inc, Philippines
- Ministry of Transport, Egypt
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- MS Steel International - UAE
- Georgia Ports Authority, United States
- Vizag Seaport Private Limited - India
- Thiess Contractors Indonesia
- Central Java Power - Indonesia
- PowerSource Philippines DevCo
- Tamil Nadu electricity Board
- Bhoruka Overseas - Indonesia
- CNBM International Corporation - China
- Coal and Oil Company - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Holcim Trading Pte Ltd - Singapore
- ICICI Bank Limited - India
- Medco Energi Mining Internasional
- Indogreen Group - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Indian Oil Corporation Limited
- Standard Chartered Bank - UAE
- Meenaskhi Energy Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Eastern Coal Council - USA
- Sakthi Sugars Limited - India
- Lanco Infratech Ltd - India
- Merrill Lynch Commodities Europe
- Krishnapatnam Port Company Ltd. - India
- Sojitz Corporation - Japan
- Energy Link Ltd, New Zealand
- Carbofer General Trading SA - India
- Parry Sugars Refinery, India
- Renaissance Capital - South Africa
- Manunggal Multi Energi - Indonesia
- Eastern Energy - Thailand
- TeaM Sual Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Mintek Dendrill Indonesia
- Ambuja Cements Ltd - India
- IHS Mccloskey Coal Group - USA
- Attock Cement Pakistan Limited
- Coastal Gujarat Power Limited - India
- Sical Logistics Limited - India
- Grasim Industreis Ltd - India
- Electricity Generating Authority of Thailand
|
| |
| |
|
