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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.
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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
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Saturday, 17 October 09
US COAL MINERS LOOKING AT LOWER PROFITS
Most US coal miners are looking at sharply lower third-quarter earnings, but those that produce coal for steelmaking and export should enjoy higher ...
Friday, 16 October 09
INDONESIA EXPORTED 19,194,857 MT OF COAL IN SEPTEMBER 2009 - SOURCES
COALspot.com (Indonesia): Indonesia exported 19,194,857 MT of coal in September 2009. Out of total exported quantity, South Korea imported abou ...
Friday, 16 October 09
NAVIGATING THROUGH STORMY WATERS
To Theodore E Veniamis, the President of the Union of Greek Shipowners, the current turmoil in world shipping is due to the cyclical nature of marit ...
Friday, 16 October 09
COAL INDIA RAISES PRICE BY 11%
Trak reported that, State-owned Coal India Ltd (CIL) has raised the price of coal produced by its subsidiaries by an average of 11 percent effective ...
Thursday, 15 October 09
SOUTH AFRICAN MINING COMPANY ACCEPTED $92 MILLION BID FOR COAL MINE STAKE IN SIYANDA COAL
Paguntaka reported that, Sentula Mining Ltd. gained in Johannesburg trading after the South African company accepted a 686 million-rand ($92 million ...
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Showing 6331 to 6335 news of total 6871 |
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- Bukit Asam (Persero) Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Oldendorff Carriers - Singapore
- LBH Netherlands Bv - Netherlands
- Wilmar Investment Holdings
- Global Coal Blending Company Limited - Australia
- The University of Queensland
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Edison Trading Spa - Italy
- Petrochimia International Co. Ltd.- Taiwan
- Billiton Holdings Pty Ltd - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Global Green Power PLC Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Posco Energy - South Korea
- Planning Commission, India
- Singapore Mercantile Exchange
- Ambuja Cements Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Heidelberg Cement - Germany
- Iligan Light & Power Inc, Philippines
- Altura Mining Limited, Indonesia
- GAC Shipping (India) Pvt Ltd
- Gujarat Mineral Development Corp Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Marubeni Corporation - India
- SN Aboitiz Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Borneo Indobara - Indonesia
- Sree Jayajothi Cements Limited - India
- Coal and Oil Company - UAE
- Meralco Power Generation, Philippines
- Interocean Group of Companies - India
- Jaiprakash Power Ventures ltd
- Kideco Jaya Agung - Indonesia
- MS Steel International - UAE
- White Energy Company Limited
- Alfred C Toepfer International GmbH - Germany
- Central Electricity Authority - India
- Savvy Resources Ltd - HongKong
- Bank of Tokyo Mitsubishi UFJ Ltd
- Xindia Steels Limited - India
- PowerSource Philippines DevCo
- CIMB Investment Bank - Malaysia
- Energy Link Ltd, New Zealand
- Karaikal Port Pvt Ltd - India
- Aditya Birla Group - India
- Sinarmas Energy and Mining - Indonesia
- Salva Resources Pvt Ltd - India
- Minerals Council of Australia
- Kalimantan Lumbung Energi - Indonesia
- Anglo American - United Kingdom
- GN Power Mariveles Coal Plant, Philippines
- Parry Sugars Refinery, India
- Madhucon Powers Ltd - India
- Metalloyd Limited - United Kingdom
- PTC India Limited - India
- Africa Commodities Group - South Africa
- Petron Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Ind-Barath Power Infra Limited - India
- Binh Thuan Hamico - Vietnam
- Essar Steel Hazira Ltd - India
- London Commodity Brokers - England
- TeaM Sual Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Coal Council - USA
- Global Business Power Corporation, Philippines
- Rio Tinto Coal - Australia
- OPG Power Generation Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Maheswari Brothers Coal Limited - India
- South Luzon Thermal Energy Corporation
- Uttam Galva Steels Limited - India
- New Zealand Coal & Carbon
- Vijayanagar Sugar Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Eastern Energy - Thailand
- Sakthi Sugars Limited - India
- Intertek Mineral Services - Indonesia
- Simpson Spence & Young - Indonesia
- Economic Council, Georgia
- Merrill Lynch Commodities Europe
- Videocon Industries ltd - India
- Pendopo Energi Batubara - Indonesia
- GMR Energy Limited - India
- AsiaOL BioFuels Corp., Philippines
- Attock Cement Pakistan Limited
- Bhushan Steel Limited - India
- Deloitte Consulting - India
- Larsen & Toubro Limited - India
- Electricity Generating Authority of Thailand
- Asmin Koalindo Tuhup - Indonesia
- Bangladesh Power Developement Board
- San Jose City I Power Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Manunggal Multi Energi - Indonesia
- ICICI Bank Limited - India
- Tamil Nadu electricity Board
- Orica Mining Services - Indonesia
- Dalmia Cement Bharat India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- India Bulls Power Limited - India
- Chamber of Mines of South Africa
- Riau Bara Harum - Indonesia
- Australian Coal Association
- Therma Luzon, Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Jindal Steel & Power Ltd - India
- Malabar Cements Ltd - India
- Independent Power Producers Association of India
- Goldman Sachs - Singapore
- Vedanta Resources Plc - India
- Bhoruka Overseas - Indonesia
- Ministry of Finance - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Indo Tambangraya Megah - Indonesia
- Globalindo Alam Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Energy Development Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Thiess Contractors Indonesia
- Indogreen Group - Indonesia
- Price Waterhouse Coopers - Russia
- Baramulti Group, Indonesia
- Banpu Public Company Limited - Thailand
- Georgia Ports Authority, United States
- Trasteel International SA, Italy
- PNOC Exploration Corporation - Philippines
- Central Java Power - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- VISA Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Kartika Selabumi Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Commonwealth Bank - Australia
- Indian Energy Exchange, India
- Standard Chartered Bank - UAE
- Parliament of New Zealand
- Kobexindo Tractors - Indoneisa
- Bharathi Cement Corporation - India
- The State Trading Corporation of India Ltd
- SMC Global Power, Philippines
- Bhatia International Limited - India
- Renaissance Capital - South Africa
- The Treasury - Australian Government
- Gujarat Sidhee Cement - India
- Krishnapatnam Port Company Ltd. - India
- Indian Oil Corporation Limited
- Kepco SPC Power Corporation, Philippines
- McConnell Dowell - Australia
- Indika Energy - Indonesia
- Latin American Coal - Colombia
- Ministry of Transport, Egypt
- Timah Investasi Mineral - Indoneisa
- Mintek Dendrill Indonesia
- Lanco Infratech Ltd - India
- Toyota Tsusho Corporation, Japan
- Gujarat Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Sical Logistics Limited - India
- ASAPP Information Group - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Carbofer General Trading SA - India
- Agrawal Coal Company - India
- Power Finance Corporation Ltd., India
- Coalindo Energy - Indonesia
- Wood Mackenzie - Singapore
- Kumho Petrochemical, South Korea
- Electricity Authority, New Zealand
- SMG Consultants - Indonesia
- Sojitz Corporation - Japan
- Siam City Cement - Thailand
- GVK Power & Infra Limited - India
- Mjunction Services Limited - India
- CNBM International Corporation - China
- Mercuria Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Barasentosa Lestari - Indonesia
- Indonesian Coal Mining Association
- Karbindo Abesyapradhi - Indoneisa
- Samtan Co., Ltd - South Korea
- Thai Mozambique Logistica
- Australian Commodity Traders Exchange
- Maharashtra Electricity Regulatory Commission - India
- Bukit Baiduri Energy - Indonesia
- Tata Chemicals Ltd - India
- Port Waratah Coal Services - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meenaskhi Energy Private Limited - India
- Vizag Seaport Private Limited - India
- Siam City Cement PLC, Thailand
- Grasim Industreis Ltd - India
- Makarim & Taira - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Orica Australia Pty. Ltd.
- Star Paper Mills Limited - India
- Romanian Commodities Exchange
- Cement Manufacturers Association - India
- Semirara Mining Corp, Philippines
- Mercator Lines Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- European Bulk Services B.V. - Netherlands
- Holcim Trading Pte Ltd - Singapore
- Medco Energi Mining Internasional
- Ministry of Mines - Canada
- Rashtriya Ispat Nigam Limited - India
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