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Saturday, 31 October 09
PRODUCERS BENEFIT FROM COAL'S TIGHT SUPPLY AND STRONG DEMAND
 The Jakarta Post reported that, The outlook for Indonesian coal producers appears promising with strong volume growth coming from both the domestic and export markets.
Despite the delayed completion of the 10,000 megawatts (MW) coal-fired steam power plant (PLTU) program, we expect to see additional electricity capacity starting in the fourth quarter of 2009. PLTU Labuan (2x300 MW) was scheduled to operate its first unit in September 2009 and the second unit by December 2009.
PLTU Rembang (2x315 MW) and Indramayu (2x330 MW) should start to operate by January 2010. As nine out of 10 projects in Java-Bali are now in their construction stages, there should be a total add-on capacity of 6,830 MW by the end of 2010. Six PLTU projects (total capacity162 MW) outside the Java-Bali region have already started the construction stage in the fourth quarter of this year with an additional 5 to follow suit.
The Government of Indonesia has finally approved the coal volume required for the domestic market obligation (DMO) at 75 million tons per year starting from 2010, 10.3 percent higher year-on-year from 68 million tons of domestic consumption estimated for 2009.
The volume set for the DMO would amount to 30 percent of the 2010 total estimate for coal production at 250 million tons or up 8.7 percent year-on-year from the 2009 estimate of 230 million tons (chart 1). PLN itself has signed 20-year coal supply contracts, effective once the PLTUs are operational, amounting to 30m tons per year of low-rank coal.
We foresee that the implementation of the DMO has limited the flexibility for coal producers to aggressively penetrate the export market. On top of that, the government has recently revealed its intention to apply a restriction on export quotas at 150 million tons per year starting from 2010.
The regulations would also require each coal producer to allocate 25 percent of their total coal production for the domestic market, or to face penalties in the form of restrictions on their exports.
We see, however, that this last regulation might not be necessary due to the anticipated increase in the volume of coal production going forward, exceeding the domestic demand requirements.
On a more positive note, the government seems willing to accommodate Indonesian coal producers' wishes for minor interventions in regulating the sales price for coal under the DMO provisions. The sales price will be with reference to the international market price to avoid high spreads between export and domestic pricing.
Based on the Newcastle Index, the year-to-date coal price has averaged US$70.7 per ton. Despite a downward trend since the fourth quarter of 2008, coal prices have been relatively steady throughout 2009.
We believe that the price of coal has found its new equilibrium at current levels, supported by stronger demand for higher energy needs mostly in the South East Asian region. Hence, we now expect the coal price to average US$75/t in 2010.
Government also plans to cut the royalty tax rate (DPHB) on low calorific value coal. The proposed DPHB rate is 9 percent for coal with CV<5,000kcal/kg (vis-*-vis 13.5 percent previously) and 7.5 percent for CV<4,500kcal/kg.
We see that upon implementation, lower royalty rates will mean incentives towards growth expectations in the sector.
Stronger domestic demand starting from 2010 paired with recovery of global demand will provide higher volume support for demand for both thermal and coking coal. In our view India will provide the highest growth in thermal coal demand, boosting imports by about 18% to 40m tons beginning this year, in line with the government's plan to double coal-fired electricity generation capacity by 2017.
Indonesia has also made preparations to start the 10,000 MW program phase II which is scheduled to start in 2012 and to operate by 2014.
We estimate coal-fired power plants will take around 48 percent from the total portion of 9,963 MW. Furthermore, coal supply may not grow at the same pace as demand due to export restrictions set on major coal exporters, such as Vietnam and China to secure their domestic needs.
Supported by the fact that the China government has decided to reduce its export quota by 50 percent from 40 million tons to 20 million tons.
As one of the world's major coal exporters, Indonesia will certainly have the upper hand in the tightening supply of coal.
Source:The Jakarta Post
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Friday, 27 November 09
BHP SEEKS VARIABLE COKING COAL PRICE IN JAPAN, NIKKEI SAYS
Bloomberg reproted that, BHP Billiton Ltd. has asked Japanese steelmakers to move to pricing of coking coal linked to spot rates rather than negotia ...
Friday, 27 November 09
EXXARO SEES HIGH COAL DEMAND RAISING PRICES
Reuters reported that, South African diversified miner Exxaro Resources said on Thursday it expected coal prices to rise to between $70 and $75 per ...
Friday, 27 November 09
CENTENNIAL SAYS ENERGY-COAL PRICE TO RISE AS CHINA SEEKS FUEL
Bloomberg reported that, Centennial Coal Co., an Australian producer of the fuel, said contract prices are expected to rise in 2010, with Chinese co ...
Friday, 27 November 09
IN FIRST-10-MONTH OF 2009 COAL IMPORTS IN GUANGXI-FANGCHENG EXCEEDED FULL-2008 IMPORTS
According to Customs statistics, during the January-October, Fangcheng port accumulatively imported 3.676mln tons valuing U.S.$370, rising by 53.8% ...
Thursday, 26 November 09
CHINA'S COAL IMPORTS TO RISE BY 170 PERCENT IN 2009
According to the statistics released by China's General Administration of Customs on November 23, China's coal imports for October totaled 11.1 mi ...
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- Directorate Of Revenue Intelligence - India
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- Port Waratah Coal Services - Australia
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- Australian Commodity Traders Exchange
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- Intertek Mineral Services - Indonesia
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- Sical Logistics Limited - India
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- Bank of Tokyo Mitsubishi UFJ Ltd
- Sarangani Energy Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
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- Xindia Steels Limited - India
- Formosa Plastics Group - Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Bahari Cakrawala Sebuku - Indonesia
- Renaissance Capital - South Africa
- McConnell Dowell - Australia
- Commonwealth Bank - Australia
- South Luzon Thermal Energy Corporation
- SMC Global Power, Philippines
- Ministry of Mines - Canada
- Sojitz Corporation - Japan
- Latin American Coal - Colombia
- San Jose City I Power Corp, Philippines
- London Commodity Brokers - England
- Merrill Lynch Commodities Europe
- Minerals Council of Australia
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- GAC Shipping (India) Pvt Ltd
- Billiton Holdings Pty Ltd - Australia
- Planning Commission, India
- SN Aboitiz Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- Standard Chartered Bank - UAE
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- Rashtriya Ispat Nigam Limited - India
- IHS Mccloskey Coal Group - USA
- Indonesian Coal Mining Association
- India Bulls Power Limited - India
- Semirara Mining and Power Corporation, Philippines
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thai Mozambique Logistica
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- Deloitte Consulting - India
- PNOC Exploration Corporation - Philippines
- Trasteel International SA, Italy
- Australian Coal Association
- MS Steel International - UAE
- OPG Power Generation Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Coal and Oil Company - UAE
- Interocean Group of Companies - India
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- Coalindo Energy - Indonesia
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- Electricity Authority, New Zealand
- Makarim & Taira - Indonesia
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- Bukit Makmur.PT - Indonesia
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- Sindya Power Generating Company Private Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indika Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Directorate General of MIneral and Coal - Indonesia
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- Vedanta Resources Plc - India
- Anglo American - United Kingdom
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- Cement Manufacturers Association - India
- IEA Clean Coal Centre - UK
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- Bayan Resources Tbk. - Indonesia
- Gujarat Sidhee Cement - India
- European Bulk Services B.V. - Netherlands
- Gujarat Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Global Business Power Corporation, Philippines
- Indian Energy Exchange, India
- Ministry of Finance - Indonesia
- Carbofer General Trading SA - India
- Riau Bara Harum - Indonesia
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- Wood Mackenzie - Singapore
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- White Energy Company Limited
- Power Finance Corporation Ltd., India
- Timah Investasi Mineral - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Bangladesh Power Developement Board
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- GVK Power & Infra Limited - India
- Banpu Public Company Limited - Thailand
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- Semirara Mining Corp, Philippines
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- Alfred C Toepfer International GmbH - Germany
- Uttam Galva Steels Limited - India
- Bhoruka Overseas - Indonesia
- Parliament of New Zealand
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
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