We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
Tuesday, 08 December 09
VOLATILE COAL PRICES SPUR ASIAN HEDGING
 Volatile coal prices are forcing staid Asian power firms to change the way they buy fuel, setting the scene for a hedging boom as a growing array of investment banks come forward to aid the firms' first forays into coal derivatives.
A big prize awaits banks such as Goldman Sachs, Morgan Stanley and JPMorgan if they can grab a share of this business, since the utilities account for about 60% of total seaborne steam coal trade of around 600 million tonnes.
Their participation could double the Asian coal derivatives market to some 400 million tonnes over the next two years, trade sources say, although there are hurdles to overcome before Asia can match Europe, where derivatives volumes exceed physical trade by several multiples.
"We're starting to see a crack in the armour among the Japanese utilities this year and there's now hedging demand out of the sector," Geoff Clear, Head of Commodities Trading at Australia & New Zealand Bank, told Reuters.
"The coal derivatives market in Asia is in a good space and is ready to take off."
Although the first over-the-counter coal trading deals were introduced to Asia about eight years ago through globalCOAL, North Asian buyers prefer to sign long-term contracts to guarantee low prices and to secure premium quality coal.
But sharp volatility in prices, which swung between USD 50 and USD 200 a tonne last year, means this decades-old method is bringing increased risk to buyers, who can sometimes be paying far more than prevailing spot rates.
Experience has also taught utilities that purchasing coal at a fixed price does not guarantee supplies, as miners have delayed shipments when the index rises above contract prices.
"We see the market changing. Many utilities that employed very traditional ways of buying coal are now open to new hedging instruments," said Patrick Markey, Chief Operating Officer of globalCOAL Singapore, an electronic trading platform.
This year, Japanese utilities have bought about 20% of their annual coal needs, or about 26 million tonnes, through index-linked contracts and the proportion is expected to rise to around 30% in 2010, producers and traders said.
For the first time, Korea Western Power Co is also planning to buy between 10% and 20% of its annual coal requirements of 12 million tonnes through index-linked contracts next year, a utility source said.
As Asian utilities are increasingly accepting of contracts linked directly to the Newcastle price index, globalCOAL's NEWC swaps become an obvious risk-management tool to reduce most of the worry around volatility.
The size of the global coal derivatives market is hard to gauge, but brokers said it has been growing rapidly, to 1.3 billion tonnes in 2006 from an estimated 750 million tonnes in 2004.
Around 2 billion tonnes of coal derivatives are expected to be traded globally in 2009, of which the globalCOAL Newcastle market accounts for about 10%, up from just five percent two years ago -- reflecting the rapid growth potential of the Asian derivatives market.
"We are waiting for the big entrance of Japanese and Korean utilities into the swaps market," said Clear. "Some of them are still weighing up their choices, but there is now a marked change in their attitudes."
Recent participation of some Japanese trading houses in the paper market was also a sign that utilities are now open to having some risk products embedded into their traditional bilateral contracts, he added.
Some industry observers said the coal trading joint venture set up by Japan's Chubu Electric and French power provider EDF in 2007, called Chubu Energy Trading (CET), may have first paved the way for change.
While some traditional coal users were dipping their toes cautiously into the market, CET took big strides. In just two years, the unit was buying about half of Chubu's 10 million tonnes of annual coal needs through the spot market -- and managed to stay profitable in a period of wild coal price swings
Other utilities to recently step up hedging include Japan's No. 1 utility, J-Power, which has added a former Barclays commodity trader to its hedging team, and South Korea's East-West Power Co Ltd, which is looking to partner LG Corp to set up a coal trading unit.
Challenges ahead
Despite expected growth in the Asian coal trading market, trade sources say it will take some time before liquidity in the Pacific coal market catches up with its European counterpart, where the value of derivative trading exceeds the underlying market by many multiples.
"The innate conservatism of the Japanese utilities is a stumbling block," said a senior trader at an investment bank.
"The middle management is all for it. They understand how it can reduce fuel costs but have a hard time convincing their bosses, who still hold the view that hedging will introduce another risk to the equation."
A full-scale deregulation of the power markets is also needed to drive Asian utilities to search for the lowest-cost fuel.
Despite having undergone a partial deregulation, utilities in Japan and South Korea still enjoy a large degree of regional monopoly, while Taiwan's power market is still state-owned. With the freedom to pass on any fuel cost rises to users, there is no strong impetus to hedge costs.
"Many Japanese utilities are hedging now because they want a fixed price for their coal as opposed to getting the lowest price," said a trader at one of the top Japanese utilities.
Other hurdles to overcome include the establishment of a widely accepted Indonesian market index, traders and buyers said.
Although globalCOAL and Argus provide a weekly average price for different grades of Indonesian coal, market players say there are too few trades to get an accurate view of prices.
"Considering how Indonesia is the world's largest thermal coal exporter, there's definitely a need for the index to mature and to have some sort of a forward curve before utilities can use that as a hedging tool," said a trader at an investment bank.
Source: Money Control
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Tuesday, 09 February 10
EURO COAL-PROMPT SLIDES WITH OIL PRICES
* April S.African cargo trades at $83.50/T FOB, unchanged
* April DES cargo trades at $74.75 a tonne, down $1/T
* Russia's Kuzbassrazrezugol sees ...
Monday, 08 February 10
BLACK RIDGE MINING APPOINTS INDEPENDENT CONSULTANT
Australian-listed Black Ridge Mining has announced the appointment of David Tuit as an independent consultant to assist with the assessment of the c ...
Monday, 08 February 10
SOUTH AFRICAN EXPORT COAL RISES FOR FIRST TIME IN FOUR WEEKS
Prices for coal shipped from South Africa’s Richards Bay, the continent’s biggest export facility for the fuel, posted their first gain ...
Monday, 08 February 10
NTPC HOPES TO START ON 500-MW PROJECT IN SRI LANKA BY FEB-END
NTPC sources told Business Standard, “All formalities from our government and NTPC have been completed.
The opinion of the Sri Lankan atto ...
Sunday, 07 February 10
AN AUSTRALIAN FIRM HAS SIGNED A $60BN DEAL TO SUPPLY COAL TO CHINESE POWER STATIONS
Clive Palmer, chairman of the company, Resourcehouse, said it was Australia's "biggest ever export contract".
Under the deal, the firm ...
|
|
|
Showing 6016 to 6020 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Miang Besar Coal Terminal - Indonesia
- Renaissance Capital - South Africa
- Intertek Mineral Services - Indonesia
- GVK Power & Infra Limited - India
- Heidelberg Cement - Germany
- Independent Power Producers Association of India
- Ministry of Transport, Egypt
- Bulk Trading Sa - Switzerland
- Sree Jayajothi Cements Limited - India
- International Coal Ventures Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Metalloyd Limited - United Kingdom
- Straits Asia Resources Limited - Singapore
- SN Aboitiz Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- McConnell Dowell - Australia
- Jorong Barutama Greston.PT - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Kohat Cement Company Ltd. - Pakistan
- Maheswari Brothers Coal Limited - India
- Riau Bara Harum - Indonesia
- Makarim & Taira - Indonesia
- SMC Global Power, Philippines
- Indonesian Coal Mining Association
- Ministry of Mines - Canada
- San Jose City I Power Corp, Philippines
- Mjunction Services Limited - India
- Attock Cement Pakistan Limited
- Kobexindo Tractors - Indoneisa
- Jindal Steel & Power Ltd - India
- Sindya Power Generating Company Private Ltd
- Interocean Group of Companies - India
- Binh Thuan Hamico - Vietnam
- Videocon Industries ltd - India
- Karaikal Port Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Romanian Commodities Exchange
- SMG Consultants - Indonesia
- Anglo American - United Kingdom
- Kartika Selabumi Mining - Indonesia
- Orica Mining Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- Malabar Cements Ltd - India
- Energy Link Ltd, New Zealand
- Directorate Of Revenue Intelligence - India
- Kalimantan Lumbung Energi - Indonesia
- Indian Oil Corporation Limited
- Iligan Light & Power Inc, Philippines
- Gujarat Sidhee Cement - India
- Petron Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Goldman Sachs - Singapore
- Star Paper Mills Limited - India
- Billiton Holdings Pty Ltd - Australia
- Tata Chemicals Ltd - India
- Sarangani Energy Corporation, Philippines
- Agrawal Coal Company - India
- Price Waterhouse Coopers - Russia
- Aboitiz Power Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- TeaM Sual Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Borneo Indobara - Indonesia
- Parry Sugars Refinery, India
- The Treasury - Australian Government
- Energy Development Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Oldendorff Carriers - Singapore
- Ambuja Cements Ltd - India
- Wilmar Investment Holdings
- Asmin Koalindo Tuhup - Indonesia
- MS Steel International - UAE
- Standard Chartered Bank - UAE
- Leighton Contractors Pty Ltd - Australia
- Aditya Birla Group - India
- Essar Steel Hazira Ltd - India
- Lanco Infratech Ltd - India
- Ministry of Finance - Indonesia
- Central Electricity Authority - India
- Deloitte Consulting - India
- Australian Commodity Traders Exchange
- IEA Clean Coal Centre - UK
- Central Java Power - Indonesia
- Indo Tambangraya Megah - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement PLC, Thailand
- Rio Tinto Coal - Australia
- Singapore Mercantile Exchange
- PNOC Exploration Corporation - Philippines
- Bhushan Steel Limited - India
- Grasim Industreis Ltd - India
- Minerals Council of Australia
- Jaiprakash Power Ventures ltd
- Economic Council, Georgia
- Altura Mining Limited, Indonesia
- European Bulk Services B.V. - Netherlands
- Indika Energy - Indonesia
- Indian Energy Exchange, India
- Medco Energi Mining Internasional
- Sical Logistics Limited - India
- Barasentosa Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- Salva Resources Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Krishnapatnam Port Company Ltd. - India
- Cigading International Bulk Terminal - Indonesia
- Power Finance Corporation Ltd., India
- ICICI Bank Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Sakthi Sugars Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mercuria Energy - Indonesia
- Sojitz Corporation - Japan
- Madhucon Powers Ltd - India
- Dalmia Cement Bharat India
- India Bulls Power Limited - India
- Xindia Steels Limited - India
- Cement Manufacturers Association - India
- Coalindo Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Meenaskhi Energy Private Limited - India
- GAC Shipping (India) Pvt Ltd
- Vedanta Resources Plc - India
- Mercator Lines Limited - India
- New Zealand Coal & Carbon
- Bangladesh Power Developement Board
- Ind-Barath Power Infra Limited - India
- Kaltim Prima Coal - Indonesia
- Meralco Power Generation, Philippines
- Siam City Cement - Thailand
- White Energy Company Limited
- Thai Mozambique Logistica
- Global Coal Blending Company Limited - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Chamber of Mines of South Africa
- Kideco Jaya Agung - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Bhoruka Overseas - Indonesia
- Africa Commodities Group - South Africa
- Formosa Plastics Group - Taiwan
- Wood Mackenzie - Singapore
- Samtan Co., Ltd - South Korea
- London Commodity Brokers - England
- Electricity Generating Authority of Thailand
- Carbofer General Trading SA - India
- South Luzon Thermal Energy Corporation
- Australian Coal Association
- Commonwealth Bank - Australia
- Gujarat Mineral Development Corp Ltd - India
- LBH Netherlands Bv - Netherlands
- Simpson Spence & Young - Indonesia
- Bharathi Cement Corporation - India
- Vizag Seaport Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Therma Luzon, Inc, Philippines
- ASAPP Information Group - India
- Rashtriya Ispat Nigam Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- CNBM International Corporation - China
- Larsen & Toubro Limited - India
- Banpu Public Company Limited - Thailand
- Edison Trading Spa - Italy
- Semirara Mining and Power Corporation, Philippines
- Marubeni Corporation - India
- Pendopo Energi Batubara - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Ceylon Electricity Board - Sri Lanka
- GN Power Mariveles Coal Plant, Philippines
- PetroVietnam Power Coal Import and Supply Company
- The University of Queensland
- PTC India Limited - India
- VISA Power Limited - India
- Antam Resourcindo - Indonesia
- Mintek Dendrill Indonesia
- Baramulti Group, Indonesia
- Latin American Coal - Colombia
- Orica Australia Pty. Ltd.
- Georgia Ports Authority, United States
- CIMB Investment Bank - Malaysia
- IHS Mccloskey Coal Group - USA
- GMR Energy Limited - India
- Parliament of New Zealand
- Manunggal Multi Energi - Indonesia
- Thiess Contractors Indonesia
- Global Business Power Corporation, Philippines
- Planning Commission, India
- Indogreen Group - Indonesia
- Toyota Tsusho Corporation, Japan
- Posco Energy - South Korea
- Global Green Power PLC Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Trasteel International SA, Italy
- Karbindo Abesyapradhi - Indoneisa
- Coal and Oil Company - UAE
- Tamil Nadu electricity Board
- Merrill Lynch Commodities Europe
- Eastern Energy - Thailand
- Semirara Mining Corp, Philippines
- Kumho Petrochemical, South Korea
- Alfred C Toepfer International GmbH - Germany
- The State Trading Corporation of India Ltd
- Savvy Resources Ltd - HongKong
- PowerSource Philippines DevCo
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Coal Council - USA
- Electricity Authority, New Zealand
- Bukit Makmur.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Bhatia International Limited - India
|
| |
| |
|
