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.
|
|
Thursday, 14 January 10
INDONESIA POWER REDUCES COAL SUPPLY
PT Indonesia Power will reduce coal supplies from PT Tambang Batu Bara Bukit Asam to its Suralaya Power Plant. "The coal supply for the plant s ...
Thursday, 14 January 10
INDIANS RESUME S. AFRICA COAL BUYING AGAINST INDEX - REUTERS
Indian trade buyers have resumed buying of South African prompt coal cargoes after a two-month hiatus but are opting for index-linked pricing, hopin ...
Wednesday, 13 January 10
STEAMING COAL SUPPLY SPOT CONTRACT FOR TAEAN POWER PLANT
COALspot.com (South Korea): Korea Western Power Co., Ltd is looking for total 1.12 million tons of Bituminous Coal for TAEAN Power Plant.
Accord ...
Wednesday, 13 January 10
INDONESIA ISSUES COAL, METAL DECREE
Indonesia has issued a ministerial decree which requires metal and coal miners to set aside a certain amount of their production for domestic needs, ...
Wednesday, 13 January 10
RESTING TIME FOR INDONESIAN COAL LOADING VESSELS
COALspot.com (Indonesia): 11 - 15 vessels are waiting in anchorages of Muara Berau and Tanjung Pemancingan to load total about 700,000 – ...
|
|
|
Showing 6091 to 6095 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Grasim Industreis Ltd - India
- Savvy Resources Ltd - HongKong
- ICICI Bank Limited - India
- Tata Chemicals Ltd - India
- Mintek Dendrill Indonesia
- Standard Chartered Bank - UAE
- Indian Energy Exchange, India
- Sinarmas Energy and Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Australian Commodity Traders Exchange
- SN Aboitiz Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Romanian Commodities Exchange
- Latin American Coal - Colombia
- Binh Thuan Hamico - Vietnam
- Eastern Coal Council - USA
- Semirara Mining Corp, Philippines
- Orica Australia Pty. Ltd.
- Tamil Nadu electricity Board
- Africa Commodities Group - South Africa
- Manunggal Multi Energi - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Ministry of Transport, Egypt
- Meralco Power Generation, Philippines
- Kepco SPC Power Corporation, Philippines
- Siam City Cement - Thailand
- Iligan Light & Power Inc, Philippines
- CNBM International Corporation - China
- Ministry of Finance - Indonesia
- South Luzon Thermal Energy Corporation
- Planning Commission, India
- Asmin Koalindo Tuhup - Indonesia
- Mjunction Services Limited - India
- Directorate Of Revenue Intelligence - India
- Medco Energi Mining Internasional
- Ambuja Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- India Bulls Power Limited - India
- Sakthi Sugars Limited - India
- Cement Manufacturers Association - India
- Kartika Selabumi Mining - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aboitiz Power Corporation - Philippines
- Thiess Contractors Indonesia
- Banpu Public Company Limited - Thailand
- Timah Investasi Mineral - Indoneisa
- Sical Logistics Limited - India
- Kideco Jaya Agung - Indonesia
- GVK Power & Infra Limited - India
- Coastal Gujarat Power Limited - India
- San Jose City I Power Corp, Philippines
- Kumho Petrochemical, South Korea
- Gujarat Sidhee Cement - India
- Rio Tinto Coal - Australia
- Orica Mining Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- The University of Queensland
- Anglo American - United Kingdom
- New Zealand Coal & Carbon
- Indo Tambangraya Megah - Indonesia
- Renaissance Capital - South Africa
- Jindal Steel & Power Ltd - India
- Madhucon Powers Ltd - India
- Chettinad Cement Corporation Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- White Energy Company Limited
- Maheswari Brothers Coal Limited - India
- Economic Council, Georgia
- Siam City Cement PLC, Thailand
- Minerals Council of Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- TeaM Sual Corporation - Philippines
- Uttam Galva Steels Limited - India
- Baramulti Group, Indonesia
- Indian Oil Corporation Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Goldman Sachs - Singapore
- AsiaOL BioFuels Corp., Philippines
- Mercuria Energy - Indonesia
- Indika Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Central Electricity Authority - India
- Miang Besar Coal Terminal - Indonesia
- PowerSource Philippines DevCo
- Vizag Seaport Private Limited - India
- Riau Bara Harum - Indonesia
- Coalindo Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- CIMB Investment Bank - Malaysia
- Essar Steel Hazira Ltd - India
- Bukit Makmur.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Xindia Steels Limited - India
- Petron Corporation, Philippines
- Lanco Infratech Ltd - India
- Bhatia International Limited - India
- Intertek Mineral Services - Indonesia
- Sojitz Corporation - Japan
- Antam Resourcindo - Indonesia
- Bulk Trading Sa - Switzerland
- Star Paper Mills Limited - India
- Parry Sugars Refinery, India
- Energy Link Ltd, New Zealand
- Power Finance Corporation Ltd., India
- Therma Luzon, Inc, Philippines
- SMC Global Power, Philippines
- Toyota Tsusho Corporation, Japan
- Thai Mozambique Logistica
- Directorate General of MIneral and Coal - Indonesia
- McConnell Dowell - Australia
- Singapore Mercantile Exchange
- Meenaskhi Energy Private Limited - India
- Ceylon Electricity Board - Sri Lanka
- Energy Development Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Interocean Group of Companies - India
- MS Steel International - UAE
- Holcim Trading Pte Ltd - Singapore
- Semirara Mining and Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Straits Asia Resources Limited - Singapore
- Central Java Power - Indonesia
- Larsen & Toubro Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Wilmar Investment Holdings
- Altura Mining Limited, Indonesia
- Bharathi Cement Corporation - India
- Videocon Industries ltd - India
- LBH Netherlands Bv - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- Marubeni Corporation - India
- The Treasury - Australian Government
- Gujarat Mineral Development Corp Ltd - India
- Bhoruka Overseas - Indonesia
- Indonesian Coal Mining Association
- Heidelberg Cement - Germany
- Krishnapatnam Port Company Ltd. - India
- Ministry of Mines - Canada
- Maharashtra Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- The State Trading Corporation of India Ltd
- Globalindo Alam Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Agrawal Coal Company - India
- International Coal Ventures Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Commonwealth Bank - Australia
- OPG Power Generation Pvt Ltd - India
- Georgia Ports Authority, United States
- Samtan Co., Ltd - South Korea
- London Commodity Brokers - England
- GAC Shipping (India) Pvt Ltd
- Merrill Lynch Commodities Europe
- Global Coal Blending Company Limited - Australia
- GMR Energy Limited - India
- Posco Energy - South Korea
- Vedanta Resources Plc - India
- Wood Mackenzie - Singapore
- Coal and Oil Company - UAE
- Jaiprakash Power Ventures ltd
- Price Waterhouse Coopers - Russia
- Eastern Energy - Thailand
- Metalloyd Limited - United Kingdom
- IEA Clean Coal Centre - UK
- Australian Coal Association
- ASAPP Information Group - India
- Karbindo Abesyapradhi - Indoneisa
- Bhushan Steel Limited - India
- Gujarat Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Trasteel International SA, Italy
- Global Business Power Corporation, Philippines
- Deloitte Consulting - India
- Ind-Barath Power Infra Limited - India
- Sindya Power Generating Company Private Ltd
- Makarim & Taira - Indonesia
- Mercator Lines Limited - India
- Electricity Generating Authority of Thailand
- Rashtriya Ispat Nigam Limited - India
- Sree Jayajothi Cements Limited - India
- Oldendorff Carriers - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Bangladesh Power Developement Board
- Carbofer General Trading SA - India
- Indogreen Group - Indonesia
- SMG Consultants - Indonesia
- VISA Power Limited - India
- Electricity Authority, New Zealand
- Sarangani Energy Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Kobexindo Tractors - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Attock Cement Pakistan Limited
- Formosa Plastics Group - Taiwan
- Chamber of Mines of South Africa
- Bayan Resources Tbk. - Indonesia
- Simpson Spence & Young - Indonesia
- Kaltim Prima Coal - Indonesia
- Aditya Birla Group - India
- Kapuas Tunggal Persada - Indonesia
- Dalmia Cement Bharat India
- Barasentosa Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Independent Power Producers Association of India
- PTC India Limited - India
- Parliament of New Zealand
- Malabar Cements Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Borneo Indobara - Indonesia
- Salva Resources Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- PNOC Exploration Corporation - Philippines
|
| |
| |
|
