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.
|
|
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 ...
Thursday, 26 November 09
CIL EYES OVERSEAS ACQUISITIONS TO BRIDGE SUPPLY GAP
Coal Minister Sriprakash Jaiswal on Wednesday said that state-run coal major Coal India is looking to acquire coal blocks in the US and
othe ...
|
|
|
Showing 6221 to 6225 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- IEA Clean Coal Centre - UK
- Vizag Seaport Private Limited - India
- PNOC Exploration Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Ministry of Mines - Canada
- Savvy Resources Ltd - HongKong
- Sical Logistics Limited - India
- Global Coal Blending Company Limited - Australia
- Barasentosa Lestari - Indonesia
- Indonesian Coal Mining Association
- Binh Thuan Hamico - Vietnam
- Maheswari Brothers Coal Limited - India
- Semirara Mining Corp, Philippines
- Madhucon Powers Ltd - India
- Tamil Nadu electricity Board
- New Zealand Coal & Carbon
- Romanian Commodities Exchange
- Parliament of New Zealand
- Petron Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- MS Steel International - UAE
- Electricity Generating Authority of Thailand
- Bukit Makmur.PT - Indonesia
- Larsen & Toubro Limited - India
- India Bulls Power Limited - India
- Rio Tinto Coal - Australia
- Meralco Power Generation, Philippines
- Aboitiz Power Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Ceylon Electricity Board - Sri Lanka
- Sojitz Corporation - Japan
- Grasim Industreis Ltd - India
- Baramulti Group, Indonesia
- Global Business Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Indian Energy Exchange, India
- Kapuas Tunggal Persada - Indonesia
- Ambuja Cements Ltd - India
- Uttam Galva Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- Parry Sugars Refinery, India
- London Commodity Brokers - England
- TNB Fuel Sdn Bhd - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Cement Manufacturers Association - India
- Ministry of Finance - Indonesia
- Kideco Jaya Agung - Indonesia
- Price Waterhouse Coopers - Russia
- IHS Mccloskey Coal Group - USA
- Malabar Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thai Mozambique Logistica
- Singapore Mercantile Exchange
- Port Waratah Coal Services - Australia
- Timah Investasi Mineral - Indoneisa
- Deloitte Consulting - India
- Oldendorff Carriers - Singapore
- Gujarat Sidhee Cement - India
- Bukit Baiduri Energy - Indonesia
- Orica Mining Services - Indonesia
- Riau Bara Harum - Indonesia
- Makarim & Taira - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Planning Commission, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chamber of Mines of South Africa
- Aditya Birla Group - India
- Chettinad Cement Corporation Ltd - India
- Orica Australia Pty. Ltd.
- Africa Commodities Group - South Africa
- Merrill Lynch Commodities Europe
- Vedanta Resources Plc - India
- Bahari Cakrawala Sebuku - Indonesia
- Karaikal Port Pvt Ltd - India
- McConnell Dowell - Australia
- Indian Oil Corporation Limited
- Lanco Infratech Ltd - India
- European Bulk Services B.V. - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Dalmia Cement Bharat India
- Thiess Contractors Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Directorate Of Revenue Intelligence - India
- PTC India Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kalimantan Lumbung Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Commonwealth Bank - Australia
- Vijayanagar Sugar Pvt Ltd - India
- SMC Global Power, Philippines
- Standard Chartered Bank - UAE
- Wilmar Investment Holdings
- Bhoruka Overseas - Indonesia
- Eastern Energy - Thailand
- Wood Mackenzie - Singapore
- LBH Netherlands Bv - Netherlands
- Kartika Selabumi Mining - Indonesia
- Essar Steel Hazira Ltd - India
- Kumho Petrochemical, South Korea
- Edison Trading Spa - Italy
- Power Finance Corporation Ltd., India
- SMG Consultants - Indonesia
- GMR Energy Limited - India
- Sinarmas Energy and Mining - Indonesia
- Intertek Mineral Services - Indonesia
- Energy Development Corp, Philippines
- Coalindo Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- San Jose City I Power Corp, Philippines
- Therma Luzon, Inc, Philippines
- Minerals Council of Australia
- Bulk Trading Sa - Switzerland
- Global Green Power PLC Corporation, Philippines
- The State Trading Corporation of India Ltd
- Mercator Lines Limited - India
- International Coal Ventures Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Maharashtra Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- PowerSource Philippines DevCo
- Coastal Gujarat Power Limited - India
- Attock Cement Pakistan Limited
- Jaiprakash Power Ventures ltd
- The University of Queensland
- Star Paper Mills Limited - India
- Semirara Mining and Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Sree Jayajothi Cements Limited - India
- Agrawal Coal Company - India
- Medco Energi Mining Internasional
- Indika Energy - Indonesia
- Altura Mining Limited, Indonesia
- Interocean Group of Companies - India
- Billiton Holdings Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Electricity Authority, New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Krishnapatnam Port Company Ltd. - India
- Bhushan Steel Limited - India
- Iligan Light & Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Samtan Co., Ltd - South Korea
- Sarangani Energy Corporation, Philippines
- Indogreen Group - Indonesia
- Toyota Tsusho Corporation, Japan
- Jindal Steel & Power Ltd - India
- ICICI Bank Limited - India
- The Treasury - Australian Government
- Indo Tambangraya Megah - Indonesia
- Simpson Spence & Young - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- GVK Power & Infra Limited - India
- Ministry of Transport, Egypt
- Straits Asia Resources Limited - Singapore
- Carbofer General Trading SA - India
- Tata Chemicals Ltd - India
- TeaM Sual Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Heidelberg Cement - Germany
- CNBM International Corporation - China
- Sindya Power Generating Company Private Ltd
- Asmin Koalindo Tuhup - Indonesia
- Renaissance Capital - South Africa
- Coal and Oil Company - UAE
- Central Electricity Authority - India
- Trasteel International SA, Italy
- Mintek Dendrill Indonesia
- Mercuria Energy - Indonesia
- Mjunction Services Limited - India
- Antam Resourcindo - Indonesia
- Latin American Coal - Colombia
- Bayan Resources Tbk. - Indonesia
- SN Aboitiz Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Bhatia International Limited - India
- Siam City Cement - Thailand
- Anglo American - United Kingdom
- Goldman Sachs - Singapore
- Metalloyd Limited - United Kingdom
- Sakthi Sugars Limited - India
- Australian Coal Association
- Manunggal Multi Energi - Indonesia
- Bangladesh Power Developement Board
- Georgia Ports Authority, United States
- ASAPP Information Group - India
- Jorong Barutama Greston.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Kaltim Prima Coal - Indonesia
- Independent Power Producers Association of India
- White Energy Company Limited
- Bharathi Cement Corporation - India
- Marubeni Corporation - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Coal Council - USA
- Globalindo Alam Lestari - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Xindia Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Formosa Plastics Group - Taiwan
- South Luzon Thermal Energy Corporation
- Ind-Barath Power Infra Limited - India
- Economic Council, Georgia
- CIMB Investment Bank - Malaysia
- Central Java Power - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- AsiaOL BioFuels Corp., Philippines
- Videocon Industries ltd - India
- Posco Energy - South Korea
- VISA Power Limited - India
|
| |
| |
|
