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.
|
|
Saturday, 07 November 09
THE STEAM COAL MOVEMENT FROM INDONESIA TO INDIA REMAINED QUITE STRONG - CAPT. REDDY
COALspot.com (Singapore): The BDI continued rising this week and was up by 290 points up by almost 9 pct and the index closed at 3,393 points.
B ...
Friday, 06 November 09
COAL INDIA ABANDONS PLAN TO BUY ASSET IN AUSTRALIA
Coal India’s efforts to acquire a mid-sized virgin thermal coal block from a private party in Australia have drawn a blank.
The effort was ...
Friday, 06 November 09
NEW ASSETS WILL INCREASE COKING AND THERMAL COAL PRODUCTION
Coal and metals processing company Coal of Africa Limited (CoAL) aims to produce 10-million tons a year of coking coal and two-million tons a year o ...
Friday, 06 November 09
NTPC TO APPOINT MERCHANT BANKER FOR S AFRICA COAL MINE
State-run power producer NTPC, which is eyeing coal mines in South Africa to meet the gap in domestic fuel supply, will appoint a merchant banker ne ...
Thursday, 05 November 09
MERCATOR LINES AIMS TO BECOME A $5 BILLION COMPANY
Mercator Lines, India’s second largest private sector shipping line, plans to invest and expand, riding India’s next wave of growth, the ...
|
|
|
Showing 6266 to 6270 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Aditya Birla Group - India
- Videocon Industries ltd - India
- Mercuria Energy - Indonesia
- Africa Commodities Group - South Africa
- Posco Energy - South Korea
- TeaM Sual Corporation - Philippines
- PowerSource Philippines DevCo
- International Coal Ventures Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Planning Commission, India
- Semirara Mining and Power Corporation, Philippines
- Goldman Sachs - Singapore
- Carbofer General Trading SA - India
- Ministry of Transport, Egypt
- Xindia Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Sarangani Energy Corporation, Philippines
- Agrawal Coal Company - India
- Energy Development Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- GMR Energy Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Savvy Resources Ltd - HongKong
- Lanco Infratech Ltd - India
- Rio Tinto Coal - Australia
- Rashtriya Ispat Nigam Limited - India
- The University of Queensland
- AsiaOL BioFuels Corp., Philippines
- Bulk Trading Sa - Switzerland
- Malabar Cements Ltd - India
- The State Trading Corporation of India Ltd
- New Zealand Coal & Carbon
- Siam City Cement PLC, Thailand
- ICICI Bank Limited - India
- Energy Link Ltd, New Zealand
- Gujarat Sidhee Cement - India
- Grasim Industreis Ltd - India
- Siam City Cement - Thailand
- Manunggal Multi Energi - Indonesia
- Parry Sugars Refinery, India
- Metalloyd Limited - United Kingdom
- Minerals Council of Australia
- Neyveli Lignite Corporation Ltd, - India
- Kalimantan Lumbung Energi - Indonesia
- Toyota Tsusho Corporation, Japan
- Chamber of Mines of South Africa
- Directorate General of MIneral and Coal - Indonesia
- Indian Oil Corporation Limited
- Attock Cement Pakistan Limited
- Jaiprakash Power Ventures ltd
- Maheswari Brothers Coal Limited - India
- Bhatia International Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Madhucon Powers Ltd - India
- South Luzon Thermal Energy Corporation
- The Treasury - Australian Government
- Bangladesh Power Developement Board
- Holcim Trading Pte Ltd - Singapore
- Bhoruka Overseas - Indonesia
- Electricity Generating Authority of Thailand
- Romanian Commodities Exchange
- Altura Mining Limited, Indonesia
- Economic Council, Georgia
- Essar Steel Hazira Ltd - India
- Sree Jayajothi Cements Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Finance - Indonesia
- Electricity Authority, New Zealand
- Karaikal Port Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Leighton Contractors Pty Ltd - Australia
- Parliament of New Zealand
- Globalindo Alam Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Aboitiz Power Corporation - Philippines
- Independent Power Producers Association of India
- VISA Power Limited - India
- Global Coal Blending Company Limited - Australia
- GVK Power & Infra Limited - India
- Simpson Spence & Young - Indonesia
- Binh Thuan Hamico - Vietnam
- San Jose City I Power Corp, Philippines
- Wood Mackenzie - Singapore
- Global Business Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Makarim & Taira - Indonesia
- Kobexindo Tractors - Indoneisa
- Sojitz Corporation - Japan
- Baramulti Group, Indonesia
- Intertek Mineral Services - Indonesia
- Uttam Galva Steels Limited - India
- Larsen & Toubro Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- CNBM International Corporation - China
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maharashtra Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- Sindya Power Generating Company Private Ltd
- White Energy Company Limited
- Antam Resourcindo - Indonesia
- Therma Luzon, Inc, Philippines
- Thai Mozambique Logistica
- GAC Shipping (India) Pvt Ltd
- Kartika Selabumi Mining - Indonesia
- SMC Global Power, Philippines
- Pendopo Energi Batubara - Indonesia
- SMG Consultants - Indonesia
- Price Waterhouse Coopers - Russia
- Bahari Cakrawala Sebuku - Indonesia
- Coal and Oil Company - UAE
- Renaissance Capital - South Africa
- Ministry of Mines - Canada
- Orica Australia Pty. Ltd.
- IHS Mccloskey Coal Group - USA
- Riau Bara Harum - Indonesia
- India Bulls Power Limited - India
- Sakthi Sugars Limited - India
- Barasentosa Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Ambuja Cements Ltd - India
- Eastern Coal Council - USA
- Mintek Dendrill Indonesia
- Indika Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Sinarmas Energy and Mining - Indonesia
- Standard Chartered Bank - UAE
- Deloitte Consulting - India
- GN Power Mariveles Coal Plant, Philippines
- Port Waratah Coal Services - Australia
- Commonwealth Bank - Australia
- London Commodity Brokers - England
- Banpu Public Company Limited - Thailand
- Oldendorff Carriers - Singapore
- Ind-Barath Power Infra Limited - India
- Edison Trading Spa - Italy
- Eastern Energy - Thailand
- Australian Commodity Traders Exchange
- Indian Energy Exchange, India
- OPG Power Generation Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Coalindo Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Merrill Lynch Commodities Europe
- Indonesian Coal Mining Association
- LBH Netherlands Bv - Netherlands
- Mercator Lines Limited - India
- IEA Clean Coal Centre - UK
- Kideco Jaya Agung - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Star Paper Mills Limited - India
- Bhushan Steel Limited - India
- Global Green Power PLC Corporation, Philippines
- Meralco Power Generation, Philippines
- Tamil Nadu electricity Board
- Cement Manufacturers Association - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- ASAPP Information Group - India
- Salva Resources Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- PTC India Limited - India
- MS Steel International - UAE
- Heidelberg Cement - Germany
- Anglo American - United Kingdom
- Sical Logistics Limited - India
- Central Electricity Authority - India
- Interocean Group of Companies - India
- Kaltim Prima Coal - Indonesia
- Singapore Mercantile Exchange
- Central Java Power - Indonesia
- Jindal Steel & Power Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Samtan Co., Ltd - South Korea
- Indogreen Group - Indonesia
- Directorate Of Revenue Intelligence - India
- Kumho Petrochemical, South Korea
- Marubeni Corporation - India
- Vedanta Resources Plc - India
- PNOC Exploration Corporation - Philippines
- Orica Mining Services - Indonesia
- Georgia Ports Authority, United States
- Tata Chemicals Ltd - India
- Wilmar Investment Holdings
- Coastal Gujarat Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Dalmia Cement Bharat India
- Bukit Makmur.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Mjunction Services Limited - India
- Medco Energi Mining Internasional
- Asmin Koalindo Tuhup - Indonesia
- Vizag Seaport Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- McConnell Dowell - Australia
- Trasteel International SA, Italy
- Thiess Contractors Indonesia
- Australian Coal Association
- Kepco SPC Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Bayan Resources Tbk. - Indonesia
- European Bulk Services B.V. - Netherlands
- Borneo Indobara - Indonesia
- Bukit Baiduri Energy - Indonesia
- Latin American Coal - Colombia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Straits Asia Resources Limited - Singapore
- Semirara Mining Corp, Philippines
- Petron Corporation, Philippines
|
| |
| |
|
