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Sunday, 16 January 11
STANCHART GLOBAL RESEARCH SEES COAL PRICE RISING ON SUPPLY DISRUPTION - BURSA MALAYSIA MARKET NEWS
 Bursa Malaysia Market News reported that, Standard Chartered Global Research has upgraded its 2011 forecasts for global thermal coal prices based on tighter-than-expected fundamentals but uncertainties loom in China, Indonesia and Australia.
It said on Saturday, Jan 15 the impressive run in coal markets resembles 2008 but is unlikely to breach its previous high, adding that it was 'bullish short-term, but highlight the risk of setbacks in 2Q as seasonal demand fades'.
StanChart Research said it had on Nov 18, 2010 it had issued a report where it had forecast US$116 per tonne (t) for Newcastle coal, free-on-board (FOB) basis, based on a global deficit of 4.8 million tonnes (mt) before the full impact of floods in Australia, in terms of supply disruption, had been factored in.
'The floods, which initially started in September, escalated in December, and ongoing bad weather in Australia, Colombia and Indonesia has put pressure on global supply and we now believe there are significant downside risks to supply for 2011.
'We are therefore upgrading our full-year 2011 forecasts to US$114 per tonne, US$115 and US$126, respectively, for API4 FOB, API2 CIF and Newcastle FOB,' it said.
(The API 2 index is the international price benchmark for coal imported to northwestern Europe. The API 4 index is the international price benchmark for coal exported from the Richards Bay terminal in South Africa).
The research house said its upgrade was partly based on supply disruptions, but also on firm demand, mainly from India and South Korea.
It said it was bullish short-term as it did not expect weather-related disruption to ease any time soon, but it remained cautious about 2Q, when seasonal demand should fade.
Below is the research report issued by StanChart Global Research
Australian floods in the headlines
Output to stay below pre-flood levels for at least another three months. The worst floods in 50 years in Queensland, Australia, have dominated the headlines since they escalated in early December. They have prompted force majeure declarations from a number of producers.
The scale and duration of the floods was uncertain when they began in September, but continuous rains have brought exports to a complete halt in Queensland and global coal prices have soared as a result.
Coking coal prices surged first, but thermal coal prices are also benefiting from the knock-on effect as competition with higher-valued coking coal for railcar access has intensified.
In our view, Australian supplies face further downside risk as floods have washed away key rail and road links. A Reuters survey also showed that market analysts expect it to take at least three months for output to recover to pre-flood levels. We therefore expect Newcastle FOB prices to trade in the US$130-US$150 a tonne range in January and early February, before seasonal demand begins to fade in March.
Issues in Colombia and South Africa complicate matters: Bad weather also affects Colombia but the global impact is small Severe rains across Colombia, also attributed to the La Ni''a phenomenon, have caused damage to infrastructure that has slowed coal mining and transport.
The government meteorological bureau has forecast the rains to last until March, and possibly even until May. We therefore expect Colombia's export growth to be subdued this year.
South Africa could export more but with little effect on global balance South Africa is also experiencing heavy rainfall. To date, this has not had a direct impact on its exports, but the slowdown in rail transport has reduced stocks to very low levels in the Richards Bay Coal Terminal.
We believe South Africa can improve exports further, to the 65-70mt level, from 2010's 63.43mt, but this will not be enough to relieve pressure on the global demand-supply balance.
Indonesia is an important wild-card.
Dominates competitors in terms of supply growth ' weather is key.
While we expect more downside to Australian supply and we do not think Colombia and South Africa can cover the lost tonnage, Indonesia will be as important as Australia in driving the global supply and demand balance this year. Despite industry consultant McCloskey's expectation that 80mt of Indonesia's output will go to local markets in 2011, compared with 64mt last year, domestic market consumption does not overly concern us.
State electricity utility, Perusahaan Listrik Negara (PLN), plans to add 10,000 MW of capacity by 2013, but we expect delays. We are more concerned about the rains in Kalimantan, as exports have been below 20mt since September.
Annualised export figures for January-November 2010 totalled 276mt, significantly below McCloskey's forecast of 287.5mt. While exports are unlikely to reach McCloskey's estimate of 308.5mt in 2011, we think 10-15mt y/y growth in Indonesian exports is possible, which would be the highest level among international suppliers.
Asian demand has remained firm in recent months. India, Korea and Japan are picking up the slack from China.'' Preliminary data from the Central Electricity Authority of India showed December power generation holding firm at 57,331 GWH, up 1.4% m/m and 2.6% y/y, marking the second-highest reading in 2010.
This is on the back of continued capacity expansion. Elsewhere, Japan's November steam coal imports stood at 10.7mt, up 5.9% y/y; while South Korea's came in at 7.4mt, up 14.2% y/y. Utilities across Asia (except China) are reported to have sought alternative sources of coal because of the disruption in Australia. This has provided additional price support.
Too early to gauge China's 2011 demand picture.
Import demand should be robust, despite being uncertain. While prospects for demand in India, Korea and Japan are good, most market attention is focused on developments in China. From January to September 2010, monthly steam coal imports from China averaged 7.73mt. In October, these dropped to 6.4mt and rebounded to 7.6mt in November. We have long argued that China is a very opportunistic buyer and its imports are heavily influenced by the differential between domestic and international prices.
This relationship held throughout 2010 and we believe that it will continue to do so. Suppliers and Chinese buyers are currently reselling coal to other Asian buyers at a price of USD 142/t FOB, 5,800 kcal basis, taking advantage of the rare arbitrage window present.
With international prices supported by supply-side factors, such an arbitrage window could remain open (provided China has extra coal) for several weeks and Chinese imports are likely to remain muted near-term, in our view.
McCloskey has upgraded its previously low import estimates for China, and now expects 112mt of imports for 2011. We think this figure is likely to be subject to substantial revision as the year goes on, as it is still early into 2011 and, more importantly, trade requirements hinge on local production and relative pricing.
However, a high level (100mt plus) of Chinese imports is likely to be a persistent feature of global thermal coal trade, given China's substantial energy requirements.
Summary
Tighter fundamentals warrant higher prices, but 2Q setback expected With supply disruptions occurring in almost every major exporting country, and a number of Asian buyers reportedly looking for prompt replacement tonnage, fundamentals have clearly tightened since November 2010. Near-term, risks are biased towards the upside as further supply losses would spark another rally.
That said, we highlight the risk of a setback in Q2-2011 as seasonal demand fades.
With weather in Indonesia still unpredictable, flood effects possibly unwinding in 2H2011, and prospects in China unclear, 2011 is likely to be a volatile year.
A repeat of 2008? We think it is unlikely.
It is tempting to compare the recent price rally with the impressive run we saw in 2008. We think there are similarities, but there is unlikely to be a repeat, and prices will probably not break the highs reached in mid-2008. As we have discussed, Chinese import demand is still uncertain, as is Indonesian supply.
Assuming more normal weather patterns, supply should be able to normalise in 2H2011, bringing prices down to USD 120-130/t for Newcastle on an FOB basis.
Another important point is the potential substitution effect, if global steam coal prices continue to rally. Newcastle FOB prices rallied about 34% in Q4-2010, while crude and natural gas prices were relatively contained, with a 12% increase during the same period. With coal being the outperformer within the energy complex, we have a much wider scope for substitution that could contain coal price rallies.
Source: Bursa My News
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Wednesday, 26 January 11
DRY BULK MARKET TAKES YET ANOTHER NOSEDIVE, CAPESIZES LOOK RATHER UNATTRACTIVE AT THE MOMENT - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The downturn of the dry bulk market sees no boundariers, disproving even those who thought that at least for the capesize market, the worst had pass ...
Tuesday, 25 January 11
DRY BULK RATES CONTINUED TO TUMBLE LAST WEEK - BRS
With weather-related problems affecting the short-term outlook, and new building deliveries the longer-term picture, dry bulk rates continued to tum ...
Tuesday, 25 January 11
R-POWER TO INVEST $5BN IN INDONESIA - THE TIMES OF INDIA
The Times of India reported that, In what is being seen as one of the largest foreign investments in Indonesia, Reliance Power will infuse $5 billio ...
Monday, 24 January 11
GOVT PROMISES COAL FOR PLN DESPITE PRICE SPIKES - THE JAKARTA POST
The Jakarta Post reported that, the government says state electricity company PT PLN will receive enough coal to fire its power plants, despite pric ...
Monday, 24 January 11
DRY BULK MARKETS DOWNTURN SEES NO RELIEF - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has kept falling for yet another week, with the industry’s benchmark, the Baltic Dry Index (BDI) losing an additional 4.79 ...
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- Bukit Baiduri Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Heidelberg Cement - Germany
- Kartika Selabumi Mining - Indonesia
- Uttam Galva Steels Limited - India
- Directorate Of Revenue Intelligence - India
- Sical Logistics Limited - India
- Cement Manufacturers Association - India
- Makarim & Taira - Indonesia
- Dalmia Cement Bharat India
- Meenaskhi Energy Private Limited - India
- The Treasury - Australian Government
- European Bulk Services B.V. - Netherlands
- Sree Jayajothi Cements Limited - India
- Parry Sugars Refinery, India
- Attock Cement Pakistan Limited
- Ministry of Transport, Egypt
- Billiton Holdings Pty Ltd - Australia
- Kalimantan Lumbung Energi - Indonesia
- Georgia Ports Authority, United States
- Kobexindo Tractors - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Carbofer General Trading SA - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Generating Authority of Thailand
- Deloitte Consulting - India
- Petrochimia International Co. Ltd.- Taiwan
- Posco Energy - South Korea
- Ministry of Mines - Canada
- SMG Consultants - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Samtan Co., Ltd - South Korea
- Semirara Mining Corp, Philippines
- Videocon Industries ltd - India
- Central Electricity Authority - India
- Tata Chemicals Ltd - India
- Tamil Nadu electricity Board
- Edison Trading Spa - Italy
- IEA Clean Coal Centre - UK
- Mercator Lines Limited - India
- McConnell Dowell - Australia
- Australian Coal Association
- Banpu Public Company Limited - Thailand
- Star Paper Mills Limited - India
- Jaiprakash Power Ventures ltd
- Petron Corporation, Philippines
- Wood Mackenzie - Singapore
- Energy Link Ltd, New Zealand
- Sinarmas Energy and Mining - Indonesia
- Renaissance Capital - South Africa
- Bulk Trading Sa - Switzerland
- Sarangani Energy Corporation, Philippines
- Siam City Cement - Thailand
- Merrill Lynch Commodities Europe
- Lanco Infratech Ltd - India
- Riau Bara Harum - Indonesia
- Wilmar Investment Holdings
- AsiaOL BioFuels Corp., Philippines
- Borneo Indobara - Indonesia
- Sakthi Sugars Limited - India
- Miang Besar Coal Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Goldman Sachs - Singapore
- Global Green Power PLC Corporation, Philippines
- Electricity Authority, New Zealand
- Mjunction Services Limited - India
- Coastal Gujarat Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- CIMB Investment Bank - Malaysia
- Bharathi Cement Corporation - India
- MS Steel International - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Holcim Trading Pte Ltd - Singapore
- Planning Commission, India
- PetroVietnam Power Coal Import and Supply Company
- Thai Mozambique Logistica
- Indika Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Australian Commodity Traders Exchange
- Sojitz Corporation - Japan
- Metalloyd Limited - United Kingdom
- Savvy Resources Ltd - HongKong
- Parliament of New Zealand
- Sindya Power Generating Company Private Ltd
- Latin American Coal - Colombia
- Chettinad Cement Corporation Ltd - India
- Bangladesh Power Developement Board
- Thiess Contractors Indonesia
- Eastern Energy - Thailand
- PTC India Limited - India
- Formosa Plastics Group - Taiwan
- Kumho Petrochemical, South Korea
- Directorate General of MIneral and Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Simpson Spence & Young - Indonesia
- Vedanta Resources Plc - India
- Neyveli Lignite Corporation Ltd, - India
- Indogreen Group - Indonesia
- Global Coal Blending Company Limited - Australia
- Orica Australia Pty. Ltd.
- International Coal Ventures Pvt Ltd - India
- Standard Chartered Bank - UAE
- Gujarat Sidhee Cement - India
- Toyota Tsusho Corporation, Japan
- PowerSource Philippines DevCo
- Kohat Cement Company Ltd. - Pakistan
- GAC Shipping (India) Pvt Ltd
- Interocean Group of Companies - India
- Economic Council, Georgia
- VISA Power Limited - India
- Ministry of Finance - Indonesia
- Rio Tinto Coal - Australia
- Timah Investasi Mineral - Indoneisa
- Larsen & Toubro Limited - India
- Port Waratah Coal Services - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CNBM International Corporation - China
- Trasteel International SA, Italy
- Xindia Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- Madhucon Powers Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GMR Energy Limited - India
- IHS Mccloskey Coal Group - USA
- London Commodity Brokers - England
- SN Aboitiz Power Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Essar Steel Hazira Ltd - India
- Kaltim Prima Coal - Indonesia
- Price Waterhouse Coopers - Russia
- Oldendorff Carriers - Singapore
- Pendopo Energi Batubara - Indonesia
- Baramulti Group, Indonesia
- Singapore Mercantile Exchange
- Manunggal Multi Energi - Indonesia
- Meralco Power Generation, Philippines
- Iligan Light & Power Inc, Philippines
- Commonwealth Bank - Australia
- Antam Resourcindo - Indonesia
- Global Business Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- ASAPP Information Group - India
- Gujarat Mineral Development Corp Ltd - India
- ICICI Bank Limited - India
- Intertek Mineral Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Indian Oil Corporation Limited
- Bahari Cakrawala Sebuku - Indonesia
- Bhatia International Limited - India
- Coalindo Energy - Indonesia
- Marubeni Corporation - India
- Aboitiz Power Corporation - Philippines
- Central Java Power - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Ind-Barath Power Infra Limited - India
- GVK Power & Infra Limited - India
- Romanian Commodities Exchange
- New Zealand Coal & Carbon
- Bank of Tokyo Mitsubishi UFJ Ltd
- Altura Mining Limited, Indonesia
- Minerals Council of Australia
- Karaikal Port Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Coal and Oil Company - UAE
- Mintek Dendrill Indonesia
- Maheswari Brothers Coal Limited - India
- Independent Power Producers Association of India
- SMC Global Power, Philippines
- Bhushan Steel Limited - India
- Indonesian Coal Mining Association
- Aditya Birla Group - India
- Siam City Cement PLC, Thailand
- Alfred C Toepfer International GmbH - Germany
- White Energy Company Limited
- Malabar Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Therma Luzon, Inc, Philippines
- San Jose City I Power Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The State Trading Corporation of India Ltd
- OPG Power Generation Pvt Ltd - India
- Energy Development Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- India Bulls Power Limited - India
- Africa Commodities Group - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Orica Mining Services - Indonesia
- Anglo American - United Kingdom
- Salva Resources Pvt Ltd - India
- Grasim Industreis Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Agrawal Coal Company - India
- The University of Queensland
- Bukit Asam (Persero) Tbk - Indonesia
- Vizag Seaport Private Limited - India
- Jindal Steel & Power Ltd - India
- Bukit Makmur.PT - Indonesia
- TeaM Sual Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Rashtriya Ispat Nigam Limited - India
- South Luzon Thermal Energy Corporation
- Mercuria Energy - Indonesia
- Eastern Coal Council - USA
- Chamber of Mines of South Africa
- Ambuja Cements Ltd - India
- Indian Energy Exchange, India
- Medco Energi Mining Internasional
- Pipit Mutiara Jaya. PT, Indonesia
- Barasentosa Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Power Finance Corporation Ltd., India
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