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Wednesday, 13 June 12
LOW COAL PRICES COULD CHANGE SUPPLY SIDE DYNAMICS - FITCH RATINGS
 Fitch Ratings believes that the weakness seen in thermal coal prices in recent months should reverse once demand from major importers recovers, although there is a risk low prices may persist into 2013, changing the industry's supply side dynamics.
The price of thermal coal (5,500 kcal coal at Newcastle Australia on a free-on-board basis) reached a two-year low of USD87 per metric ton in early June 2012, down from USD142/mt in January 2011. Major reasons for this decline include China's economic slowdown and high coal inventory levels, increased production and exports from Indonesia and Australia, and increased exports by US coal producers due to cheap natural gas displacing coal used in US power generation.
Fitch believes that prices can recover from current lows once demand from key importers - China and India - improves, and the supply side adjusts to reflect the price environment. India depends on coal as its major energy source and is increasingly relying on imported coal as it struggles to increase domestic production. Likewise in China, thermal coal fired power represents more than 70% of the country's energy needs; Fitch believes thermal coal demand from China will lift again post sufficient policy easing by the government, and continue rising over the medium-to-long term in line with the country's strong GDP growth outlook, albeit lower than previous years.
The weak pricing environment is exposing the business risks of high-cost coal producers, as coal prices fall near or below the marginal cost of production. Many Australian producers have high cash costs of production; such operators will be significantly affected if prices remain low for an extended period. At the same time, sustained low coal prices can shift buyers from low-rank coal to higher-grade coals and thus negatively affect both demand and realized prices for low-rank coal.
Fitch notes that many large coal producers have contracts in place with both volumes and prices fixed, typically for a period of one year; such contracts can account for a meaningful share of their total revenues - for example around 65% for Adaro Indonesia ('BB+'/Stable) and around 45% PT Indika Energy ('B+'/Positive). These operators would be insulated from a temporary weakening of coal prices to some extent. However, should low prices persist through 2012 and into 2013, it will negatively affect the prices they negotiate for 2013; such negotiations typically take place in Q4 and Q1 of each calendar year.
Should the current low price environment persist into 2013, Fitch expects high-cost producers in Australia and the US to undertake production cuts, and review expansion projects under consideration. Fitch also believes that production expansion plans by low-cost producing countries like Indonesia may be curtailed. Such actions would limit coal production levels (or growth) and help address oversupply.
In rating companies producing commodities, like coal, Fitch takes a through-the-cycle approach to its ratings; this factors in a reasonable level of rating headroom to accommodate weakening of coal prices. Cash cost of production and cash margins over an industry cycle are given a heavy emphasis and factored into the ratings. Hence, Fitch does not expect any immediate negative rating actions on its rated coal producers in the Asia-Pacific region.
Source: Fitch Ratings
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Sunday, 09 December 12
LOW DEMAND PUSHES CHARTER RATES TOWARDS DOWN - VISTAAR
COALspot.com - The freight market has softened and BDI, The Baltic Dry Index, a measure of shipping costs for dry bulk goods, plunged below 10 ...
Friday, 07 December 12
A NEW PHASE FOR AUSTRALIAN RESOURCES - A FITCH STREET INTERVIEW
This week Matt Jamieson spoke with Andrew Colquhoun in Fitch's Asian sovereign rating team, and Vicky Melbourne, Fitch's commodity analyst based i ...
Friday, 07 December 12
SHIPPING INDUSTRY LOOKING ON YET ANOTHER TOUGH YEAR AS WE APPROACH 2013 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With shipping finance "on the ropes" as traditional lenders appear to be cutting their losses and tonnage oversupply still the most import ...
Thursday, 06 December 12
PANAMAX : THE POSITIVE VIBES IN THE ATLANTIC REMAINS - FEARNLEYS AS
Handy
The Atlantic market is still depressed with dearth of cargoes and more ships. The trips from Continent to Feast fixed around USD 12k. Trips f ...
Thursday, 06 December 12
STRONG CHINESE DEMAND FOR DRY BULK COMMODITIES EXPECTED FOR 2013 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
A new analysis from BIMCO released yesterday suggests that 2013 is expected to be a stronger year in terms of China's "hunger" for commod ...
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- Kumho Petrochemical, South Korea
- Mjunction Services Limited - India
- Global Coal Blending Company Limited - Australia
- Chettinad Cement Corporation Ltd - India
- OPG Power Generation Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Anglo American - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- LBH Netherlands Bv - Netherlands
- Ministry of Finance - Indonesia
- New Zealand Coal & Carbon
- Iligan Light & Power Inc, Philippines
- PTC India Limited - India
- Latin American Coal - Colombia
- Edison Trading Spa - Italy
- Semirara Mining Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Kaltim Prima Coal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bulk Trading Sa - Switzerland
- Kobexindo Tractors - Indoneisa
- Commonwealth Bank - Australia
- Carbofer General Trading SA - India
- Barasentosa Lestari - Indonesia
- Petron Corporation, Philippines
- Attock Cement Pakistan Limited
- SN Aboitiz Power Inc, Philippines
- Mercator Lines Limited - India
- Eastern Energy - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Mines - Canada
- Trasteel International SA, Italy
- Coalindo Energy - Indonesia
- Gujarat Sidhee Cement - India
- Holcim Trading Pte Ltd - Singapore
- Vizag Seaport Private Limited - India
- Krishnapatnam Port Company Ltd. - India
- Vijayanagar Sugar Pvt Ltd - India
- Parliament of New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Energy Link Ltd, New Zealand
- Jindal Steel & Power Ltd - India
- CNBM International Corporation - China
- Romanian Commodities Exchange
- Miang Besar Coal Terminal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- SMC Global Power, Philippines
- European Bulk Services B.V. - Netherlands
- Bangladesh Power Developement Board
- Dalmia Cement Bharat India
- Uttam Galva Steels Limited - India
- TeaM Sual Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Siam City Cement PLC, Thailand
- Vedanta Resources Plc - India
- Kartika Selabumi Mining - Indonesia
- Minerals Council of Australia
- Agrawal Coal Company - India
- Orica Mining Services - Indonesia
- London Commodity Brokers - England
- Xindia Steels Limited - India
- IEA Clean Coal Centre - UK
- Thiess Contractors Indonesia
- Alfred C Toepfer International GmbH - Germany
- Billiton Holdings Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Metalloyd Limited - United Kingdom
- Renaissance Capital - South Africa
- Chamber of Mines of South Africa
- Therma Luzon, Inc, Philippines
- McConnell Dowell - Australia
- PNOC Exploration Corporation - Philippines
- Ambuja Cements Ltd - India
- Karaikal Port Pvt Ltd - India
- Mintek Dendrill Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Oil Corporation Limited
- Ceylon Electricity Board - Sri Lanka
- Essar Steel Hazira Ltd - India
- Planning Commission, India
- The State Trading Corporation of India Ltd
- Grasim Industreis Ltd - India
- Orica Australia Pty. Ltd.
- Energy Development Corp, Philippines
- Samtan Co., Ltd - South Korea
- Simpson Spence & Young - Indonesia
- Deloitte Consulting - India
- MS Steel International - UAE
- ICICI Bank Limited - India
- Kideco Jaya Agung - Indonesia
- Bukit Baiduri Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Aboitiz Power Corporation - Philippines
- Goldman Sachs - Singapore
- Georgia Ports Authority, United States
- Sinarmas Energy and Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- GAC Shipping (India) Pvt Ltd
- Manunggal Multi Energi - Indonesia
- Madhucon Powers Ltd - India
- The Treasury - Australian Government
- Meralco Power Generation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- White Energy Company Limited
- Power Finance Corporation Ltd., India
- Port Waratah Coal Services - Australia
- Price Waterhouse Coopers - Russia
- Riau Bara Harum - Indonesia
- Wood Mackenzie - Singapore
- Videocon Industries ltd - India
- Parry Sugars Refinery, India
- Siam City Cement - Thailand
- Bharathi Cement Corporation - India
- Asmin Koalindo Tuhup - Indonesia
- Australian Coal Association
- IHS Mccloskey Coal Group - USA
- Sakthi Sugars Limited - India
- Altura Mining Limited, Indonesia
- Salva Resources Pvt Ltd - India
- PowerSource Philippines DevCo
- Mercuria Energy - Indonesia
- Wilmar Investment Holdings
- Oldendorff Carriers - Singapore
- Merrill Lynch Commodities Europe
- Bayan Resources Tbk. - Indonesia
- Indonesian Coal Mining Association
- Gujarat Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- Lanco Infratech Ltd - India
- Ministry of Transport, Egypt
- Rio Tinto Coal - Australia
- Kohat Cement Company Ltd. - Pakistan
- Malabar Cements Ltd - India
- Tata Chemicals Ltd - India
- Cement Manufacturers Association - India
- SMG Consultants - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Rashtriya Ispat Nigam Limited - India
- Independent Power Producers Association of India
- Binh Thuan Hamico - Vietnam
- Formosa Plastics Group - Taiwan
- Africa Commodities Group - South Africa
- Aditya Birla Group - India
- Gujarat Mineral Development Corp Ltd - India
- Posco Energy - South Korea
- South Luzon Thermal Energy Corporation
- Jaiprakash Power Ventures ltd
- Central Java Power - Indonesia
- Standard Chartered Bank - UAE
- Bhatia International Limited - India
- Meenaskhi Energy Private Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Indika Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Tamil Nadu electricity Board
- Bhushan Steel Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Larsen & Toubro Limited - India
- Singapore Mercantile Exchange
- Electricity Authority, New Zealand
- Directorate Of Revenue Intelligence - India
- Thai Mozambique Logistica
- Heidelberg Cement - Germany
- Electricity Generating Authority of Thailand
- Maheswari Brothers Coal Limited - India
- Makarim & Taira - Indonesia
- Coastal Gujarat Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Sical Logistics Limited - India
- Antam Resourcindo - Indonesia
- GVK Power & Infra Limited - India
- San Jose City I Power Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- ASAPP Information Group - India
- Eastern Coal Council - USA
- Star Paper Mills Limited - India
- Indogreen Group - Indonesia
- Australian Commodity Traders Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GMR Energy Limited - India
- Borneo Indobara - Indonesia
- Global Business Power Corporation, Philippines
- Central Electricity Authority - India
- Leighton Contractors Pty Ltd - Australia
- Sarangani Energy Corporation, Philippines
- Interocean Group of Companies - India
- Globalindo Alam Lestari - Indonesia
- Baramulti Group, Indonesia
- Pendopo Energi Batubara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- Indian Energy Exchange, India
- Economic Council, Georgia
- Directorate General of MIneral and Coal - Indonesia
- Marubeni Corporation - India
- Kapuas Tunggal Persada - Indonesia
- CIMB Investment Bank - Malaysia
- Bukit Makmur.PT - Indonesia
- Sojitz Corporation - Japan
- Savvy Resources Ltd - HongKong
- Coal and Oil Company - UAE
- VISA Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The University of Queensland
- Banpu Public Company Limited - Thailand
- Medco Energi Mining Internasional
- Sree Jayajothi Cements Limited - India
- Bhoruka Overseas - Indonesia
- Kepco SPC Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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