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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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Thursday, 04 October 12
CAPESIZE : IN SPITE OF THE HOLIDAYS IN CHINA, RATES ARE CLIMBING UP - FEARNLEYS AS
Handy
Atlantic market remains quiet due to lack of cargoes and more supply of ships. Rates from Continent to east Med were around USD 13k and Black ...
Wednesday, 03 October 12
BARCLAYS'S PRICE FORECAST FOR NEWCASTLE COAL HAS BEEN WRITTEN DOWN
“ The main story in the global coal markets has been the growth in supply, with all of the major exporters adding volumes into a market which ...
Sunday, 30 September 12
SUB-BIT INDONESIA COAL SWAPS: MIXED TREND
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for November 2012 delivery lost 0.73 percent w-o-w but gained 0.41 percent d-o-d on Friday, 28 Se ...
Sunday, 30 September 12
INDONESIA HAS NO PLAN TO CAP COAL PRODUCTION
COALspot.com - “The current low coal prices were mainly due to a global oversupply condition, spurred by numerous mining exploitations in the ...
Sunday, 30 September 12
FREIGHT MARKET UNDER PRESSURE; OVERALL SENTIMENTS ARE STILL BEARISH
COALspot.com - The freight market seemed to have lost steam and all indices were down except for cape index.
The BDI was slightly down by 6 point ...
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- Port Waratah Coal Services - Australia
- Orica Mining Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Coalindo Energy - Indonesia
- Medco Energi Mining Internasional
- Edison Trading Spa - Italy
- Gujarat Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- Meralco Power Generation, Philippines
- Power Finance Corporation Ltd., India
- Borneo Indobara - Indonesia
- White Energy Company Limited
- Karbindo Abesyapradhi - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- McConnell Dowell - Australia
- Indogreen Group - Indonesia
- Thiess Contractors Indonesia
- Bangladesh Power Developement Board
- Tata Chemicals Ltd - India
- Electricity Authority, New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Jindal Steel & Power Ltd - India
- Ambuja Cements Ltd - India
- Barasentosa Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Petron Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Metalloyd Limited - United Kingdom
- Oldendorff Carriers - Singapore
- Singapore Mercantile Exchange
- GMR Energy Limited - India
- Orica Australia Pty. Ltd.
- Grasim Industreis Ltd - India
- Eastern Energy - Thailand
- Globalindo Alam Lestari - Indonesia
- Cement Manufacturers Association - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PTC India Limited - India
- Indian Energy Exchange, India
- Uttam Galva Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Aditya Birla Group - India
- Bulk Trading Sa - Switzerland
- Sindya Power Generating Company Private Ltd
- The State Trading Corporation of India Ltd
- IEA Clean Coal Centre - UK
- SMC Global Power, Philippines
- Merrill Lynch Commodities Europe
- Kideco Jaya Agung - Indonesia
- Carbofer General Trading SA - India
- Baramulti Group, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Star Paper Mills Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Videocon Industries ltd - India
- Interocean Group of Companies - India
- Bayan Resources Tbk. - Indonesia
- Gujarat Sidhee Cement - India
- Dalmia Cement Bharat India
- Simpson Spence & Young - Indonesia
- Indika Energy - Indonesia
- Altura Mining Limited, Indonesia
- International Coal Ventures Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Directorate General of MIneral and Coal - Indonesia
- Eastern Coal Council - USA
- Rio Tinto Coal - Australia
- Bukit Makmur.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- VISA Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Kaltim Prima Coal - Indonesia
- Savvy Resources Ltd - HongKong
- Kobexindo Tractors - Indoneisa
- Australian Commodity Traders Exchange
- Coal and Oil Company - UAE
- Romanian Commodities Exchange
- Sakthi Sugars Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Agrawal Coal Company - India
- Therma Luzon, Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Bhatia International Limited - India
- Aboitiz Power Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- India Bulls Power Limited - India
- Attock Cement Pakistan Limited
- ASAPP Information Group - India
- Indian Oil Corporation Limited
- Bhoruka Overseas - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Antam Resourcindo - Indonesia
- Chamber of Mines of South Africa
- Riau Bara Harum - Indonesia
- PNOC Exploration Corporation - Philippines
- Malabar Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- Energy Development Corp, Philippines
- Samtan Co., Ltd - South Korea
- Formosa Plastics Group - Taiwan
- Cigading International Bulk Terminal - Indonesia
- ICICI Bank Limited - India
- South Luzon Thermal Energy Corporation
- Bharathi Cement Corporation - India
- Parliament of New Zealand
- Intertek Mineral Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Commonwealth Bank - Australia
- SMG Consultants - Indonesia
- Indonesian Coal Mining Association
- Wood Mackenzie - Singapore
- Standard Chartered Bank - UAE
- Directorate Of Revenue Intelligence - India
- Jorong Barutama Greston.PT - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Economic Council, Georgia
- The University of Queensland
- Latin American Coal - Colombia
- Mintek Dendrill Indonesia
- Trasteel International SA, Italy
- Timah Investasi Mineral - Indoneisa
- Straits Asia Resources Limited - Singapore
- Africa Commodities Group - South Africa
- Iligan Light & Power Inc, Philippines
- Sical Logistics Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Price Waterhouse Coopers - Russia
- Sree Jayajothi Cements Limited - India
- Siam City Cement PLC, Thailand
- Posco Energy - South Korea
- Billiton Holdings Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- Essar Steel Hazira Ltd - India
- Georgia Ports Authority, United States
- Alfred C Toepfer International GmbH - Germany
- Mjunction Services Limited - India
- Wilmar Investment Holdings
- Holcim Trading Pte Ltd - Singapore
- Toyota Tsusho Corporation, Japan
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining Corp, Philippines
- Jaiprakash Power Ventures ltd
- Makarim & Taira - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kepco SPC Power Corporation, Philippines
- Ministry of Mines - Canada
- Global Green Power PLC Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Banpu Public Company Limited - Thailand
- Parry Sugars Refinery, India
- GVK Power & Infra Limited - India
- Deloitte Consulting - India
- Karaikal Port Pvt Ltd - India
- Goldman Sachs - Singapore
- Mercator Lines Limited - India
- Salva Resources Pvt Ltd - India
- CNBM International Corporation - China
- Larsen & Toubro Limited - India
- Anglo American - United Kingdom
- The Treasury - Australian Government
- MS Steel International - UAE
- Australian Coal Association
- Binh Thuan Hamico - Vietnam
- Planning Commission, India
- Tamil Nadu electricity Board
- Kumho Petrochemical, South Korea
- Sojitz Corporation - Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Chettinad Cement Corporation Ltd - India
- Ind-Barath Power Infra Limited - India
- CIMB Investment Bank - Malaysia
- Central Electricity Authority - India
- PowerSource Philippines DevCo
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bhushan Steel Limited - India
- Minerals Council of Australia
- San Jose City I Power Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- Kartika Selabumi Mining - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- London Commodity Brokers - England
- Marubeni Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Independent Power Producers Association of India
- Electricity Generating Authority of Thailand
- Central Java Power - Indonesia
- Global Business Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Lanco Infratech Ltd - India
- Ministry of Transport, Egypt
- Vizag Seaport Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Petrochimia International Co. Ltd.- Taiwan
- Renaissance Capital - South Africa
- Kapuas Tunggal Persada - Indonesia
- Bukit Baiduri Energy - Indonesia
- Heidelberg Cement - Germany
- Madhucon Powers Ltd - India
- Siam City Cement - Thailand
- Thai Mozambique Logistica
- Coastal Gujarat Power Limited - India
- New Zealand Coal & Carbon
- Ministry of Finance - Indonesia
- Vedanta Resources Plc - India
- Xindia Steels Limited - India
- Indo Tambangraya Megah - Indonesia
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