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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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Friday, 28 September 12
DRY BULK SECOND HAND VESSELS ON HIGH DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Despite the demise of the dry bulk market and the collapse of freight rates since the beginning of 2012, on the back of record breaking newbuilding ...
Thursday, 27 September 12
MINING RE-COMMENCES AT ORPHEUS' B2 EAST KALIMANTAN COAL PROJECT
- B2 project overburden removal completed and coal exposed
- Coal getting has commenced with target production of 30,000tpm
- Orpheus to re ...
Thursday, 27 September 12
HANDY: THE PACIFIC MARKET IS GETTING WEAKER WITH UPCOMING GOLDEN WEEK HOLIDAYS - FEARNLEYS AS
Handy
Yet another week with rates softening in all trades. Especially owners with ships open Continent struggle to find employment paying decent mo ...
Thursday, 27 September 12
DRY BULK MARKET LOSES STEAM - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The rise of the BDI (Baltic Dry Index), the dry bulk industry’s benchmark during the course of the previous week, proved to be short-lived, as ...
Wednesday, 26 September 12
NEWBUILDING ORDERING ACTIVITY REMAINS SUBDUED ON GLOBAL MARKET UNCERTAINTY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Newbuilding ordering activity has been on the down side during the past few weeks, a trend also noticeable during the course of the past few days, a ...
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- London Commodity Brokers - England
- Simpson Spence & Young - Indonesia
- Port Waratah Coal Services - Australia
- India Bulls Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Gujarat Sidhee Cement - India
- Miang Besar Coal Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Mjunction Services Limited - India
- Cigading International Bulk Terminal - Indonesia
- Central Electricity Authority - India
- Carbofer General Trading SA - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sical Logistics Limited - India
- European Bulk Services B.V. - Netherlands
- Power Finance Corporation Ltd., India
- Kobexindo Tractors - Indoneisa
- PNOC Exploration Corporation - Philippines
- Global Business Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Merrill Lynch Commodities Europe
- Directorate General of MIneral and Coal - Indonesia
- ASAPP Information Group - India
- Ind-Barath Power Infra Limited - India
- Sakthi Sugars Limited - India
- Orica Mining Services - Indonesia
- Lanco Infratech Ltd - India
- Manunggal Multi Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Orica Australia Pty. Ltd.
- Gujarat Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- New Zealand Coal & Carbon
- Standard Chartered Bank - UAE
- Planning Commission, India
- PTC India Limited - India
- IHS Mccloskey Coal Group - USA
- Bahari Cakrawala Sebuku - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Banpu Public Company Limited - Thailand
- AsiaOL BioFuels Corp., Philippines
- Kohat Cement Company Ltd. - Pakistan
- Attock Cement Pakistan Limited
- Thai Mozambique Logistica
- Global Coal Blending Company Limited - Australia
- Economic Council, Georgia
- Rashtriya Ispat Nigam Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Essar Steel Hazira Ltd - India
- Singapore Mercantile Exchange
- Bharathi Cement Corporation - India
- Indian Energy Exchange, India
- Bhatia International Limited - India
- Electricity Authority, New Zealand
- Ambuja Cements Ltd - India
- Riau Bara Harum - Indonesia
- Petron Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Heidelberg Cement - Germany
- Makarim & Taira - Indonesia
- The University of Queensland
- Bukit Makmur.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- Thiess Contractors Indonesia
- Trasteel International SA, Italy
- Kideco Jaya Agung - Indonesia
- Siam City Cement PLC, Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Mercator Lines Limited - India
- South Luzon Thermal Energy Corporation
- Barasentosa Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Indika Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Anglo American - United Kingdom
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMC Global Power, Philippines
- Eastern Coal Council - USA
- Deloitte Consulting - India
- Sojitz Corporation - Japan
- Dalmia Cement Bharat India
- The State Trading Corporation of India Ltd
- GN Power Mariveles Coal Plant, Philippines
- San Jose City I Power Corp, Philippines
- Tamil Nadu electricity Board
- Independent Power Producers Association of India
- Rio Tinto Coal - Australia
- CIMB Investment Bank - Malaysia
- Edison Trading Spa - Italy
- Mintek Dendrill Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- McConnell Dowell - Australia
- GVK Power & Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- Energy Development Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Maheswari Brothers Coal Limited - India
- Bhoruka Overseas - Indonesia
- Marubeni Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- MS Steel International - UAE
- Australian Coal Association
- Salva Resources Pvt Ltd - India
- VISA Power Limited - India
- Straits Asia Resources Limited - Singapore
- The Treasury - Australian Government
- Coal and Oil Company - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Bhushan Steel Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Georgia Ports Authority, United States
- Borneo Indobara - Indonesia
- Savvy Resources Ltd - HongKong
- Minerals Council of Australia
- ICICI Bank Limited - India
- LBH Netherlands Bv - Netherlands
- Australian Commodity Traders Exchange
- Maharashtra Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Videocon Industries ltd - India
- Medco Energi Mining Internasional
- Africa Commodities Group - South Africa
- PowerSource Philippines DevCo
- Wood Mackenzie - Singapore
- Intertek Mineral Services - Indonesia
- Renaissance Capital - South Africa
- Larsen & Toubro Limited - India
- GAC Shipping (India) Pvt Ltd
- Bukit Baiduri Energy - Indonesia
- GMR Energy Limited - India
- Star Paper Mills Limited - India
- Jindal Steel & Power Ltd - India
- Parliament of New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Mines - Canada
- Metalloyd Limited - United Kingdom
- Ministry of Finance - Indonesia
- Posco Energy - South Korea
- Vizag Seaport Private Limited - India
- Aditya Birla Group - India
- Xindia Steels Limited - India
- Kumho Petrochemical, South Korea
- Altura Mining Limited, Indonesia
- Antam Resourcindo - Indonesia
- Kaltim Prima Coal - Indonesia
- Formosa Plastics Group - Taiwan
- Commonwealth Bank - Australia
- PetroVietnam Power Coal Import and Supply Company
- Central Java Power - Indonesia
- Karaikal Port Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Binh Thuan Hamico - Vietnam
- Electricity Generating Authority of Thailand
- IEA Clean Coal Centre - UK
- Aboitiz Power Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Indogreen Group - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement - Thailand
- Vedanta Resources Plc - India
- Asmin Koalindo Tuhup - Indonesia
- CNBM International Corporation - China
- Jaiprakash Power Ventures ltd
- Agrawal Coal Company - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Oil Corporation Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mercuria Energy - Indonesia
- Parry Sugars Refinery, India
- Therma Luzon, Inc, Philippines
- Wilmar Investment Holdings
- Meralco Power Generation, Philippines
- White Energy Company Limited
- Billiton Holdings Pty Ltd - Australia
- Madhucon Powers Ltd - India
- Price Waterhouse Coopers - Russia
- Malabar Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Ministry of Transport, Egypt
- Chamber of Mines of South Africa
- Latin American Coal - Colombia
- OPG Power Generation Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Cement Manufacturers Association - India
- Meenaskhi Energy Private Limited - India
- Energy Link Ltd, New Zealand
- Sarangani Energy Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMG Consultants - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Grasim Industreis Ltd - India
- Bangladesh Power Developement Board
- Eastern Energy - Thailand
- Sree Jayajothi Cements Limited - India
- Coastal Gujarat Power Limited - India
- Goldman Sachs - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Romanian Commodities Exchange
- Directorate Of Revenue Intelligence - India
- SN Aboitiz Power Inc, Philippines
- Coalindo Energy - Indonesia
- Tata Chemicals Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Baramulti Group, Indonesia
- Chettinad Cement Corporation Ltd - India
- Pendopo Energi Batubara - Indonesia
- Bulk Trading Sa - Switzerland
- Semirara Mining Corp, Philippines
- Indonesian Coal Mining Association
- Kepco SPC Power Corporation, Philippines
- Interocean Group of Companies - India
- Indo Tambangraya Megah - Indonesia
- Ceylon Electricity Board - Sri Lanka
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