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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, 13 September 12
PANAMAX: THE NEGATIVE TREND, POOR SENTIMENT CONTINUES - FEARNLEYS AS
Handy
Lack of cargoes and a growing list of available ships is causing rates to slip for all Atlantic trades.
The only trade keeping somewhat s ...
Thursday, 13 September 12
FUEL EFFICIENT SHIPS MAY BE MORE EXPENSIVE, BUT THEY MAKE FINANCIAL SENSE SAYS ANALYSIS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The latest trend in shipbuilding is the so called "Eco" ship, i.e. ships which offer much better fuel consumption and are more cost-effect ...
Wednesday, 12 September 12
INDIAS COALGATE: TIME FOR A ROOT CANAL
A recent report from India’s Comptroller and Auditor General (CAG) pertaining to the allocation of coal blocks has created a political storm i ...
Tuesday, 11 September 12
CLOUDY AND POLICY RISK INDONESIAN COAL INDUSTRY
COALspot.com - Bahana Securities in its latest coal outlook, commented on the Indonesian coal market, with economic slowdown in the four largest coa ...
Tuesday, 11 September 12
SHIP OWNERS KEEN ON SECOND HAND VESSEL PURCHASES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With most ship owners back from their summer rest, things are starting to pick up again in the second hand vessel market, with more and more deals b ...
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- Africa Commodities Group - South Africa
- Thiess Contractors Indonesia
- Alfred C Toepfer International GmbH - Germany
- Intertek Mineral Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- European Bulk Services B.V. - Netherlands
- Indonesian Coal Mining Association
- Gujarat Electricity Regulatory Commission - India
- Wood Mackenzie - Singapore
- Uttam Galva Steels Limited - India
- Renaissance Capital - South Africa
- Merrill Lynch Commodities Europe
- Orica Mining Services - Indonesia
- Georgia Ports Authority, United States
- Indian Oil Corporation Limited
- GAC Shipping (India) Pvt Ltd
- Jorong Barutama Greston.PT - Indonesia
- Formosa Plastics Group - Taiwan
- Coalindo Energy - Indonesia
- Madhucon Powers Ltd - India
- Australian Commodity Traders Exchange
- Altura Mining Limited, Indonesia
- London Commodity Brokers - England
- PowerSource Philippines DevCo
- PTC India Limited - India
- Indo Tambangraya Megah - Indonesia
- ICICI Bank Limited - India
- Coal and Oil Company - UAE
- Trasteel International SA, Italy
- Goldman Sachs - Singapore
- LBH Netherlands Bv - Netherlands
- Bangladesh Power Developement Board
- Carbofer General Trading SA - India
- Medco Energi Mining Internasional
- Electricity Generating Authority of Thailand
- Tata Chemicals Ltd - India
- SMC Global Power, Philippines
- McConnell Dowell - Australia
- Star Paper Mills Limited - India
- Meralco Power Generation, Philippines
- Bukit Baiduri Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Cigading International Bulk Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Metalloyd Limited - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Larsen & Toubro Limited - India
- Pendopo Energi Batubara - Indonesia
- Oldendorff Carriers - Singapore
- Semirara Mining Corp, Philippines
- Indika Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Kepco SPC Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Mercator Lines Limited - India
- Therma Luzon, Inc, Philippines
- Iligan Light & Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Miang Besar Coal Terminal - Indonesia
- Sindya Power Generating Company Private Ltd
- Bhatia International Limited - India
- Bharathi Cement Corporation - India
- Global Business Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Global Green Power PLC Corporation, Philippines
- Romanian Commodities Exchange
- Karbindo Abesyapradhi - Indoneisa
- Mjunction Services Limited - India
- Coastal Gujarat Power Limited - India
- Posco Energy - South Korea
- CNBM International Corporation - China
- Sojitz Corporation - Japan
- Ind-Barath Power Infra Limited - India
- Siam City Cement - Thailand
- Kartika Selabumi Mining - Indonesia
- SMG Consultants - Indonesia
- Bukit Makmur.PT - Indonesia
- Energy Development Corp, Philippines
- Wilmar Investment Holdings
- PNOC Exploration Corporation - Philippines
- Power Finance Corporation Ltd., India
- Maheswari Brothers Coal Limited - India
- Krishnapatnam Port Company Ltd. - India
- Planning Commission, India
- Economic Council, Georgia
- AsiaOL BioFuels Corp., Philippines
- White Energy Company Limited
- The State Trading Corporation of India Ltd
- Baramulti Group, Indonesia
- Dalmia Cement Bharat India
- Australian Coal Association
- Jindal Steel & Power Ltd - India
- Manunggal Multi Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Salva Resources Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Sarangani Energy Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- GVK Power & Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- San Jose City I Power Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Port Waratah Coal Services - Australia
- Eastern Coal Council - USA
- GMR Energy Limited - India
- Ministry of Finance - Indonesia
- MS Steel International - UAE
- Malabar Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Bulk Trading Sa - Switzerland
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petron Corporation, Philippines
- Latin American Coal - Colombia
- Kaltim Prima Coal - Indonesia
- IEA Clean Coal Centre - UK
- CIMB Investment Bank - Malaysia
- Grasim Industreis Ltd - India
- Orica Australia Pty. Ltd.
- Marubeni Corporation - India
- SN Aboitiz Power Inc, Philippines
- Siam City Cement PLC, Thailand
- Bhoruka Overseas - Indonesia
- Minerals Council of Australia
- Sical Logistics Limited - India
- Ambuja Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Interocean Group of Companies - India
- New Zealand Coal & Carbon
- Edison Trading Spa - Italy
- Toyota Tsusho Corporation, Japan
- Holcim Trading Pte Ltd - Singapore
- Banpu Public Company Limited - Thailand
- Eastern Energy - Thailand
- Vedanta Resources Plc - India
- Ministry of Transport, Egypt
- GN Power Mariveles Coal Plant, Philippines
- Standard Chartered Bank - UAE
- Ministry of Mines - Canada
- Aboitiz Power Corporation - Philippines
- Gujarat Sidhee Cement - India
- TeaM Sual Corporation - Philippines
- Lanco Infratech Ltd - India
- Cement Manufacturers Association - India
- Meenaskhi Energy Private Limited - India
- South Luzon Thermal Energy Corporation
- Binh Thuan Hamico - Vietnam
- Barasentosa Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Agrawal Coal Company - India
- Globalindo Alam Lestari - Indonesia
- Makarim & Taira - Indonesia
- Mintek Dendrill Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Tamil Nadu electricity Board
- Independent Power Producers Association of India
- Karaikal Port Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Thai Mozambique Logistica
- Sakthi Sugars Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Xindia Steels Limited - India
- Commonwealth Bank - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Aditya Birla Group - India
- Bayan Resources Tbk. - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Vijayanagar Sugar Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Singapore Mercantile Exchange
- Heidelberg Cement - Germany
- Central Java Power - Indonesia
- The Treasury - Australian Government
- International Coal Ventures Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Central Electricity Authority - India
- Riau Bara Harum - Indonesia
- Vizag Seaport Private Limited - India
- Kumho Petrochemical, South Korea
- Electricity Authority, New Zealand
- Deloitte Consulting - India
- Savvy Resources Ltd - HongKong
- Semirara Mining and Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Indogreen Group - Indonesia
- Attock Cement Pakistan Limited
- Timah Investasi Mineral - Indoneisa
- Parliament of New Zealand
- Leighton Contractors Pty Ltd - Australia
- Essar Steel Hazira Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- ASAPP Information Group - India
- Straits Asia Resources Limited - Singapore
- Anglo American - United Kingdom
- Borneo Indobara - Indonesia
- Antam Resourcindo - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- VISA Power Limited - India
- Chamber of Mines of South Africa
- Videocon Industries ltd - India
- The University of Queensland
- Indian Energy Exchange, India
- India Bulls Power Limited - India
- Mercuria Energy - Indonesia
- Bhushan Steel Limited - India
- Parry Sugars Refinery, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rio Tinto Coal - Australia
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