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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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Monday, 10 September 12
TNPL, AN INDIAN PAPER MAKER IS SEEKING FOR 300K MT OF IMPORTED NON-COKING COAL
COALspot.com - Tamil Nadu Newsprint & Papers Ltd. , an Indian paper maker, is seeking 300,000 metric tons ± 5% (In 6 Shipments about 50,0 ...
Monday, 10 September 12
DRY BULK MARKET SLOWLY BUT SURELY REACHING CRITICAL STATUS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The radical consequences of the shifts in dry bulk demand and prices, especially for the most sought after commodity, concerning the industry, i.e. ...
Monday, 10 September 12
ORPHEUS ENERGY SECURES INDONESIAN COAL TRADING LICENSE
COALspot.com - Indonesian coal producer, Orpheus Energy (ASX:OEG) has announced today that the Indonesian Ministry of Energy and Mineral Resources h ...
Monday, 10 September 12
A SNAPSHOT ON THE ECONOMIC AND SHIPPING ENVIRONMENT - GOLDEN DESTINY / HELLENIC SHIPPING
The European Central Bank left its interest rate unchanged at 0.75% focusing on pushing down borrowing costs in troubled economies, Spain and Italy. ...
Sunday, 09 September 12
H213 SUB-BIT FOB INDONESIA COAL SWAPS ARE TRADING HIGHER
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for October 2012 delivery lost 0.14 percent W-O-W on 7 September 2012, Friday closing but gained ...
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- Uttam Galva Steels Limited - India
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- Merrill Lynch Commodities Europe
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- European Bulk Services B.V. - Netherlands
- Borneo Indobara - Indonesia
- Kobexindo Tractors - Indoneisa
- Krishnapatnam Port Company Ltd. - India
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- GMR Energy Limited - India
- Parliament of New Zealand
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- New Zealand Coal & Carbon
- Medco Energi Mining Internasional
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- Romanian Commodities Exchange
- San Jose City I Power Corp, Philippines
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- The University of Queensland
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- Global Coal Blending Company Limited - Australia
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- Coal and Oil Company - UAE
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- Kepco SPC Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- White Energy Company Limited
- Miang Besar Coal Terminal - Indonesia
- Xindia Steels Limited - India
- Standard Chartered Bank - UAE
- Billiton Holdings Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- Thiess Contractors Indonesia
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- Central Electricity Authority - India
- Independent Power Producers Association of India
- London Commodity Brokers - England
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- Semirara Mining and Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Chettinad Cement Corporation Ltd - India
- IEA Clean Coal Centre - UK
- Meenaskhi Energy Private Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Price Waterhouse Coopers - Russia
- Salva Resources Pvt Ltd - India
- VISA Power Limited - India
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- Offshore Bulk Terminal Pte Ltd, Singapore
- ICICI Bank Limited - India
- Mercuria Energy - Indonesia
- Kumho Petrochemical, South Korea
- Mintek Dendrill Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- McConnell Dowell - Australia
- Cigading International Bulk Terminal - Indonesia
- Mercator Lines Limited - India
- Siam City Cement - Thailand
- Sarangani Energy Corporation, Philippines
- Ministry of Mines - Canada
- Parry Sugars Refinery, India
- Carbofer General Trading SA - India
- Eastern Coal Council - USA
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- Antam Resourcindo - Indonesia
- Electricity Authority, New Zealand
- Formosa Plastics Group - Taiwan
- Eastern Energy - Thailand
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- Trasteel International SA, Italy
- Electricity Generating Authority of Thailand
- Makarim & Taira - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Timah Investasi Mineral - Indoneisa
- Ministry of Transport, Egypt
- Grasim Industreis Ltd - India
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- Altura Mining Limited, Indonesia
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- Wilmar Investment Holdings
- Holcim Trading Pte Ltd - Singapore
- SN Aboitiz Power Inc, Philippines
- Central Java Power - Indonesia
- Rio Tinto Coal - Australia
- Commonwealth Bank - Australia
- Intertek Mineral Services - Indonesia
- Bhushan Steel Limited - India
- Planning Commission, India
- Anglo American - United Kingdom
- Alfred C Toepfer International GmbH - Germany
- Dalmia Cement Bharat India
- Malabar Cements Ltd - India
- Sical Logistics Limited - India
- Agrawal Coal Company - India
- Aditya Birla Group - India
- PowerSource Philippines DevCo
- Jindal Steel & Power Ltd - India
- Binh Thuan Hamico - Vietnam
- Bhoruka Overseas - Indonesia
- Marubeni Corporation - India
- Sindya Power Generating Company Private Ltd
- GVK Power & Infra Limited - India
- Bukit Makmur.PT - Indonesia
- Renaissance Capital - South Africa
- AsiaOL BioFuels Corp., Philippines
- SMG Consultants - Indonesia
- Africa Commodities Group - South Africa
- Latin American Coal - Colombia
- Economic Council, Georgia
- Lanco Infratech Ltd - India
- South Luzon Thermal Energy Corporation
- Meralco Power Generation, Philippines
- Chamber of Mines of South Africa
- Vedanta Resources Plc - India
- Orica Australia Pty. Ltd.
- Metalloyd Limited - United Kingdom
- PTC India Limited - India
- Maheswari Brothers Coal Limited - India
- Bangladesh Power Developement Board
- Bharathi Cement Corporation - India
- Power Finance Corporation Ltd., India
- Mjunction Services Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Cement Manufacturers Association - India
- Leighton Contractors Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- The Treasury - Australian Government
- TNB Fuel Sdn Bhd - Malaysia
- Heidelberg Cement - Germany
- Australian Coal Association
- SMC Global Power, Philippines
- Coalindo Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ind-Barath Power Infra Limited - India
- Interocean Group of Companies - India
- Ministry of Finance - Indonesia
- Banpu Public Company Limited - Thailand
- Indonesian Coal Mining Association
- Thai Mozambique Logistica
- PNOC Exploration Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Goldman Sachs - Singapore
- Minerals Council of Australia
- LBH Netherlands Bv - Netherlands
- Kaltim Prima Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Samtan Co., Ltd - South Korea
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- Siam City Cement PLC, Thailand
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- Sojitz Corporation - Japan
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- Wood Mackenzie - Singapore
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