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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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Saturday, 08 September 12
INDO INDIA ROUTE FREIGHT FOR SUPRAMAX REMAINS STRONG - CAPT. REDDY
COALspot.com - The freight market overall remained weak and except for cape index all other sectors were down. The biggest drop was in the Panamax s ...
Saturday, 08 September 12
RIO TINTO COMPLETES ACQUISITION OF BHP BILLITON'S INTERESTS IN RICHARDS BAY MINERALS
Rio Tinto has doubled its holding in Richards Bay Minerals (RBM) following the completion of its acquisition of BHP Billiton’s entire inte ...
Friday, 07 September 12
HBA GAINS $ 1.56 PER MT IN SEPTEMBER
COALspot.com - The Indonesian government’s declared coal reference price has gained US$ 1.56 per MT M-o-M. This is the first gain ...
Thursday, 06 September 12
SOME ANCHORED PANAMAX VESSELS WAITING FOR CARGOS TO COME
Handy
According to Fearnleys weekly report, in the smaller segments Fearnleys sees little to no changes since last week. There are still entering s ...
Thursday, 06 September 12
DRY BULK CARRIERS STILL IN HIGH DEMAND AMONG SHIP OWNERS, BUT NEWBUILDING ACTIVITY SLIDES IN AUGUST - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The slide of the dry bulk market this year hasn't abated ship owners' appetite for dry bulk carriers, as evidenced by the steady interest expresse ...
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- Bahari Cakrawala Sebuku - Indonesia
- India Bulls Power Limited - India
- Madhucon Powers Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Central Java Power - Indonesia
- Standard Chartered Bank - UAE
- AsiaOL BioFuels Corp., Philippines
- Miang Besar Coal Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- Thai Mozambique Logistica
- Coastal Gujarat Power Limited - India
- Australian Coal Association
- Makarim & Taira - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Independent Power Producers Association of India
- Mjunction Services Limited - India
- SN Aboitiz Power Inc, Philippines
- Australian Commodity Traders Exchange
- Global Green Power PLC Corporation, Philippines
- Bhushan Steel Limited - India
- Sree Jayajothi Cements Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Sakthi Sugars Limited - India
- Attock Cement Pakistan Limited
- San Jose City I Power Corp, Philippines
- Commonwealth Bank - Australia
- Neyveli Lignite Corporation Ltd, - India
- Asmin Koalindo Tuhup - Indonesia
- Posco Energy - South Korea
- Kepco SPC Power Corporation, Philippines
- Ministry of Mines - Canada
- The State Trading Corporation of India Ltd
- Merrill Lynch Commodities Europe
- Directorate General of MIneral and Coal - Indonesia
- CNBM International Corporation - China
- Indian Energy Exchange, India
- Bukit Baiduri Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Iligan Light & Power Inc, Philippines
- Mercator Lines Limited - India
- Vizag Seaport Private Limited - India
- Indian Oil Corporation Limited
- Kaltim Prima Coal - Indonesia
- Trasteel International SA, Italy
- Wilmar Investment Holdings
- Metalloyd Limited - United Kingdom
- Deloitte Consulting - India
- Altura Mining Limited, Indonesia
- Dalmia Cement Bharat India
- Toyota Tsusho Corporation, Japan
- Alfred C Toepfer International GmbH - Germany
- Tata Chemicals Ltd - India
- Jaiprakash Power Ventures ltd
- Energy Development Corp, Philippines
- Carbofer General Trading SA - India
- Ind-Barath Power Infra Limited - India
- Therma Luzon, Inc, Philippines
- Coal and Oil Company - UAE
- Cement Manufacturers Association - India
- PTC India Limited - India
- LBH Netherlands Bv - Netherlands
- Africa Commodities Group - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Mineral Development Corp Ltd - India
- Indonesian Coal Mining Association
- GVK Power & Infra Limited - India
- Coalindo Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Ceylon Electricity Board - Sri Lanka
- Gujarat Sidhee Cement - India
- Port Waratah Coal Services - Australia
- Indogreen Group - Indonesia
- The Treasury - Australian Government
- Star Paper Mills Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- White Energy Company Limited
- Interocean Group of Companies - India
- Pipit Mutiara Jaya. PT, Indonesia
- Semirara Mining Corp, Philippines
- Jindal Steel & Power Ltd - India
- Latin American Coal - Colombia
- TNB Fuel Sdn Bhd - Malaysia
- Videocon Industries ltd - India
- IEA Clean Coal Centre - UK
- Power Finance Corporation Ltd., India
- PowerSource Philippines DevCo
- GAC Shipping (India) Pvt Ltd
- Vedanta Resources Plc - India
- SMC Global Power, Philippines
- Georgia Ports Authority, United States
- Krishnapatnam Port Company Ltd. - India
- Karbindo Abesyapradhi - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Larsen & Toubro Limited - India
- Barasentosa Lestari - Indonesia
- McConnell Dowell - Australia
- Minerals Council of Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Marubeni Corporation - India
- OPG Power Generation Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Chamber of Mines of South Africa
- GMR Energy Limited - India
- Directorate Of Revenue Intelligence - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bayan Resources Tbk. - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Tamil Nadu electricity Board
- Wood Mackenzie - Singapore
- ICICI Bank Limited - India
- Riau Bara Harum - Indonesia
- Bangladesh Power Developement Board
- Binh Thuan Hamico - Vietnam
- Edison Trading Spa - Italy
- European Bulk Services B.V. - Netherlands
- Straits Asia Resources Limited - Singapore
- Mercuria Energy - Indonesia
- The University of Queensland
- Heidelberg Cement - Germany
- Agrawal Coal Company - India
- PNOC Exploration Corporation - Philippines
- Formosa Plastics Group - Taiwan
- ASAPP Information Group - India
- Eastern Coal Council - USA
- Uttam Galva Steels Limited - India
- Oldendorff Carriers - Singapore
- Bhatia International Limited - India
- Global Business Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Ministry of Finance - Indonesia
- Economic Council, Georgia
- Sojitz Corporation - Japan
- Sical Logistics Limited - India
- Pendopo Energi Batubara - Indonesia
- Planning Commission, India
- Eastern Energy - Thailand
- Energy Link Ltd, New Zealand
- Lanco Infratech Ltd - India
- Intertek Mineral Services - Indonesia
- Global Coal Blending Company Limited - Australia
- Electricity Authority, New Zealand
- VISA Power Limited - India
- Parry Sugars Refinery, India
- Sarangani Energy Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Grasim Industreis Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Meralco Power Generation, Philippines
- Rio Tinto Coal - Australia
- Goldman Sachs - Singapore
- Aboitiz Power Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Antam Resourcindo - Indonesia
- Indo Tambangraya Megah - Indonesia
- Borneo Indobara - Indonesia
- Savvy Resources Ltd - HongKong
- Bulk Trading Sa - Switzerland
- Maheswari Brothers Coal Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Mintek Dendrill Indonesia
- Meenaskhi Energy Private Limited - India
- Siam City Cement - Thailand
- Medco Energi Mining Internasional
- Simpson Spence & Young - Indonesia
- Electricity Generating Authority of Thailand
- Central Electricity Authority - India
- Romanian Commodities Exchange
- Kumho Petrochemical, South Korea
- London Commodity Brokers - England
- MS Steel International - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Price Waterhouse Coopers - Russia
- Gujarat Electricity Regulatory Commission - India
- Baramulti Group, Indonesia
- CIMB Investment Bank - Malaysia
- Xindia Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- Kobexindo Tractors - Indoneisa
- Orica Mining Services - Indonesia
- New Zealand Coal & Carbon
- Thiess Contractors Indonesia
- Globalindo Alam Lestari - Indonesia
- Parliament of New Zealand
- Ministry of Transport, Egypt
- Ambuja Cements Ltd - India
- Indika Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Karaikal Port Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- TeaM Sual Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Singapore Mercantile Exchange
- Aditya Birla Group - India
- PetroVietnam Power Coal Import and Supply Company
- Essar Steel Hazira Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Malabar Cements Ltd - India
- Renaissance Capital - South Africa
- Bhoruka Overseas - Indonesia
- Petron Corporation, Philippines
- Bharathi Cement Corporation - India
- Samtan Co., Ltd - South Korea
- Anglo American - United Kingdom
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMG Consultants - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Kohat Cement Company Ltd. - Pakistan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement PLC, Thailand
- Semirara Mining and Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Sindya Power Generating Company Private Ltd
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