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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, 01 September 12
PANAMAX FREIGHT RATES UNDER PRESSURE FROM LOW DEMAND - VISTAAR
COALspot.com - This week the freight market was weak with mixed results.
The BDI was down by 1.95 pct closing at 703 points, however there was so ...
Friday, 31 August 12
ADVERSE SHIPPING MARKET CONDITIONS SHORTENS LIFE SPAN OF VESSELS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The adverse conditions which have been put in place in the world's freight markets, means that ship owners are forced to scrap vessels of a much yo ...
Thursday, 30 August 12
INDO-INDIA, LARGE ECO SUPRA NOW FIXED AT USD 7K FOR DELIVERY SINGAPORE - FEARNLEYS AS
Handy
The Supra market continued its negative trend with little fresh business entering the market. Continent positions fixed around USD 4k for tri ...
Thursday, 30 August 12
DRY BULK MARKET STILL LOOKING OUT FOR BETTER DAYS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With things in China moving slowly this week, as a result of holidays, it’s no surprise that the latest positive trend in the dry bulk market ...
Wednesday, 29 August 12
COLOMBIA'S MINING BOOM: PART TWO - JOSEPH KIRSCHKE
One of the most prominent casualties of Canada's entry into the Colombian mining sector has been a priest named Jose Reynal-Restrepo. Last Septembe ...
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- Jorong Barutama Greston.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- Uttam Galva Steels Limited - India
- SMC Global Power, Philippines
- Sakthi Sugars Limited - India
- Kideco Jaya Agung - Indonesia
- Binh Thuan Hamico - Vietnam
- Oldendorff Carriers - Singapore
- Gujarat Sidhee Cement - India
- Minerals Council of Australia
- The Treasury - Australian Government
- Asmin Koalindo Tuhup - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Central Electricity Authority - India
- Australian Coal Association
- Energy Link Ltd, New Zealand
- Kaltim Prima Coal - Indonesia
- Goldman Sachs - Singapore
- Coal and Oil Company - UAE
- Mjunction Services Limited - India
- Indonesian Coal Mining Association
- Bukit Baiduri Energy - Indonesia
- Madhucon Powers Ltd - India
- Directorate Of Revenue Intelligence - India
- Siam City Cement - Thailand
- Eastern Coal Council - USA
- White Energy Company Limited
- MS Steel International - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhushan Steel Limited - India
- Intertek Mineral Services - Indonesia
- LBH Netherlands Bv - Netherlands
- Savvy Resources Ltd - HongKong
- The State Trading Corporation of India Ltd
- Leighton Contractors Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Jindal Steel & Power Ltd - India
- Economic Council, Georgia
- Banpu Public Company Limited - Thailand
- Bukit Makmur.PT - Indonesia
- Aditya Birla Group - India
- PowerSource Philippines DevCo
- Globalindo Alam Lestari - Indonesia
- GVK Power & Infra Limited - India
- Electricity Generating Authority of Thailand
- Sical Logistics Limited - India
- Barasentosa Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Rio Tinto Coal - Australia
- Trasteel International SA, Italy
- Mercator Lines Limited - India
- Standard Chartered Bank - UAE
- Krishnapatnam Port Company Ltd. - India
- Carbofer General Trading SA - India
- Petrochimia International Co. Ltd.- Taiwan
- Commonwealth Bank - Australia
- Global Business Power Corporation, Philippines
- Central Java Power - Indonesia
- Africa Commodities Group - South Africa
- International Coal Ventures Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Sindya Power Generating Company Private Ltd
- Makarim & Taira - Indonesia
- Ambuja Cements Ltd - India
- Marubeni Corporation - India
- Ministry of Finance - Indonesia
- Vizag Seaport Private Limited - India
- India Bulls Power Limited - India
- Formosa Plastics Group - Taiwan
- New Zealand Coal & Carbon
- Mercuria Energy - Indonesia
- GMR Energy Limited - India
- Sojitz Corporation - Japan
- ASAPP Information Group - India
- London Commodity Brokers - England
- Chettinad Cement Corporation Ltd - India
- Medco Energi Mining Internasional
- Grasim Industreis Ltd - India
- CIMB Investment Bank - Malaysia
- European Bulk Services B.V. - Netherlands
- Indian Oil Corporation Limited
- Thai Mozambique Logistica
- Attock Cement Pakistan Limited
- Holcim Trading Pte Ltd - Singapore
- Renaissance Capital - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Tamil Nadu electricity Board
- Orica Mining Services - Indonesia
- VISA Power Limited - India
- Latin American Coal - Colombia
- Semirara Mining Corp, Philippines
- Romanian Commodities Exchange
- Star Paper Mills Limited - India
- Electricity Authority, New Zealand
- Metalloyd Limited - United Kingdom
- Coastal Gujarat Power Limited - India
- Bhatia International Limited - India
- Indogreen Group - Indonesia
- Eastern Energy - Thailand
- Samtan Co., Ltd - South Korea
- Meenaskhi Energy Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Interocean Group of Companies - India
- Power Finance Corporation Ltd., India
- Deloitte Consulting - India
- Global Green Power PLC Corporation, Philippines
- Parliament of New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Semirara Mining and Power Corporation, Philippines
- Ministry of Mines - Canada
- Salva Resources Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Bulk Trading Sa - Switzerland
- Bharathi Cement Corporation - India
- Vedanta Resources Plc - India
- IEA Clean Coal Centre - UK
- Singapore Mercantile Exchange
- Kalimantan Lumbung Energi - Indonesia
- Iligan Light & Power Inc, Philippines
- Altura Mining Limited, Indonesia
- ICICI Bank Limited - India
- Sarangani Energy Corporation, Philippines
- Cement Manufacturers Association - India
- Bangladesh Power Developement Board
- Borneo Indobara - Indonesia
- Antam Resourcindo - Indonesia
- Malabar Cements Ltd - India
- IHS Mccloskey Coal Group - USA
- Coalindo Energy - Indonesia
- Posco Energy - South Korea
- Videocon Industries ltd - India
- Kumho Petrochemical, South Korea
- OPG Power Generation Pvt Ltd - India
- Energy Development Corp, Philippines
- Mintek Dendrill Indonesia
- Wilmar Investment Holdings
- TeaM Sual Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- McConnell Dowell - Australia
- Anglo American - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Petron Corporation, Philippines
- Xindia Steels Limited - India
- Maheswari Brothers Coal Limited - India
- Alfred C Toepfer International GmbH - Germany
- Independent Power Producers Association of India
- Directorate General of MIneral and Coal - Indonesia
- Dalmia Cement Bharat India
- Cigading International Bulk Terminal - Indonesia
- Bhoruka Overseas - Indonesia
- Jaiprakash Power Ventures ltd
- Bayan Resources Tbk. - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sree Jayajothi Cements Limited - India
- Lanco Infratech Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Ministry of Transport, Egypt
- SN Aboitiz Power Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- PNOC Exploration Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Toyota Tsusho Corporation, Japan
- Ceylon Electricity Board - Sri Lanka
- Baramulti Group, Indonesia
- Therma Luzon, Inc, Philippines
- Parry Sugars Refinery, India
- Meralco Power Generation, Philippines
- Essar Steel Hazira Ltd - India
- Indian Energy Exchange, India
- Kapuas Tunggal Persada - Indonesia
- Tata Chemicals Ltd - India
- Karaikal Port Pvt Ltd - India
- SMG Consultants - Indonesia
- Ind-Barath Power Infra Limited - India
- Australian Commodity Traders Exchange
- Global Coal Blending Company Limited - Australia
- Neyveli Lignite Corporation Ltd, - India
- Sinarmas Energy and Mining - Indonesia
- Port Waratah Coal Services - Australia
- Merrill Lynch Commodities Europe
- Agrawal Coal Company - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Larsen & Toubro Limited - India
- Wood Mackenzie - Singapore
- Price Waterhouse Coopers - Russia
- San Jose City I Power Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Riau Bara Harum - Indonesia
- CNBM International Corporation - China
- Georgia Ports Authority, United States
- Kepco SPC Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Gujarat Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thiess Contractors Indonesia
- Aboitiz Power Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Orica Australia Pty. Ltd.
- Indika Energy - Indonesia
- PTC India Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- GAC Shipping (India) Pvt Ltd
- Planning Commission, India
- Heidelberg Cement - Germany
- Chamber of Mines of South Africa
- Siam City Cement PLC, Thailand
- The University of Queensland
- Manunggal Multi Energi - Indonesia
- Edison Trading Spa - Italy
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