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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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Tuesday, 07 August 12
2ND ANNUAL FLOATING TERMINALS
Press Release - After a ground breaking and successful launch in 2011, the 2nd Annual Floating Terminals conferenceis back to address innovation, co ...
Tuesday, 07 August 12
KRISHNAPATNAM PORT HAS DISCHARGED 122,247 MTS OF COAL IN JUST 24 HRS
COALspot.com - Keeping with the tradition of the new records that are set at the Olympic Games 2012, Krishnapatnam Port has also achieved in setting ...
Tuesday, 07 August 12
THE JAKARTA POST EDITORIAL: REVISITING THE MINING LAW
The Jakarta post, one of the leading English news paper in Indonesia writes in its editorial today, what the domestic and foreign investors had drea ...
Tuesday, 07 August 12
BARAMULTI SET TO LIST ON BOURSE IN Q4 - JP
The Jakarta Post reported that, coal miner PT Baramulti Sukses Sarana is preparing to make its shares available to the public in the fourth quarter ...
Tuesday, 07 August 12
REALM RESOURCES COMPLETES STUDY ON ITS KATINGAN RIA COAL PROJECT
COALspot.com - Realm Resources Ltd. has announced that it has completed the Project Study for the Katingan Ria Project in Central Kalimantan, Indone ...
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- Goldman Sachs - Singapore
- GMR Energy Limited - India
- Gujarat Mineral Development Corp Ltd - India
- The Treasury - Australian Government
- Directorate General of MIneral and Coal - Indonesia
- Meralco Power Generation, Philippines
- Madhucon Powers Ltd - India
- Sakthi Sugars Limited - India
- Wilmar Investment Holdings
- Petron Corporation, Philippines
- Bangladesh Power Developement Board
- IEA Clean Coal Centre - UK
- Independent Power Producers Association of India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Singapore Mercantile Exchange
- PNOC Exploration Corporation - Philippines
- Aboitiz Power Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Mintek Dendrill Indonesia
- Bhushan Steel Limited - India
- Coalindo Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Metalloyd Limited - United Kingdom
- Bharathi Cement Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Africa Commodities Group - South Africa
- Larsen & Toubro Limited - India
- SMG Consultants - Indonesia
- Siam City Cement PLC, Thailand
- Oldendorff Carriers - Singapore
- Salva Resources Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- New Zealand Coal & Carbon
- South Luzon Thermal Energy Corporation
- Ceylon Electricity Board - Sri Lanka
- Global Business Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Georgia Ports Authority, United States
- Karbindo Abesyapradhi - Indoneisa
- Australian Commodity Traders Exchange
- Karaikal Port Pvt Ltd - India
- Latin American Coal - Colombia
- Global Coal Blending Company Limited - Australia
- CNBM International Corporation - China
- Edison Trading Spa - Italy
- Cigading International Bulk Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- OPG Power Generation Pvt Ltd - India
- PTC India Limited - India
- MS Steel International - UAE
- Australian Coal Association
- Indian Energy Exchange, India
- Bukit Makmur.PT - Indonesia
- Riau Bara Harum - Indonesia
- Economic Council, Georgia
- Kobexindo Tractors - Indoneisa
- Aditya Birla Group - India
- Bulk Trading Sa - Switzerland
- Antam Resourcindo - Indonesia
- Posco Energy - South Korea
- Intertek Mineral Services - Indonesia
- San Jose City I Power Corp, Philippines
- Central Electricity Authority - India
- TeaM Sual Corporation - Philippines
- Commonwealth Bank - Australia
- Parry Sugars Refinery, India
- Directorate Of Revenue Intelligence - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- White Energy Company Limited
- Marubeni Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Oil Corporation Limited
- Vedanta Resources Plc - India
- Standard Chartered Bank - UAE
- Coastal Gujarat Power Limited - India
- Parliament of New Zealand
- GVK Power & Infra Limited - India
- Orica Mining Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Heidelberg Cement - Germany
- The State Trading Corporation of India Ltd
- The University of Queensland
- Kartika Selabumi Mining - Indonesia
- Simpson Spence & Young - Indonesia
- Electricity Authority, New Zealand
- Ministry of Finance - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Electricity Generating Authority of Thailand
- Eastern Energy - Thailand
- Indonesian Coal Mining Association
- PowerSource Philippines DevCo
- Kumho Petrochemical, South Korea
- Planning Commission, India
- Trasteel International SA, Italy
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Transport, Egypt
- LBH Netherlands Bv - Netherlands
- Bhatia International Limited - India
- Ministry of Mines - Canada
- Minerals Council of Australia
- Sree Jayajothi Cements Limited - India
- Wood Mackenzie - Singapore
- CIMB Investment Bank - Malaysia
- McConnell Dowell - Australia
- Neyveli Lignite Corporation Ltd, - India
- Carbofer General Trading SA - India
- Siam City Cement - Thailand
- Rashtriya Ispat Nigam Limited - India
- Iligan Light & Power Inc, Philippines
- Altura Mining Limited, Indonesia
- Binh Thuan Hamico - Vietnam
- Makarim & Taira - Indonesia
- Timah Investasi Mineral - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Dalmia Cement Bharat India
- Globalindo Alam Lestari - Indonesia
- Sojitz Corporation - Japan
- Ind-Barath Power Infra Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Pendopo Energi Batubara - Indonesia
- Semirara Mining Corp, Philippines
- Tata Chemicals Ltd - India
- Central Java Power - Indonesia
- Malabar Cements Ltd - India
- Merrill Lynch Commodities Europe
- Deloitte Consulting - India
- Sical Logistics Limited - India
- ICICI Bank Limited - India
- European Bulk Services B.V. - Netherlands
- Baramulti Group, Indonesia
- Port Waratah Coal Services - Australia
- Maharashtra Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Rio Tinto Coal - Australia
- Borneo Indobara - Indonesia
- Power Finance Corporation Ltd., India
- Vizag Seaport Private Limited - India
- Energy Link Ltd, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Romanian Commodities Exchange
- Gujarat Sidhee Cement - India
- Mjunction Services Limited - India
- Kideco Jaya Agung - Indonesia
- Semirara Mining and Power Corporation, Philippines
- SMC Global Power, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Ambuja Cements Ltd - India
- Medco Energi Mining Internasional
- Thai Mozambique Logistica
- Indika Energy - Indonesia
- Orica Australia Pty. Ltd.
- Xindia Steels Limited - India
- Toyota Tsusho Corporation, Japan
- India Bulls Power Limited - India
- Lanco Infratech Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Barasentosa Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Kepco SPC Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- London Commodity Brokers - England
- Sindya Power Generating Company Private Ltd
- Formosa Plastics Group - Taiwan
- Sarangani Energy Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Price Waterhouse Coopers - Russia
- Meenaskhi Energy Private Limited - India
- Grasim Industreis Ltd - India
- Agrawal Coal Company - India
- Indogreen Group - Indonesia
- Manunggal Multi Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- Coal and Oil Company - UAE
- Billiton Holdings Pty Ltd - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Savvy Resources Ltd - HongKong
- Tamil Nadu electricity Board
- Essar Steel Hazira Ltd - India
- Chettinad Cement Corporation Ltd - India
- Uttam Galva Steels Limited - India
- Renaissance Capital - South Africa
- GAC Shipping (India) Pvt Ltd
- Bhoruka Overseas - Indonesia
- Attock Cement Pakistan Limited
- Cement Manufacturers Association - India
- Global Green Power PLC Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Energy Development Corp, Philippines
- Eastern Coal Council - USA
- VISA Power Limited - India
- Mercuria Energy - Indonesia
- Thiess Contractors Indonesia
- Anglo American - United Kingdom
- Bayan Resources Tbk. - Indonesia
- Indo Tambangraya Megah - Indonesia
- Chamber of Mines of South Africa
- Kapuas Tunggal Persada - Indonesia
- Banpu Public Company Limited - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Bukit Baiduri Energy - Indonesia
- Videocon Industries ltd - India
- Star Paper Mills Limited - India
- Maheswari Brothers Coal Limited - India
- International Coal Ventures Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- ASAPP Information Group - India
- Mercator Lines Limited - India
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