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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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Friday, 03 August 12
INDIA - LIGHTS OUT! - SALVA
The Indian power sector hit global headlines this week for all the wrong reasons. Firstly, on Monday, over 350 million people lost power across nort ...
Thursday, 02 August 12
OIL & GAS COMPANIES TO MEET IN MYANMAR FOR UPDATES ON NEW ROUND OF BIDDING AND INVESTMENT POTENTIAL IN UPSTREAM OIL, GAS, AND POWER GENERATION
Press Release - 2nd MOGP Summit (Myanmar Oil, Gas & Power) will convene in Yangon from 3 – 6 September 2012, to unveil new round of biddin ...
Thursday, 02 August 12
DRY BULK MARKET RATES CONTINUE SLUMP AMID SLOWER DEMAND NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market kept on its downward path Wednesday, as the BDI (Baltic Dry Index) kept retreating to new lows. The index was down by 2.12 perce ...
Monday, 30 July 12
DRY BULK MARKET TO REMAIN UNDER PRESSURE FOR THE REST OF 2012 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
In an interview with Hellenic Shipping News Worldwide, Mr. Yannis Pachoulis, President of the Hellenic Shipbrokers' Association, remains cautiously ...
Sunday, 29 July 12
FREIGHT MARKET MOMENTUM CONTINUES TO WEAK
COALspot.com - The freight market continued to soft this week with all the segments dropped and the BDI fell below 1,000 points and closed at 933 po ...
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- Miang Besar Coal Terminal - Indonesia
- Coalindo Energy - Indonesia
- Coal and Oil Company - UAE
- CNBM International Corporation - China
- Meenaskhi Energy Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- Meralco Power Generation, Philippines
- Anglo American - United Kingdom
- The State Trading Corporation of India Ltd
- Toyota Tsusho Corporation, Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The University of Queensland
- Manunggal Multi Energi - Indonesia
- Romanian Commodities Exchange
- Uttam Galva Steels Limited - India
- Sindya Power Generating Company Private Ltd
- Central Electricity Authority - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Carbofer General Trading SA - India
- GAC Shipping (India) Pvt Ltd
- Kalimantan Lumbung Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Bhushan Steel Limited - India
- Coastal Gujarat Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Baramulti Group, Indonesia
- Australian Commodity Traders Exchange
- Electricity Authority, New Zealand
- Indogreen Group - Indonesia
- Lanco Infratech Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Global Business Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Medco Energi Mining Internasional
- Bhatia International Limited - India
- Petron Corporation, Philippines
- Posco Energy - South Korea
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- SMG Consultants - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Sical Logistics Limited - India
- The Treasury - Australian Government
- Mercator Lines Limited - India
- Ministry of Finance - Indonesia
- Energy Link Ltd, New Zealand
- Edison Trading Spa - Italy
- Antam Resourcindo - Indonesia
- SMC Global Power, Philippines
- Rio Tinto Coal - Australia
- Alfred C Toepfer International GmbH - Germany
- Sojitz Corporation - Japan
- Goldman Sachs - Singapore
- Jaiprakash Power Ventures ltd
- Ambuja Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kartika Selabumi Mining - Indonesia
- GMR Energy Limited - India
- Interocean Group of Companies - India
- Neyveli Lignite Corporation Ltd, - India
- IHS Mccloskey Coal Group - USA
- Globalindo Alam Lestari - Indonesia
- London Commodity Brokers - England
- Malabar Cements Ltd - India
- Aditya Birla Group - India
- Tamil Nadu electricity Board
- Economic Council, Georgia
- AsiaOL BioFuels Corp., Philippines
- Bukit Makmur.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Mintek Dendrill Indonesia
- MS Steel International - UAE
- Videocon Industries ltd - India
- Attock Cement Pakistan Limited
- Borneo Indobara - Indonesia
- Directorate Of Revenue Intelligence - India
- Bhoruka Overseas - Indonesia
- Commonwealth Bank - Australia
- PNOC Exploration Corporation - Philippines
- Indian Energy Exchange, India
- Kideco Jaya Agung - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- VISA Power Limited - India
- Binh Thuan Hamico - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Leighton Contractors Pty Ltd - Australia
- Indika Energy - Indonesia
- Parliament of New Zealand
- Therma Luzon, Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Savvy Resources Ltd - HongKong
- Larsen & Toubro Limited - India
- India Bulls Power Limited - India
- Intertek Mineral Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Thai Mozambique Logistica
- Global Coal Blending Company Limited - Australia
- International Coal Ventures Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Siam City Cement - Thailand
- Energy Development Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Standard Chartered Bank - UAE
- Mercuria Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Africa Commodities Group - South Africa
- Minerals Council of Australia
- Asmin Koalindo Tuhup - Indonesia
- Timah Investasi Mineral - Indoneisa
- Latin American Coal - Colombia
- PowerSource Philippines DevCo
- Wood Mackenzie - Singapore
- LBH Netherlands Bv - Netherlands
- Power Finance Corporation Ltd., India
- IEA Clean Coal Centre - UK
- Barasentosa Lestari - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Agrawal Coal Company - India
- Thiess Contractors Indonesia
- New Zealand Coal & Carbon
- Petrochimia International Co. Ltd.- Taiwan
- Simpson Spence & Young - Indonesia
- Bayan Resources Tbk. - Indonesia
- Tata Chemicals Ltd - India
- Kobexindo Tractors - Indoneisa
- Aboitiz Power Corporation - Philippines
- PTC India Limited - India
- Parry Sugars Refinery, India
- Pendopo Energi Batubara - Indonesia
- Chamber of Mines of South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Maheswari Brothers Coal Limited - India
- ASAPP Information Group - India
- Port Waratah Coal Services - Australia
- Ind-Barath Power Infra Limited - India
- Renaissance Capital - South Africa
- Gujarat Sidhee Cement - India
- Semirara Mining Corp, Philippines
- Star Paper Mills Limited - India
- Karaikal Port Pvt Ltd - India
- Bangladesh Power Developement Board
- Gujarat Mineral Development Corp Ltd - India
- SN Aboitiz Power Inc, Philippines
- White Energy Company Limited
- Electricity Generating Authority of Thailand
- Iligan Light & Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Merrill Lynch Commodities Europe
- Oldendorff Carriers - Singapore
- Wilmar Investment Holdings
- Madhucon Powers Ltd - India
- Vizag Seaport Private Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Vedanta Resources Plc - India
- Ministry of Transport, Egypt
- CIMB Investment Bank - Malaysia
- Bukit Baiduri Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Eastern Energy - Thailand
- Australian Coal Association
- Kumho Petrochemical, South Korea
- Planning Commission, India
- Straits Asia Resources Limited - Singapore
- Georgia Ports Authority, United States
- Trasteel International SA, Italy
- Salva Resources Pvt Ltd - India
- Sakthi Sugars Limited - India
- Eastern Coal Council - USA
- Makarim & Taira - Indonesia
- Cement Manufacturers Association - India
- Karbindo Abesyapradhi - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- Krishnapatnam Port Company Ltd. - India
- ICICI Bank Limited - India
- Grasim Industreis Ltd - India
- Global Green Power PLC Corporation, Philippines
- Independent Power Producers Association of India
- European Bulk Services B.V. - Netherlands
- Orica Mining Services - Indonesia
- Indonesian Coal Mining Association
- Siam City Cement PLC, Thailand
- Marubeni Corporation - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Dalmia Cement Bharat India
- Gujarat Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- GVK Power & Infra Limited - India
- Indian Oil Corporation Limited
- San Jose City I Power Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Heidelberg Cement - Germany
- Sarangani Energy Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Singapore Mercantile Exchange
- Sree Jayajothi Cements Limited - India
- Mjunction Services Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Orica Australia Pty. Ltd.
- Kepco SPC Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Mines - Canada
- Indo Tambangraya Megah - Indonesia
- McConnell Dowell - Australia
- Samtan Co., Ltd - South Korea
- Deloitte Consulting - India
- South Luzon Thermal Energy Corporation
- OPG Power Generation Pvt Ltd - India
- Central Java Power - Indonesia
- Essar Steel Hazira Ltd - India
- Riau Bara Harum - Indonesia
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