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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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Wednesday, 18 July 12
SHIP PRICES HAVE FALLEN RAPIDLY THIS YEAR, FAVORING INVESTORS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The price for a 5 year old Capesize dry bulk carrier of 172,000 dwt has fallen to about $33,4mil from $42.9 at the end of June 2011, while at end of ...
Saturday, 14 July 12
FREIGHT MARKET SEEMS TO BE QUITE VOLATILE - VISTAAR
COALspot.com - The market seems to be quite volatile with the trend changing almost every week. This week all the segments were down except for Pana ...
Friday, 13 July 12
TRANSCOAL MINERGY HAS RECEIVED PMA STATUS IN INDONESIA
COALspot.com - PT Transcoal Minergy (“TCM”) has received official foreign owned company status from the Capital Investment Coordinating ...
Thursday, 12 July 12
LACK OF CAPESIZE DEMAND DRAGS DRY BULK MARKET LOWER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
A lack of demand for the larger Capesize dry bulk carriers had as a result the fall of the industry’s benchmark, the BDI (Baltic Dry Index), w ...
Thursday, 12 July 12
RIO TINTO'S SENIOR MANAGEMENT CHANGES
COALspot.com - Rio Tinto is making changes to its senior management team as chief financial officer (CFO) Guy Elliott has decided to retire at the e ...
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- Riau Bara Harum - Indonesia
- Meenaskhi Energy Private Limited - India
- Parliament of New Zealand
- Sical Logistics Limited - India
- Cement Manufacturers Association - India
- Billiton Holdings Pty Ltd - Australia
- Kalimantan Lumbung Energi - Indonesia
- Tamil Nadu electricity Board
- Goldman Sachs - Singapore
- Sakthi Sugars Limited - India
- The State Trading Corporation of India Ltd
- Oldendorff Carriers - Singapore
- Romanian Commodities Exchange
- Videocon Industries ltd - India
- McConnell Dowell - Australia
- Coalindo Energy - Indonesia
- New Zealand Coal & Carbon
- Semirara Mining Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Mines - Canada
- Cigading International Bulk Terminal - Indonesia
- Eastern Energy - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- MS Steel International - UAE
- Banpu Public Company Limited - Thailand
- Chettinad Cement Corporation Ltd - India
- ASAPP Information Group - India
- Altura Mining Limited, Indonesia
- Parry Sugars Refinery, India
- Leighton Contractors Pty Ltd - Australia
- Indian Energy Exchange, India
- Antam Resourcindo - Indonesia
- Standard Chartered Bank - UAE
- PetroVietnam Power Coal Import and Supply Company
- Binh Thuan Hamico - Vietnam
- Energy Development Corp, Philippines
- Dalmia Cement Bharat India
- Neyveli Lignite Corporation Ltd, - India
- Simpson Spence & Young - Indonesia
- CIMB Investment Bank - Malaysia
- Indika Energy - Indonesia
- Electricity Generating Authority of Thailand
- Renaissance Capital - South Africa
- Essar Steel Hazira Ltd - India
- Maheswari Brothers Coal Limited - India
- Iligan Light & Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Ceylon Electricity Board - Sri Lanka
- Agrawal Coal Company - India
- Savvy Resources Ltd - HongKong
- Coastal Gujarat Power Limited - India
- Madhucon Powers Ltd - India
- Meralco Power Generation, Philippines
- Sarangani Energy Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Anglo American - United Kingdom
- European Bulk Services B.V. - Netherlands
- Kumho Petrochemical, South Korea
- Electricity Authority, New Zealand
- Pendopo Energi Batubara - Indonesia
- Attock Cement Pakistan Limited
- The Treasury - Australian Government
- Thiess Contractors Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Economic Council, Georgia
- PowerSource Philippines DevCo
- Bahari Cakrawala Sebuku - Indonesia
- London Commodity Brokers - England
- Mercuria Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Malabar Cements Ltd - India
- Rio Tinto Coal - Australia
- Vizag Seaport Private Limited - India
- Bhushan Steel Limited - India
- Sinarmas Energy and Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Marubeni Corporation - India
- Grasim Industreis Ltd - India
- India Bulls Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Makarim & Taira - Indonesia
- Jindal Steel & Power Ltd - India
- Singapore Mercantile Exchange
- Global Business Power Corporation, Philippines
- Bangladesh Power Developement Board
- Chamber of Mines of South Africa
- Formosa Plastics Group - Taiwan
- Kobexindo Tractors - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wilmar Investment Holdings
- Latin American Coal - Colombia
- Sindya Power Generating Company Private Ltd
- Medco Energi Mining Internasional
- Samtan Co., Ltd - South Korea
- Vedanta Resources Plc - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Borneo Indobara - Indonesia
- CNBM International Corporation - China
- Lanco Infratech Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Indonesian Coal Mining Association
- Baramulti Group, Indonesia
- Straits Asia Resources Limited - Singapore
- Aboitiz Power Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- San Jose City I Power Corp, Philippines
- Merrill Lynch Commodities Europe
- Miang Besar Coal Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Indo Tambangraya Megah - Indonesia
- Sree Jayajothi Cements Limited - India
- Indian Oil Corporation Limited
- Jaiprakash Power Ventures ltd
- Rashtriya Ispat Nigam Limited - India
- Indogreen Group - Indonesia
- GAC Shipping (India) Pvt Ltd
- Orica Mining Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- Coal and Oil Company - UAE
- Africa Commodities Group - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Interocean Group of Companies - India
- Heidelberg Cement - Germany
- Jorong Barutama Greston.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Ambuja Cements Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Deloitte Consulting - India
- Edison Trading Spa - Italy
- The University of Queensland
- Independent Power Producers Association of India
- Star Paper Mills Limited - India
- Price Waterhouse Coopers - Russia
- Ministry of Transport, Egypt
- Gujarat Electricity Regulatory Commission - India
- Bhatia International Limited - India
- Energy Link Ltd, New Zealand
- IHS Mccloskey Coal Group - USA
- Karaikal Port Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Bhoruka Overseas - Indonesia
- GMR Energy Limited - India
- Larsen & Toubro Limited - India
- Ind-Barath Power Infra Limited - India
- Barasentosa Lestari - Indonesia
- Georgia Ports Authority, United States
- Eastern Coal Council - USA
- Port Waratah Coal Services - Australia
- International Coal Ventures Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Trasteel International SA, Italy
- Mintek Dendrill Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Thai Mozambique Logistica
- Bukit Asam (Persero) Tbk - Indonesia
- Petron Corporation, Philippines
- Sojitz Corporation - Japan
- Mercator Lines Limited - India
- Directorate Of Revenue Intelligence - India
- Uttam Galva Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMC Global Power, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Orica Australia Pty. Ltd.
- TNB Fuel Sdn Bhd - Malaysia
- Tata Chemicals Ltd - India
- Power Finance Corporation Ltd., India
- Global Coal Blending Company Limited - Australia
- Gujarat Mineral Development Corp Ltd - India
- Siam City Cement PLC, Thailand
- Posco Energy - South Korea
- Bukit Baiduri Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Bharathi Cement Corporation - India
- Bukit Makmur.PT - Indonesia
- Minerals Council of Australia
- White Energy Company Limited
- Petrochimia International Co. Ltd.- Taiwan
- Aditya Birla Group - India
- Planning Commission, India
- Kideco Jaya Agung - Indonesia
- SMG Consultants - Indonesia
- ICICI Bank Limited - India
- Australian Commodity Traders Exchange
- Mjunction Services Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IEA Clean Coal Centre - UK
- Bulk Trading Sa - Switzerland
- Commonwealth Bank - Australia
- Wood Mackenzie - Singapore
- Globalindo Alam Lestari - Indonesia
- Central Electricity Authority - India
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Bayan Resources Tbk. - Indonesia
- VISA Power Limited - India
- Kaltim Prima Coal - Indonesia
- Gujarat Sidhee Cement - India
- Therma Luzon, Inc, Philippines
- Intertek Mineral Services - Indonesia
- Carbofer General Trading SA - India
- GVK Power & Infra Limited - India
- Xindia Steels Limited - India
- Australian Coal Association
- Central Java Power - Indonesia
- TeaM Sual Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Global Green Power PLC Corporation, Philippines
- PTC India Limited - India
- Salva Resources Pvt Ltd - India
- Siam City Cement - Thailand
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