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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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- Vijayanagar Sugar Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Georgia Ports Authority, United States
- VISA Power Limited - India
- Directorate Of Revenue Intelligence - India
- Economic Council, Georgia
- Oldendorff Carriers - Singapore
- Africa Commodities Group - South Africa
- AsiaOL BioFuels Corp., Philippines
- ASAPP Information Group - India
- Carbofer General Trading SA - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wilmar Investment Holdings
- Standard Chartered Bank - UAE
- GMR Energy Limited - India
- Bangladesh Power Developement Board
- Aboitiz Power Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indika Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Mines - Canada
- Altura Mining Limited, Indonesia
- Bayan Resources Tbk. - Indonesia
- Tamil Nadu electricity Board
- Iligan Light & Power Inc, Philippines
- Commonwealth Bank - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Energy Link Ltd, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- CIMB Investment Bank - Malaysia
- Petron Corporation, Philippines
- The Treasury - Australian Government
- Trasteel International SA, Italy
- Medco Energi Mining Internasional
- SN Aboitiz Power Inc, Philippines
- Central Java Power - Indonesia
- Manunggal Multi Energi - Indonesia
- Sakthi Sugars Limited - India
- PTC India Limited - India
- New Zealand Coal & Carbon
- Siam City Cement PLC, Thailand
- Semirara Mining and Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Indian Energy Exchange, India
- Karaikal Port Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Cement Manufacturers Association - India
- Semirara Mining Corp, Philippines
- Salva Resources Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Agrawal Coal Company - India
- Mjunction Services Limited - India
- Bulk Trading Sa - Switzerland
- Kumho Petrochemical, South Korea
- Tata Chemicals Ltd - India
- The State Trading Corporation of India Ltd
- San Jose City I Power Corp, Philippines
- Antam Resourcindo - Indonesia
- Kartika Selabumi Mining - Indonesia
- Romanian Commodities Exchange
- Australian Commodity Traders Exchange
- Australian Coal Association
- Port Waratah Coal Services - Australia
- Savvy Resources Ltd - HongKong
- Heidelberg Cement - Germany
- Coalindo Energy - Indonesia
- Malabar Cements Ltd - India
- The University of Queensland
- Attock Cement Pakistan Limited
- Rashtriya Ispat Nigam Limited - India
- Rio Tinto Coal - Australia
- ICICI Bank Limited - India
- Mercuria Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Baiduri Energy - Indonesia
- Global Business Power Corporation, Philippines
- Anglo American - United Kingdom
- Parry Sugars Refinery, India
- Bhoruka Overseas - Indonesia
- Grasim Industreis Ltd - India
- Kaltim Prima Coal - Indonesia
- Aditya Birla Group - India
- Binh Thuan Hamico - Vietnam
- International Coal Ventures Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Orica Australia Pty. Ltd.
- TNB Fuel Sdn Bhd - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Transport, Egypt
- Meenaskhi Energy Private Limited - India
- Electricity Generating Authority of Thailand
- PowerSource Philippines DevCo
- London Commodity Brokers - England
- Essar Steel Hazira Ltd - India
- Xindia Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Central Electricity Authority - India
- Eastern Energy - Thailand
- Miang Besar Coal Terminal - Indonesia
- SMC Global Power, Philippines
- PNOC Exploration Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Ministry of Finance - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Singapore Mercantile Exchange
- Maheswari Brothers Coal Limited - India
- Minerals Council of Australia
- Straits Asia Resources Limited - Singapore
- Intertek Mineral Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- McConnell Dowell - Australia
- Star Paper Mills Limited - India
- Electricity Authority, New Zealand
- Videocon Industries ltd - India
- GVK Power & Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Vizag Seaport Private Limited - India
- Edison Trading Spa - Italy
- Ind-Barath Power Infra Limited - India
- Eastern Coal Council - USA
- Petrochimia International Co. Ltd.- Taiwan
- Global Coal Blending Company Limited - Australia
- Sojitz Corporation - Japan
- Bhushan Steel Limited - India
- Marubeni Corporation - India
- IHS Mccloskey Coal Group - USA
- Kideco Jaya Agung - Indonesia
- Coal and Oil Company - UAE
- Meralco Power Generation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- SMG Consultants - Indonesia
- Uttam Galva Steels Limited - India
- Sindya Power Generating Company Private Ltd
- Baramulti Group, Indonesia
- Interocean Group of Companies - India
- Goldman Sachs - Singapore
- Kapuas Tunggal Persada - Indonesia
- Banpu Public Company Limited - Thailand
- Madhucon Powers Ltd - India
- Renaissance Capital - South Africa
- Merrill Lynch Commodities Europe
- Power Finance Corporation Ltd., India
- Deloitte Consulting - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cigading International Bulk Terminal - Indonesia
- Larsen & Toubro Limited - India
- Pendopo Energi Batubara - Indonesia
- Samtan Co., Ltd - South Korea
- Indonesian Coal Mining Association
- CNBM International Corporation - China
- IEA Clean Coal Centre - UK
- Kepco SPC Power Corporation, Philippines
- Thiess Contractors Indonesia
- Bhatia International Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Bharathi Cement Corporation - India
- Makarim & Taira - Indonesia
- Independent Power Producers Association of India
- Chettinad Cement Corporation Ltd - India
- Wood Mackenzie - Singapore
- Chamber of Mines of South Africa
- Coastal Gujarat Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- TeaM Sual Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Indogreen Group - Indonesia
- Barasentosa Lestari - Indonesia
- Ambuja Cements Ltd - India
- Bukit Makmur.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Jaiprakash Power Ventures ltd
- LBH Netherlands Bv - Netherlands
- Siam City Cement - Thailand
- Simpson Spence & Young - Indonesia
- Lanco Infratech Ltd - India
- Riau Bara Harum - Indonesia
- Latin American Coal - Colombia
- Sree Jayajothi Cements Limited - India
- Global Green Power PLC Corporation, Philippines
- Sical Logistics Limited - India
- Gujarat Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Vedanta Resources Plc - India
- Thai Mozambique Logistica
- Timah Investasi Mineral - Indoneisa
- Borneo Indobara - Indonesia
- Dalmia Cement Bharat India
- Energy Development Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Gujarat Sidhee Cement - India
- Holcim Trading Pte Ltd - Singapore
- India Bulls Power Limited - India
- Indian Oil Corporation Limited
- Therma Luzon, Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Krishnapatnam Port Company Ltd. - India
- Mercator Lines Limited - India
- Toyota Tsusho Corporation, Japan
- MS Steel International - UAE
- White Energy Company Limited
- Karbindo Abesyapradhi - Indoneisa
- Mintek Dendrill Indonesia
- Parliament of New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Planning Commission, India
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