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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, 07 July 12
EXCESS SUPPLY & WEAK DEMAND KEEP COAL PRICES LOW
COALspot.com - SGX AsiaClear OTC Coal Swaps for August and Q4 deliveries slipped slightly this week. SGX’s Indonesian sub-bituminous coal swap ...
Saturday, 07 July 12
BALTIC INDEX UP ON STRONG CAPE, PANAMAX RATES - VISTAAR
COALspot.com - This week all the segments were firmed up with BDI up by 15.23 pct (up by 153 points) closing at 1,157 points.
The cape index also ...
Saturday, 07 July 12
DRY BULK MARKET NOT ABLE TO FIND SOLID GROUND SAY EXPERTS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the second half of each, traditionally looking the most active one, especially in terms of newbuildings being delivered, it's highly unlikely ...
Thursday, 05 July 12
GOVT GETS READY FOR $1.8B SUIT - THE JAKARTA POST
The Jakarta Post, one of the leading Indonesian English new papers reported that, several ministries and the Attorney General’s Office held a ...
Thursday, 05 July 12
DRY BULK MARKET MOVES FURTHER UP THE HILL - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has kept its growth momentum by the middle of the week, as the BDI (Baltic Dry Index) rose by an additional 40 points to 1,103 p ...
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- Merrill Lynch Commodities Europe
- Central Java Power - Indonesia
- IHS Mccloskey Coal Group - USA
- Kumho Petrochemical, South Korea
- Xindia Steels Limited - India
- Semirara Mining Corp, Philippines
- Wood Mackenzie - Singapore
- Bulk Trading Sa - Switzerland
- Alfred C Toepfer International GmbH - Germany
- Central Electricity Authority - India
- Planning Commission, India
- Jaiprakash Power Ventures ltd
- GVK Power & Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Savvy Resources Ltd - HongKong
- Formosa Plastics Group - Taiwan
- Grasim Industreis Ltd - India
- Makarim & Taira - Indonesia
- Latin American Coal - Colombia
- ICICI Bank Limited - India
- South Luzon Thermal Energy Corporation
- Siam City Cement PLC, Thailand
- Ministry of Finance - Indonesia
- Meralco Power Generation, Philippines
- Indo Tambangraya Megah - Indonesia
- Vizag Seaport Private Limited - India
- Mercuria Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Singapore Mercantile Exchange
- Karaikal Port Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Barasentosa Lestari - Indonesia
- MS Steel International - UAE
- Bhoruka Overseas - Indonesia
- Orica Mining Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Australian Coal Association
- Pipit Mutiara Jaya. PT, Indonesia
- Port Waratah Coal Services - Australia
- Petron Corporation, Philippines
- Trasteel International SA, Italy
- Bharathi Cement Corporation - India
- Deloitte Consulting - India
- CNBM International Corporation - China
- Jindal Steel & Power Ltd - India
- Attock Cement Pakistan Limited
- Baramulti Group, Indonesia
- Wilmar Investment Holdings
- Parliament of New Zealand
- Rashtriya Ispat Nigam Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The Treasury - Australian Government
- Manunggal Multi Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Globalindo Alam Lestari - Indonesia
- Indonesian Coal Mining Association
- London Commodity Brokers - England
- Pendopo Energi Batubara - Indonesia
- Siam City Cement - Thailand
- Ceylon Electricity Board - Sri Lanka
- Commonwealth Bank - Australia
- IEA Clean Coal Centre - UK
- Goldman Sachs - Singapore
- Sinarmas Energy and Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Uttam Galva Steels Limited - India
- ASAPP Information Group - India
- Kartika Selabumi Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karbindo Abesyapradhi - Indoneisa
- Electricity Generating Authority of Thailand
- Salva Resources Pvt Ltd - India
- Posco Energy - South Korea
- Global Green Power PLC Corporation, Philippines
- Marubeni Corporation - India
- PNOC Exploration Corporation - Philippines
- Energy Link Ltd, New Zealand
- Medco Energi Mining Internasional
- Georgia Ports Authority, United States
- Chettinad Cement Corporation Ltd - India
- India Bulls Power Limited - India
- TeaM Sual Corporation - Philippines
- Coalindo Energy - Indonesia
- Independent Power Producers Association of India
- Holcim Trading Pte Ltd - Singapore
- International Coal Ventures Pvt Ltd - India
- McConnell Dowell - Australia
- Chamber of Mines of South Africa
- Bukit Makmur.PT - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- Lanco Infratech Ltd - India
- Kaltim Prima Coal - Indonesia
- Global Business Power Corporation, Philippines
- Interocean Group of Companies - India
- Sree Jayajothi Cements Limited - India
- Eastern Energy - Thailand
- Metalloyd Limited - United Kingdom
- Standard Chartered Bank - UAE
- Indogreen Group - Indonesia
- Maheswari Brothers Coal Limited - India
- Ind-Barath Power Infra Limited - India
- GMR Energy Limited - India
- PTC India Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Global Coal Blending Company Limited - Australia
- Intertek Mineral Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Edison Trading Spa - Italy
- TNB Fuel Sdn Bhd - Malaysia
- Kobexindo Tractors - Indoneisa
- Ambuja Cements Ltd - India
- Africa Commodities Group - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Antam Resourcindo - Indonesia
- Romanian Commodities Exchange
- Sindya Power Generating Company Private Ltd
- Altura Mining Limited, Indonesia
- Madhucon Powers Ltd - India
- Power Finance Corporation Ltd., India
- Cigading International Bulk Terminal - Indonesia
- Australian Commodity Traders Exchange
- Eastern Coal Council - USA
- Billiton Holdings Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- Borneo Indobara - Indonesia
- VISA Power Limited - India
- Aditya Birla Group - India
- Gujarat Mineral Development Corp Ltd - India
- Tata Chemicals Ltd - India
- Tamil Nadu electricity Board
- SMG Consultants - Indonesia
- Rio Tinto Coal - Australia
- Star Paper Mills Limited - India
- Cement Manufacturers Association - India
- Semirara Mining and Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- Miang Besar Coal Terminal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Heidelberg Cement - Germany
- Bukit Baiduri Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Thai Mozambique Logistica
- Krishnapatnam Port Company Ltd. - India
- Petrochimia International Co. Ltd.- Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Economic Council, Georgia
- OPG Power Generation Pvt Ltd - India
- Indian Energy Exchange, India
- Vedanta Resources Plc - India
- PowerSource Philippines DevCo
- Ministry of Transport, Egypt
- Sakthi Sugars Limited - India
- Kideco Jaya Agung - Indonesia
- The University of Queensland
- Indian Oil Corporation Limited
- Renaissance Capital - South Africa
- Price Waterhouse Coopers - Russia
- SMC Global Power, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Binh Thuan Hamico - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Riau Bara Harum - Indonesia
- Banpu Public Company Limited - Thailand
- Bangladesh Power Developement Board
- CIMB Investment Bank - Malaysia
- Indika Energy - Indonesia
- Anglo American - United Kingdom
- SN Aboitiz Power Inc, Philippines
- Agrawal Coal Company - India
- Mercator Lines Limited - India
- Gujarat Sidhee Cement - India
- Thiess Contractors Indonesia
- European Bulk Services B.V. - Netherlands
- Bhushan Steel Limited - India
- Samtan Co., Ltd - South Korea
- White Energy Company Limited
- Orica Australia Pty. Ltd.
- Therma Luzon, Inc, Philippines
- Larsen & Toubro Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Parry Sugars Refinery, India
- New Zealand Coal & Carbon
- Sojitz Corporation - Japan
- Minerals Council of Australia
- Mjunction Services Limited - India
- Straits Asia Resources Limited - Singapore
- Leighton Contractors Pty Ltd - Australia
- Coal and Oil Company - UAE
- Directorate Of Revenue Intelligence - India
- Bhatia International Limited - India
- Sarangani Energy Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- San Jose City I Power Corp, Philippines
- Sical Logistics Limited - India
- Dalmia Cement Bharat India
- Malabar Cements Ltd - India
- Oldendorff Carriers - Singapore
- Videocon Industries ltd - India
- Coastal Gujarat Power Limited - India
- Toyota Tsusho Corporation, Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Ministry of Mines - Canada
- Carbofer General Trading SA - India
- Energy Development Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Electricity Authority, New Zealand
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