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