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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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Thursday, 05 July 12
BUMI ACHIEVES HIGHER SELLING PRICE IN FIRST QUARTER
COALspot.com - PT Bumi Resources Tbk (BUMI), Indonesia's largest coal producer and exporter, has successfully maintained a higher sales margin, des ...
Tuesday, 03 July 12
DRY BULK MARKET INCHED FORWARD AT THE START OF THE WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market inched forward at the beginning of the new week, prior to the US holidays regarding the celebration of the 4th of July, which is ...
Monday, 02 July 12
ORPHEUS STRENGTHENS REVENUE STREAM WITH NEW ROYALTY AGREEMENT AT THE B2 COAL PROJECT
Orpheus Energy (ASX:OEG) is pleased to advise that it has executed a life of mine Royalty Agreement with Indonesian mining contractor PT Debbia Mini ...
Monday, 02 July 12
DRY BULK DEMAND TO RISE TO 3.6 BILLION TONNES IN 2012, BUT NEW BUILDING DELIVERIES ARE
In its latest analysis on the dry bulk market fundamentals, DVB Bank said that dry bulk cargo demand is forecast to rise to approximately 3.6 billio ...
Sunday, 01 July 12
AUSTRALIAS CARBON TAX - SUNIL K KUMBHAT
COALspot.com - Climate Change
Climate change and global warming have now become buzzwords the world over. The disastrous consequences for global ...
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- Australian Commodity Traders Exchange
- PetroVietnam Power Coal Import and Supply Company
- ASAPP Information Group - India
- Energy Link Ltd, New Zealand
- Standard Chartered Bank - UAE
- Binh Thuan Hamico - Vietnam
- Essar Steel Hazira Ltd - India
- South Luzon Thermal Energy Corporation
- Global Coal Blending Company Limited - Australia
- Gujarat Electricity Regulatory Commission - India
- Ministry of Finance - Indonesia
- Parry Sugars Refinery, India
- Global Green Power PLC Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Interocean Group of Companies - India
- Coalindo Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- London Commodity Brokers - England
- Indogreen Group - Indonesia
- Aboitiz Power Corporation - Philippines
- Economic Council, Georgia
- SMC Global Power, Philippines
- Tamil Nadu electricity Board
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Energy - Thailand
- New Zealand Coal & Carbon
- Indian Oil Corporation Limited
- Kapuas Tunggal Persada - Indonesia
- Jaiprakash Power Ventures ltd
- Goldman Sachs - Singapore
- Thai Mozambique Logistica
- European Bulk Services B.V. - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Leighton Contractors Pty Ltd - Australia
- Madhucon Powers Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Merrill Lynch Commodities Europe
- Romanian Commodities Exchange
- Central Electricity Authority - India
- Semirara Mining and Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Bhushan Steel Limited - India
- Sarangani Energy Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Transport, Egypt
- Timah Investasi Mineral - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Chettinad Cement Corporation Ltd - India
- Gujarat Sidhee Cement - India
- Mintek Dendrill Indonesia
- Meenaskhi Energy Private Limited - India
- Indika Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- LBH Netherlands Bv - Netherlands
- Agrawal Coal Company - India
- Ministry of Mines - Canada
- Central Java Power - Indonesia
- Metalloyd Limited - United Kingdom
- Bhoruka Overseas - Indonesia
- Iligan Light & Power Inc, Philippines
- Star Paper Mills Limited - India
- Sojitz Corporation - Japan
- Straits Asia Resources Limited - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Indo Tambangraya Megah - Indonesia
- IEA Clean Coal Centre - UK
- GN Power Mariveles Coal Plant, Philippines
- International Coal Ventures Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- ICICI Bank Limited - India
- GVK Power & Infra Limited - India
- Baramulti Group, Indonesia
- Indonesian Coal Mining Association
- Renaissance Capital - South Africa
- Energy Development Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- CNBM International Corporation - China
- Bhatia International Limited - India
- Price Waterhouse Coopers - Russia
- Karbindo Abesyapradhi - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Independent Power Producers Association of India
- Coal and Oil Company - UAE
- Georgia Ports Authority, United States
- Malabar Cements Ltd - India
- Siam City Cement PLC, Thailand
- The Treasury - Australian Government
- Electricity Generating Authority of Thailand
- MS Steel International - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Kartika Selabumi Mining - Indonesia
- Australian Coal Association
- Directorate Of Revenue Intelligence - India
- SMG Consultants - Indonesia
- CIMB Investment Bank - Malaysia
- Siam City Cement - Thailand
- PNOC Exploration Corporation - Philippines
- Planning Commission, India
- Toyota Tsusho Corporation, Japan
- Sical Logistics Limited - India
- Posco Energy - South Korea
- Jindal Steel & Power Ltd - India
- GAC Shipping (India) Pvt Ltd
- Pendopo Energi Batubara - Indonesia
- Videocon Industries ltd - India
- Chamber of Mines of South Africa
- Coastal Gujarat Power Limited - India
- Vizag Seaport Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Global Business Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Bukit Makmur.PT - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Edison Trading Spa - Italy
- Trasteel International SA, Italy
- Miang Besar Coal Terminal - Indonesia
- Commonwealth Bank - Australia
- Riau Bara Harum - Indonesia
- Intertek Mineral Services - Indonesia
- The University of Queensland
- Minerals Council of Australia
- Singapore Mercantile Exchange
- Directorate General of MIneral and Coal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- VISA Power Limited - India
- Vedanta Resources Plc - India
- Latin American Coal - Colombia
- Grasim Industreis Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kohat Cement Company Ltd. - Pakistan
- Ambuja Cements Ltd - India
- PTC India Limited - India
- Orica Australia Pty. Ltd.
- Tata Chemicals Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Indian Energy Exchange, India
- Heidelberg Cement - Germany
- Rio Tinto Coal - Australia
- The State Trading Corporation of India Ltd
- Kumho Petrochemical, South Korea
- Therma Luzon, Inc, Philippines
- Formosa Plastics Group - Taiwan
- Aditya Birla Group - India
- Attock Cement Pakistan Limited
- Oldendorff Carriers - Singapore
- Xindia Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- Makarim & Taira - Indonesia
- Orica Mining Services - Indonesia
- Parliament of New Zealand
- Kideco Jaya Agung - Indonesia
- Anglo American - United Kingdom
- Semirara Mining Corp, Philippines
- Port Waratah Coal Services - Australia
- Petron Corporation, Philippines
- Mercuria Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Deloitte Consulting - India
- Rashtriya Ispat Nigam Limited - India
- PowerSource Philippines DevCo
- Krishnapatnam Port Company Ltd. - India
- Bangladesh Power Developement Board
- Carbofer General Trading SA - India
- Meralco Power Generation, Philippines
- Kaltim Prima Coal - Indonesia
- Dalmia Cement Bharat India
- McConnell Dowell - Australia
- Uttam Galva Steels Limited - India
- Marubeni Corporation - India
- Wilmar Investment Holdings
- Savvy Resources Ltd - HongKong
- SN Aboitiz Power Inc, Philippines
- Thiess Contractors Indonesia
- Bharathi Cement Corporation - India
- Samtan Co., Ltd - South Korea
- Medco Energi Mining Internasional
- GMR Energy Limited - India
- Manunggal Multi Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Cement Manufacturers Association - India
- Mercator Lines Limited - India
- Africa Commodities Group - South Africa
- Borneo Indobara - Indonesia
- White Energy Company Limited
- Antam Resourcindo - Indonesia
- Ind-Barath Power Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- Electricity Authority, New Zealand
- Lanco Infratech Ltd - India
- Power Finance Corporation Ltd., India
- OPG Power Generation Pvt Ltd - India
- Wood Mackenzie - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Simpson Spence & Young - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Coal Council - USA
- Kobexindo Tractors - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Sree Jayajothi Cements Limited - India
- Sindya Power Generating Company Private Ltd
- India Bulls Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Altura Mining Limited, Indonesia
- Larsen & Toubro Limited - India
- Mjunction Services Limited - India
- Cigading International Bulk Terminal - Indonesia
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