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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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Friday, 22 June 12
GLOBAL ACTION NEEDED ON ENERGY POVERTY - WORLD COAL
Eradicating energy poverty is possibly the biggest challenge facing the world today. Like climate change it can only be addressed with a concerted g ...
Friday, 22 June 12
COAL: THE BACKBONE OF MODERN ELECTRICITY - ECOAL
Coal has been described as the "forgotten fuel," perhaps because many aren't aware of the huge role it plays in powering the global econo ...
Thursday, 21 June 12
DRY BULK MARKET ON THE RISE AGAIN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market was on the rise once again yesterday, with the Baltic Dry Index (BDI), the industry’s benchmark, rising by 18 points, or 1 ...
Wednesday, 20 June 12
BDI MOVING HIGHER, PANAMAX AND SUPRAMAX VESSELS STRONGER, CAPESIZE RATES NEAR TO HISTORICAL LOWS OF DECEMBER 2008 - MARIA BERTZELETOU, HELLENIC SHIPPING
The dry market seems to follow the dynamic of the previous week with the Baltic Dry Index showing daily increases since June 8th, but is still stand ...
Tuesday, 19 June 12
SMALLER DRY BULK CARRIERS LIFT UP MARKET, PANAMAXES SET TO FALL SAYS ANALYST - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Another rise for the dry bulk market was evident yesterday, as the industry’s benchmark, the BDI (Baltic Dry Index) was up for a ninth straigh ...
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- Rio Tinto Coal - Australia
- Malabar Cements Ltd - India
- VISA Power Limited - India
- Renaissance Capital - South Africa
- Neyveli Lignite Corporation Ltd, - India
- Aboitiz Power Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Barasentosa Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- LBH Netherlands Bv - Netherlands
- Dalmia Cement Bharat India
- Semirara Mining Corp, Philippines
- Chamber of Mines of South Africa
- Uttam Galva Steels Limited - India
- Meenaskhi Energy Private Limited - India
- Banpu Public Company Limited - Thailand
- Edison Trading Spa - Italy
- Oldendorff Carriers - Singapore
- Wood Mackenzie - Singapore
- CIMB Investment Bank - Malaysia
- Cigading International Bulk Terminal - Indonesia
- Star Paper Mills Limited - India
- Bhushan Steel Limited - India
- Coalindo Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Chettinad Cement Corporation Ltd - India
- Sree Jayajothi Cements Limited - India
- Jindal Steel & Power Ltd - India
- Vedanta Resources Plc - India
- Kobexindo Tractors - Indoneisa
- Simpson Spence & Young - Indonesia
- Salva Resources Pvt Ltd - India
- Petron Corporation, Philippines
- Sical Logistics Limited - India
- Grasim Industreis Ltd - India
- Attock Cement Pakistan Limited
- Sarangani Energy Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- ASAPP Information Group - India
- TeaM Sual Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Tamil Nadu electricity Board
- Ind-Barath Power Infra Limited - India
- Electricity Generating Authority of Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Karbindo Abesyapradhi - Indoneisa
- Meralco Power Generation, Philippines
- Energy Development Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Tata Chemicals Ltd - India
- Larsen & Toubro Limited - India
- Australian Coal Association
- Deloitte Consulting - India
- Romanian Commodities Exchange
- Mercator Lines Limited - India
- Port Waratah Coal Services - Australia
- IEA Clean Coal Centre - UK
- Directorate Of Revenue Intelligence - India
- The University of Queensland
- Central Java Power - Indonesia
- SMG Consultants - Indonesia
- Bharathi Cement Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- AsiaOL BioFuels Corp., Philippines
- Cement Manufacturers Association - India
- Globalindo Alam Lestari - Indonesia
- Trasteel International SA, Italy
- Goldman Sachs - Singapore
- Electricity Authority, New Zealand
- GVK Power & Infra Limited - India
- Therma Luzon, Inc, Philippines
- Standard Chartered Bank - UAE
- Global Coal Blending Company Limited - Australia
- Timah Investasi Mineral - Indoneisa
- Thiess Contractors Indonesia
- Lanco Infratech Ltd - India
- Sindya Power Generating Company Private Ltd
- Kartika Selabumi Mining - Indonesia
- Merrill Lynch Commodities Europe
- PowerSource Philippines DevCo
- Africa Commodities Group - South Africa
- Kapuas Tunggal Persada - Indonesia
- Bhatia International Limited - India
- Indonesian Coal Mining Association
- Intertek Mineral Services - Indonesia
- Siam City Cement PLC, Thailand
- Mintek Dendrill Indonesia
- GMR Energy Limited - India
- Australian Commodity Traders Exchange
- SMC Global Power, Philippines
- IHS Mccloskey Coal Group - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Savvy Resources Ltd - HongKong
- Orica Mining Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- CNBM International Corporation - China
- Ambuja Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Baramulti Group, Indonesia
- MS Steel International - UAE
- Latin American Coal - Colombia
- Indika Energy - Indonesia
- White Energy Company Limited
- Iligan Light & Power Inc, Philippines
- Bangladesh Power Developement Board
- Videocon Industries ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Commonwealth Bank - Australia
- Parry Sugars Refinery, India
- Global Business Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Siam City Cement - Thailand
- Xindia Steels Limited - India
- Planning Commission, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- International Coal Ventures Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Energy Link Ltd, New Zealand
- Straits Asia Resources Limited - Singapore
- Ceylon Electricity Board - Sri Lanka
- Makarim & Taira - Indonesia
- Jaiprakash Power Ventures ltd
- Leighton Contractors Pty Ltd - Australia
- Carbofer General Trading SA - India
- PTC India Limited - India
- Ministry of Transport, Egypt
- Metalloyd Limited - United Kingdom
- Eastern Energy - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Independent Power Producers Association of India
- Kumho Petrochemical, South Korea
- TNB Fuel Sdn Bhd - Malaysia
- ICICI Bank Limited - India
- Indian Oil Corporation Limited
- OPG Power Generation Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Kaltim Prima Coal - Indonesia
- Eastern Coal Council - USA
- Minerals Council of Australia
- Kohat Cement Company Ltd. - Pakistan
- Borneo Indobara - Indonesia
- McConnell Dowell - Australia
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Finance - Indonesia
- San Jose City I Power Corp, Philippines
- India Bulls Power Limited - India
- Samtan Co., Ltd - South Korea
- Thai Mozambique Logistica
- PetroVietnam Power Coal Import and Supply Company
- Essar Steel Hazira Ltd - India
- European Bulk Services B.V. - Netherlands
- Bukit Makmur.PT - Indonesia
- Coal and Oil Company - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Sakthi Sugars Limited - India
- The Treasury - Australian Government
- Manunggal Multi Energi - Indonesia
- Ministry of Mines - Canada
- Global Green Power PLC Corporation, Philippines
- The State Trading Corporation of India Ltd
- London Commodity Brokers - England
- Interocean Group of Companies - India
- Krishnapatnam Port Company Ltd. - India
- Medco Energi Mining Internasional
- Asmin Koalindo Tuhup - Indonesia
- Posco Energy - South Korea
- GAC Shipping (India) Pvt Ltd
- Binh Thuan Hamico - Vietnam
- Mjunction Services Limited - India
- Toyota Tsusho Corporation, Japan
- Mercuria Energy - Indonesia
- Sojitz Corporation - Japan
- Petrochimia International Co. Ltd.- Taiwan
- Kepco SPC Power Corporation, Philippines
- Economic Council, Georgia
- Kideco Jaya Agung - Indonesia
- Coastal Gujarat Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Anglo American - United Kingdom
- New Zealand Coal & Carbon
- Heidelberg Cement - Germany
- Formosa Plastics Group - Taiwan
- Karaikal Port Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Indogreen Group - Indonesia
- Antam Resourcindo - Indonesia
- Gujarat Sidhee Cement - India
- Central Electricity Authority - India
- Directorate General of MIneral and Coal - Indonesia
- Wilmar Investment Holdings
- Agrawal Coal Company - India
- Gujarat Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- Offshore Bulk Terminal Pte Ltd, Singapore
- South Luzon Thermal Energy Corporation
- Marubeni Corporation - India
- Maheswari Brothers Coal Limited - India
- Parliament of New Zealand
- Bayan Resources Tbk. - Indonesia
- Aditya Birla Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- Singapore Mercantile Exchange
- Altura Mining Limited, Indonesia
- Indian Energy Exchange, India
- PNOC Exploration Corporation - Philippines
- Madhucon Powers Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Georgia Ports Authority, United States
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