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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, 08 June 12
NO IMMEDIATE IMPACT ON ADARO'S RATING FROM BEP TRANSACTION - FITCH RATINGS
Fitch Ratings has said that PT Adaro Indonesia's (Adaro, 'BB+'/ Stable) ratings are not immediately affected by its parent PT Adaro Energy Tbk's ...
Thursday, 07 June 12
DRY BULK MARKET FALLS FOR 10 STRAIGHT SESSION ON OVERSUPPLY PROBLEMS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
A resurgence of oversupply, coupled with national holidays in various parts of the world has contributed to yet another fall of the dry bulk market ...
Thursday, 07 June 12
COAL EXPORT TAX NOT RATIONAL: MINISTER - THE JAKARTA POST
Trade Minister Gita Wirjawan has criticized as irrational the idea to restrict coal exports by imposing an export tax, According to The Jakarta post ...
Thursday, 07 June 12
BY 2022 PLN IS EXPECTED TO BURN AROUND 125 MILLION TONS OF COAL
COALspot.com - Indonesia's state owned electricity company's (PLN) coal consumption is expected to reach 125.7 million tons by 2012.
Nur Pamudj ...
Wednesday, 06 June 12
INDONESIAN GOVERNMENT'S DECLARED COAL PRICES CONTINUING ITS DECLINE
COALspot.com - Indonesian HBA fell to lowest level since January 2011 in June 2012. The monthly coal reference price for coal sales this month ...
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- CIMB Investment Bank - Malaysia
- Sical Logistics Limited - India
- ASAPP Information Group - India
- Latin American Coal - Colombia
- Siam City Cement - Thailand
- Indonesian Coal Mining Association
- Pendopo Energi Batubara - Indonesia
- Heidelberg Cement - Germany
- Savvy Resources Ltd - HongKong
- Bulk Trading Sa - Switzerland
- Sakthi Sugars Limited - India
- GMR Energy Limited - India
- India Bulls Power Limited - India
- Antam Resourcindo - Indonesia
- Power Finance Corporation Ltd., India
- Parliament of New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Edison Trading Spa - Italy
- Marubeni Corporation - India
- Bayan Resources Tbk. - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Eastern Energy - Thailand
- Oldendorff Carriers - Singapore
- Aboitiz Power Corporation - Philippines
- Ministry of Mines - Canada
- Deloitte Consulting - India
- ICICI Bank Limited - India
- Bangladesh Power Developement Board
- Straits Asia Resources Limited - Singapore
- Electricity Authority, New Zealand
- Ministry of Transport, Egypt
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Toyota Tsusho Corporation, Japan
- Mintek Dendrill Indonesia
- SN Aboitiz Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Chettinad Cement Corporation Ltd - India
- Samtan Co., Ltd - South Korea
- Trasteel International SA, Italy
- Xindia Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Makarim & Taira - Indonesia
- Borneo Indobara - Indonesia
- Singapore Mercantile Exchange
- Chamber of Mines of South Africa
- Africa Commodities Group - South Africa
- Merrill Lynch Commodities Europe
- TeaM Sual Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Sojitz Corporation - Japan
- Bukit Baiduri Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Indogreen Group - Indonesia
- Aditya Birla Group - India
- Wood Mackenzie - Singapore
- Agrawal Coal Company - India
- Posco Energy - South Korea
- Tata Chemicals Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Australian Coal Association
- Indika Energy - Indonesia
- Indian Oil Corporation Limited
- IEA Clean Coal Centre - UK
- Medco Energi Mining Internasional
- Lanco Infratech Ltd - India
- Parry Sugars Refinery, India
- Energy Link Ltd, New Zealand
- Georgia Ports Authority, United States
- Central Java Power - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- International Coal Ventures Pvt Ltd - India
- Tamil Nadu electricity Board
- Ceylon Electricity Board - Sri Lanka
- Bahari Cakrawala Sebuku - Indonesia
- Grasim Industreis Ltd - India
- White Energy Company Limited
- AsiaOL BioFuels Corp., Philippines
- Electricity Generating Authority of Thailand
- Salva Resources Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PTC India Limited - India
- Planning Commission, India
- Riau Bara Harum - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- McConnell Dowell - Australia
- Sarangani Energy Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Baramulti Group, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Mercuria Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Economic Council, Georgia
- Maheswari Brothers Coal Limited - India
- Kapuas Tunggal Persada - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Thai Mozambique Logistica
- Gujarat Sidhee Cement - India
- Bharathi Cement Corporation - India
- Malabar Cements Ltd - India
- Madhucon Powers Ltd - India
- MS Steel International - UAE
- Binh Thuan Hamico - Vietnam
- Petron Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Indian Energy Exchange, India
- Kohat Cement Company Ltd. - Pakistan
- Thiess Contractors Indonesia
- Holcim Trading Pte Ltd - Singapore
- Directorate Of Revenue Intelligence - India
- SMC Global Power, Philippines
- Standard Chartered Bank - UAE
- Siam City Cement PLC, Thailand
- Ind-Barath Power Infra Limited - India
- Uttam Galva Steels Limited - India
- London Commodity Brokers - England
- Karbindo Abesyapradhi - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- PNOC Exploration Corporation - Philippines
- Videocon Industries ltd - India
- Ambuja Cements Ltd - India
- Mjunction Services Limited - India
- Coastal Gujarat Power Limited - India
- The University of Queensland
- Rashtriya Ispat Nigam Limited - India
- Meralco Power Generation, Philippines
- Romanian Commodities Exchange
- The State Trading Corporation of India Ltd
- GVK Power & Infra Limited - India
- Vedanta Resources Plc - India
- New Zealand Coal & Carbon
- Miang Besar Coal Terminal - Indonesia
- Mercator Lines Limited - India
- PowerSource Philippines DevCo
- Goldman Sachs - Singapore
- Central Electricity Authority - India
- Timah Investasi Mineral - Indoneisa
- Vizag Seaport Private Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Carbofer General Trading SA - India
- Vijayanagar Sugar Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Banpu Public Company Limited - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Finance - Indonesia
- Indo Tambangraya Megah - Indonesia
- Renaissance Capital - South Africa
- Gujarat Mineral Development Corp Ltd - India
- San Jose City I Power Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Sindya Power Generating Company Private Ltd
- South Luzon Thermal Energy Corporation
- Wilmar Investment Holdings
- Therma Luzon, Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Attock Cement Pakistan Limited
- TNB Fuel Sdn Bhd - Malaysia
- Altura Mining Limited, Indonesia
- Commonwealth Bank - Australia
- Kartika Selabumi Mining - Indonesia
- Orica Australia Pty. Ltd.
- Independent Power Producers Association of India
- Neyveli Lignite Corporation Ltd, - India
- Manunggal Multi Energi - Indonesia
- Orica Mining Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Cement Manufacturers Association - India
- Bhushan Steel Limited - India
- Eastern Coal Council - USA
- The Treasury - Australian Government
- Meenaskhi Energy Private Limited - India
- Price Waterhouse Coopers - Russia
- PetroVietnam Power Coal Import and Supply Company
- Metalloyd Limited - United Kingdom
- Rio Tinto Coal - Australia
- Global Coal Blending Company Limited - Australia
- SMG Consultants - Indonesia
- Semirara Mining Corp, Philippines
- Iligan Light & Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- CNBM International Corporation - China
- Bhatia International Limited - India
- Interocean Group of Companies - India
- VISA Power Limited - India
- Bhoruka Overseas - Indonesia
- Global Business Power Corporation, Philippines
- Minerals Council of Australia
- Leighton Contractors Pty Ltd - Australia
- Anglo American - United Kingdom
- Jindal Steel & Power Ltd - India
- Dalmia Cement Bharat India
- Directorate General of MIneral and Coal - Indonesia
- Port Waratah Coal Services - Australia
- Coal and Oil Company - UAE
- Semirara Mining and Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Energy Development Corp, Philippines
- Star Paper Mills Limited - India
- Coalindo Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Larsen & Toubro Limited - India
- Jaiprakash Power Ventures ltd
- Kideco Jaya Agung - Indonesia
- Karaikal Port Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- Sree Jayajothi Cements Limited - India
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