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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, 01 June 12
ADARO BUYS MAJORITY STAKE IN AFFILIATED BHAKTI ENERGI - INSIDER STORIES
Insider Stories reported that, PT Adaro Energy Tbk entered into an option to provide a convertible loan of up to US$500 million for a period of 3 ye ...
Thursday, 31 May 12
DRY BULK MARKET UNABLE TO FIND NEW SUPPORT TO REACH HIGHER LEVELS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has been unable to find new support and recover to higher levels during these past few days. As a result, the Baltic Dry Index ( ...
Wednesday, 30 May 12
ORPHEUS RAISES $2.24M TO ADVANCE INDONESIAN COAL PRODUCTION ASSETS
• $2.24 million raised from a placement to new and existing institutional and sophisticated investors from Australia and overseas
• Funds ...
Wednesday, 30 May 12
ARPENI SECURES TRANSSHIPMENT CONTRACT FROM BARUNA DIRGA
Insider Stories reported that, shipping operator PT Arpeni Pratama Ocean Line Tbk (APOL) has secured a 1-year coal transhipment contract of 4 millio ...
Monday, 28 May 12
COAL EXPORTS ARE JUMPING HIGHER, BUT PRICES ARE FALLING LOWER
COALspot.com: Indonesia, the world largest coal exporter, shipped 31.86* million tons of coal in April 2012, compared to 30.64* million tons i ...
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- Bukit Asam (Persero) Tbk - Indonesia
- New Zealand Coal & Carbon
- Vijayanagar Sugar Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Merrill Lynch Commodities Europe
- Parry Sugars Refinery, India
- Jaiprakash Power Ventures ltd
- GAC Shipping (India) Pvt Ltd
- Ind-Barath Power Infra Limited - India
- Antam Resourcindo - Indonesia
- Port Waratah Coal Services - Australia
- White Energy Company Limited
- Grasim Industreis Ltd - India
- SN Aboitiz Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- GVK Power & Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Thiess Contractors Indonesia
- Australian Coal Association
- Larsen & Toubro Limited - India
- Kobexindo Tractors - Indoneisa
- Salva Resources Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Essar Steel Hazira Ltd - India
- CNBM International Corporation - China
- Rashtriya Ispat Nigam Limited - India
- Xindia Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement - Thailand
- Cement Manufacturers Association - India
- India Bulls Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Bharathi Cement Corporation - India
- London Commodity Brokers - England
- Neyveli Lignite Corporation Ltd, - India
- Sical Logistics Limited - India
- Price Waterhouse Coopers - Russia
- TeaM Sual Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Global Business Power Corporation, Philippines
- The Treasury - Australian Government
- Coal and Oil Company - UAE
- Carbofer General Trading SA - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Africa Commodities Group - South Africa
- Tamil Nadu electricity Board
- Deloitte Consulting - India
- Sindya Power Generating Company Private Ltd
- Kumho Petrochemical, South Korea
- SMC Global Power, Philippines
- Ministry of Finance - Indonesia
- Renaissance Capital - South Africa
- Mintek Dendrill Indonesia
- Globalindo Alam Lestari - Indonesia
- Savvy Resources Ltd - HongKong
- Chettinad Cement Corporation Ltd - India
- PowerSource Philippines DevCo
- Madhucon Powers Ltd - India
- Mercator Lines Limited - India
- Holcim Trading Pte Ltd - Singapore
- Heidelberg Cement - Germany
- GN Power Mariveles Coal Plant, Philippines
- Bukit Makmur.PT - Indonesia
- Goldman Sachs - Singapore
- Maheswari Brothers Coal Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Riau Bara Harum - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Eastern Coal Council - USA
- Romanian Commodities Exchange
- Pendopo Energi Batubara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Energy - Thailand
- Bulk Trading Sa - Switzerland
- Makarim & Taira - Indonesia
- Interocean Group of Companies - India
- Kohat Cement Company Ltd. - Pakistan
- Independent Power Producers Association of India
- TNB Fuel Sdn Bhd - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Bhoruka Overseas - Indonesia
- VISA Power Limited - India
- Bhatia International Limited - India
- Mercuria Energy - Indonesia
- Indonesian Coal Mining Association
- Gujarat Electricity Regulatory Commission - India
- Krishnapatnam Port Company Ltd. - India
- Anglo American - United Kingdom
- Intertek Mineral Services - Indonesia
- Oldendorff Carriers - Singapore
- Asmin Koalindo Tuhup - Indonesia
- PNOC Exploration Corporation - Philippines
- Indika Energy - Indonesia
- Standard Chartered Bank - UAE
- Videocon Industries ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coalindo Energy - Indonesia
- Ministry of Mines - Canada
- Aditya Birla Group - India
- Directorate Of Revenue Intelligence - India
- McConnell Dowell - Australia
- Vizag Seaport Private Limited - India
- Star Paper Mills Limited - India
- Marubeni Corporation - India
- Thai Mozambique Logistica
- Semirara Mining Corp, Philippines
- Simpson Spence & Young - Indonesia
- Bukit Baiduri Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Energy Development Corp, Philippines
- LBH Netherlands Bv - Netherlands
- GMR Energy Limited - India
- The University of Queensland
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Barasentosa Lestari - Indonesia
- Orica Australia Pty. Ltd.
- The State Trading Corporation of India Ltd
- Binh Thuan Hamico - Vietnam
- Jindal Steel & Power Ltd - India
- Indogreen Group - Indonesia
- Samtan Co., Ltd - South Korea
- Indian Energy Exchange, India
- Kepco SPC Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Sojitz Corporation - Japan
- Gujarat Mineral Development Corp Ltd - India
- Electricity Authority, New Zealand
- Commonwealth Bank - Australia
- Cigading International Bulk Terminal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Chamber of Mines of South Africa
- Vedanta Resources Plc - India
- IEA Clean Coal Centre - UK
- Iligan Light & Power Inc, Philippines
- Latin American Coal - Colombia
- ICICI Bank Limited - India
- Semirara Mining and Power Corporation, Philippines
- Attock Cement Pakistan Limited
- MS Steel International - UAE
- Gujarat Sidhee Cement - India
- Edison Trading Spa - Italy
- Indian Oil Corporation Limited
- PTC India Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Borneo Indobara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Orica Mining Services - Indonesia
- Meralco Power Generation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Formosa Plastics Group - Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhushan Steel Limited - India
- Lanco Infratech Ltd - India
- Altura Mining Limited, Indonesia
- Kideco Jaya Agung - Indonesia
- Bangladesh Power Developement Board
- Ceylon Electricity Board - Sri Lanka
- Mjunction Services Limited - India
- Posco Energy - South Korea
- Agrawal Coal Company - India
- Rio Tinto Coal - Australia
- Central Java Power - Indonesia
- Sakthi Sugars Limited - India
- IHS Mccloskey Coal Group - USA
- ASAPP Information Group - India
- Aboitiz Power Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- Tata Chemicals Ltd - India
- Petron Corporation, Philippines
- Electricity Generating Authority of Thailand
- Therma Luzon, Inc, Philippines
- SMG Consultants - Indonesia
- Georgia Ports Authority, United States
- Maharashtra Electricity Regulatory Commission - India
- Minerals Council of Australia
- Petrochimia International Co. Ltd.- Taiwan
- Malabar Cements Ltd - India
- Parliament of New Zealand
- Planning Commission, India
- Toyota Tsusho Corporation, Japan
- Economic Council, Georgia
- Kaltim Prima Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Uttam Galva Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Dalmia Cement Bharat India
- Sree Jayajothi Cements Limited - India
- Trasteel International SA, Italy
- Wood Mackenzie - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Commodity Traders Exchange
- Baramulti Group, Indonesia
- Ministry of Transport, Egypt
- Global Green Power PLC Corporation, Philippines
- Ambuja Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Manunggal Multi Energi - Indonesia
- Meenaskhi Energy Private Limited - India
- Sarangani Energy Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Singapore Mercantile Exchange
- Medco Energi Mining Internasional
- Power Finance Corporation Ltd., India
- European Bulk Services B.V. - Netherlands
- Energy Link Ltd, New Zealand
- Straits Asia Resources Limited - Singapore
- Global Coal Blending Company Limited - Australia
- Metalloyd Limited - United Kingdom
- Indo Tambangraya Megah - Indonesia
- Wilmar Investment Holdings
- Central Electricity Authority - India
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